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10 bne IntelliNews Daily Central Europe and Baltic States EU tries to use
May 9, 2017
EBRD joins deal to buy Polish internet giant Allegro
bne IntelliNews
The European Bank for Reconstruction and Development (EBRD) announced on January 20 that it has joined the consortium of inves- tors that is in the process of buying Polish online retailer Allegro Group.
The EBRD joins private equity groups Cinven, Permira and Mid Europa Partners in the deal. The consortium was confirmed in October as the winner of a bidding contest to acquire Allegro from Naspers. The South African group acquired Allegro in 2008 for $1.48bn.
The acquisition price hit $3bn (€2.8bn), over $1bn above expectations. It was last year’s biggest private equity deal in Central and Eastern Europe.
The EBRD is joining the consortium with the provision of a PLN400mn (€92mn) sub- ordinated debt and a €24mn equity com- mitment, which form a part of Mid Europa Partners’ equity syndication process.
“This is an important transaction be- cause expanding and strengthening online platforms in Poland facilitates faster de- velopment of companies in the country. The internet allows to overcome local divisions and tap into customer markets which were previously either not accessible or only at prohibitive cost,” Dirk Werner, EBRD’s di- rector of information and communication technologies said in a statement.
Allegro was highly regarded as an acquisi- tion opportunity given its double-digit growth, already high market share, and profitability, and relatively high (at least in emerging mar- ket terms) market penetration.
Poland's e-commerce market is expected to grow by 15% in 2016 to PLN36bn, and swell to PLN63bn by 2020, according to So- ciomantic Labs.
Russia's Nord Stream 2 to its own advantage
Tim Gosling in Prague
Gazprom appeared to have once again out- foxed the EU when it announced on April 24 that it had closed a €4.75bn financing deal for the construction of the Nord Stream 2 gas pipeline with five major European compa- nies, two of them German. The deal secures 50% of the project’s cost from Engie, OMV, Shell, Uniper and Wintershall, but will leave full equity in the Russian state company’s hands – a reaction to an injunction against the Western companies’ role in the project due to a Polish legal challenge.
This apparent success followed the Eu- ropean Commission compromise in March with Gazprom over its competition con- cerns, and the rejigging of limits on the use of the Opal overland pipeline from the Baltic late last year, which have opened the way for greater volumes of Russian gas to flow south.
It’s the exploitation of such loopholes that has critics blasting Brussels for a limp- wristed stance on Nord Stream 2, which they allege is being influenced by German enthu- siasm for the project.
True, the European Commission has struggled to find legal means to halt the project, which would add a second 63bn cubic metre a year (cm) pipeline below the Baltic Sea to Germany (the first was opened in 2012).
Yet, Brussels is still looking for new ways to reduce Gazprom’s market dominance and, thanks to the recent compromise offered by Gazprom to avert the EU competition probe, it may have found one.
Gazprom has agreed to allow cross-bor- der trading of its gas between importers, which will give CEE member states greater leverage in negotiating Russian gas supply
deals. That is, assuming they sign up whole- heartedly to the Energy Union and continue to improve cross-border links.
“Gas supplies are extremely dependent on costly infrastructure, delivered ... via expensive pipelines,” noted the European Bank for Reconstruction and Development (EBRD) in late April. “Only working across borders can ensure that a country avoids
© Nord Stream 2 / Wolfram Scheible
ports head to the European bloc. Moscow’s revenues from oil and gas accounted for over 43% of federal budget revenue in 2015.
The Commission has pushed through rules that allow the EU to be party to the contract talks of member states. However, driven by their stance demanding greater national sovereignty, and likely some less idealistic issues also, some CEE countries
“Cross-border trading of gas between importers will give CEE member states greater leverage”
being dependent on a single supplier of gas. Having access to a regional gas market means access to various suppliers who are competing to provide the best price. It also means better security of supply.”
Russia hopes that boosting its supply of relatively cheap gas to the EU will help kill off the development of alternative sources such as LNG. However, it also weds Gazprom to its EU customers, offering them greater leverage on price if they stick together.
While Russia supplies the bulk of gas in CEE, its role in overall EU supply - although the largest - is a far less dominant 30% or so. Meanwhile, a full 75% of Gazprom’s ex-
have resisted efforts from the EU to involve itself in such negotiations.
Yet that clearly weakens their hand in talks with Russia. Moscow is pouring huge resources into the construction of perma- nent links to the European market. The EU's challenge is to turn the tables by unifying that market and exploiting Russia's huge economic dependence on it.
Plugging Russia’s gas export business even deeper into the EU via yet another ex- pensive pipeline is no one way street then, despite claims from opponents of Nord Stream 2 that it will simply increase de- pendence.