Telecredit has been supporting Romanian SMEs and entrepreneurs since it launched its ‘Omnicredit’ SME financing platform in early 2019, having provided EUR 145 m of financings either in the form of factoring transactions or micro-loans since then. The management team is proud to have grown the business in spite of a difficult period for Romania and the region, including the Covid-pandemic induced lockdowns and the war in Ukraine. We look forward to a new chapter in the company’s development once the transaction with PragmaGO is completed, and are confident that our new shareholders have all the resources and know-how to continue Telecredit’s exceptional growth trajectory.
Elisa Rusu, CEO of Telecredit
We see Omnicredit as a strong and trustworthy experienced strategic partner, and together we will continue supporting development of a wider group of Romanian SMEs. The company has a similar target customer profile to ours, focuses on digitalization and automation of its business processes and has strong operational and credit risk expertise. Together with Omnicredit we are well positioned to rapidly expand the portfolio and grow our customer base scale the business
– says Vjaceslav Lypko, Director of International Expansion of PragmaGO
We will focus heavily on embedded finance, which allows us to achieve economies of scale, including geographical scalability. In the area of digital factoring, we will implement processes that are innovative in the Romanian market and already proven with us. These are automated scoring algorithms and customer experience solutions. In Romania, as in Poland, we want to fill the financing gap for SMEs - to provide access to finance for companies that are not fully satisfied with the banking offer. Omnicredit's management team shares our vision for the joint project
- adds Jacek Obrocki, Vice President of PragmaGO.
When RC2 as majority shareholder re-launched Telecredit as a factoring and microlending business in early 2019, its shareholder funds amounted to a mere EUR 1.05m. Since then, Telecredit has been involved in approximately EUR 145m of financing transactions, providing financial support to hundreds of Romanian entrepreneurs and SMEs. Excluding the earn out component, the sale of Telecredit, if approved by RC2’s shareholders, will represent a 6.2 times return on capital since the factoring business was started, and a return of 6.7 times if one includes the full earn-out component. If completed, the sale of Telecredit will represent another successful exit of RC2, and its second successful exit from a financial services business, the first being the sale of the Top Factoring group, a non performing loan (NPL) management business, in 2017 which returned EUR 19.8m to RC2 (including dividends received over the course of the investment), or approximately 5.7 times the cost of this investment.
Ion Florescu, President of the Board of New Europe Capital Srl, the investment adviser to RC2, comments the transaction
About PragmaGO:
· The leader in the CEE region in the B2B embedded finance segment - €109 million in turnover in 2023 (+49 % y/y). Maintains solid balance sheet of over €75 million, with over €25 million in equity.
· Has access to both private and public debt markets, including the Warsaw Stock Exchange and blue-chip financial institutions (such as the largest commercial banks in Poland - mBank of the Commerzbank Group and the EBRD).
· Has successfully issued bonds with a total value of €112 million. These were public issues based on prospectuses approved by the national regulator, which subjected the company to strict regulations and high standards. Investors appreciate PragmaGO's performance, growth dynamics and innovation.
About Telecredit IFN S.A Omnicredit:
· Company providing non-bank financing to SMEs through digital factoring and credit products.
· At the end of 2023, its receivables portfolio amounted to €6.4 million (+ 54% y/y) and its turnover to €40 million (+ 40% y/y). In the first half of 2024, has already achieved a turnover of €28.5 million (+90% y/y) and its receivables portfolio has increased to €8.2 million.
· The company attracts both clients not served by traditional Romanian banks and those who have access to bank financing but choose to work with the company because of its multi-product offering, flexibility, simplicity of solutions and focus on customer needs.
About Reconstruction Capital II Limited (“RC2”)
· RC2 is a closed-end investment company which, apart from an 85% shareholding in Telecredit S.A., has two other main investments: Policolor S.A., a leading producer of paints and chemicals with manufacturing plants in Romania and Bulgaria, and Mamaia Resort Hotels SRL, a 300-room hotel in Mamaia, Romania’s premium Black Sea resort.
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