Syntaxis backs Polish travel agent

The CEE-focused investor's fund II is almost three-quarters invested after providing €11.5m of mezzanine finance and equity to eSky

Syntaxis Capital has made an €11.5 million mezzanine and equity investment in eSKY, the largest online travel agent in the region, according to a statement.

The Vienna-based lender , one of a handful of mezzanine finance providers in Central Europe, provided €3.7 million in equity for a 6 percent minority stake, Aleksander Majewski, investment director at the firm told Private Debt Investor. The remaining €7.8 million is comprised of a mezzanine loan secured on the company.

The loan has a 7-year term and a bullet maturity, carrying cash pay and PIK (payment-in-kind) elements. Leverage is “at moderate levels” below 4 times, Majewski explained.

Founded in Poland in 2004, eSky provides travel services, particularly  around airline ticket sales. Syntaxis said the online search engine company had achieved market-leading positions in Bulgaria and Romania and has recently branched out to Brazil, where it is rated amongst the top three online travel agents.
Proceeds from the loan will be used to support the expansion of the company through add-ons in Europe and Latin America, while the equity investment was used to buy out a minority investor.

The transaction is the sixth deal made from the Syntaxis Mezzanine Fund II. The fund is almost three-quarters invested, contingent on a seventh deal  to be completed with another Poland-based company in the coming weeks. It is expected to be fully invested by 2015. A review on the creation of a third fund is likely after the summer, Majewski indicated.

“Management has been very much focused on origination… but of course given where we will be by the end of the summer, we will look at the strategy for doing something new,” Majewski said, adding that the firm would “stay in the credit space doing alternative debt”.

Majewski said that Syntaxis had observed a pick-up in mid-market deal activity in the region across all industries since mid-2013, particularly in Poland and to the south and east of Central Europe.
Mid-market companies that have weathered the storm of the financial crisis and grown market share are “looking to monetise”, he said, while a shortage of lending options and “a massive pick-up in the number of advisors in the region, especially in Warsaw, Istanbul and Romania” has translated into “a massive pick-up in mid-market opportunities”.

“If you look at the Central Europe fund space, which make investment sizes in the €7 to €20 million range, there are not many funds, especially equity funds,” Majewski said.

Other debt fund managers that operate in the area include Darby Private Equity and Mezzanine Management Central Europe.

Syntaxis also has offices in Warsaw, Poland, where many of its deals are done. Last year, it set up a new office in Istanbul, Turkey. The firm hopes to do its first transaction in the country shortly.