Profi Romania Grocery

completed

The proposed investment consists of an A loan of up to €50 million to Profi Rom Food S.R.L. (“Profi” or the “company”), the largest food retailer in Romania based on the number of stores. Profi is owned by Mid Europa Partners (the “sponsor”), a private equity firm. The proposed investment would allow the company to (i) further expand its reach in the country by opening 800 new stores by 2027 including acquisition of existing stores and greenfield developments; and (ii) partially refinancing its existing debt during the next three-year period (the “project”). Profi (https://www.profi.ro/) was established in 1979 in Romania, and has a presence in all 41 counties of the country supplying groceries, fruits, vegetables and related household products. As of March 2021, the company has 1,404 stores in 4 formats: -          Profi Supermarket (avg. sales area 400 m2); -          Profi City (avg. sales area 220 m2); -          Profi Loco in rural areas (avg. sales area 220 m2); and -          Profi Mini (avg. sales area 121 m2).  The company sources and carries its own inventory of over 5,400 products and over 1,800 brands. For this purpose, the company has distribution centers (DCs) in 5 major counties of Romania i.e. Cluj, Prahova, Giurgiu, Neamt and Timis. A typical DC has an area of around 40,000 m2, has rack storage space, receiving and dispatch bays.  The company currently leases all the facilities it operates, and all leases are currently valid. The company’s expansion is expected to involve acquiring new stores through mergers and acquisitions of smaller retail stores, leasing of existing buildings deemed suitable to develop retail stores and, to a lesser degree, the development of greenfield sites. If greenfield sites are deemed required, the company will engage a ‘developer’ to develop the stores and will then enter into a lease agreement with the developer. The land for greenfield stores will typically be leased. If any land is required to be acquired for a greenfield site, this will be done via a ‘willing buyer, willing seller’ arrangement.As part of the expansion plan, Profi’s target is to grow through the “Agents” model in which the company has an agreement with a local individual in rural areas to operate the Profi Loco type of store. In this model, Profi is responsible for leasing the space, renovation, design and obtaining all the necessary permits. Agents act as store managers although receive agreed fees for their services rather than a salary. Agents recruit and manage their own staff in accordance with Profi corporate processes.