VENTURE CAPITALISTS WITH A HOME-COURT ADVANTAGE (int'l edition)
How will Polish enterprises combat the onslaught of competition in their market? Ask Jacek Siwicki, 36, and Michal Rusiecki, 33, two of Poland's best-known turnaround experts. Back in 1991, when Poland first began privatizing large enterprises, Siwicki ran the government's program, selling 21 companies in just seven months. Rusiecki, a linguistics professor who didn't want to stand on the sidelines, became a leading member of Siwicki's team. Now, as top managers at U.S.-backed venture-capital firm Enterprise Investors, they target Polish companies they believe can beat American, European, and Asian rivals.
''WALL OF SUPPORT.'' The keys to success, Siwicki says, are controlling costs and managing growth. That's crucial, even though enterprises and their workers are weary of rapid change. Enterprise Investors helped Polish drugmaker Polfa Kutno lift its profits by 49%, to $5.2 million on $54.3 million in sales last year, by restructuring its activities into three separate cost centers. The company's share price has jumped sixfold since it was listed on the Warsaw Stock Exchange in 1995. Now, Polfa Kutno is planning to divest businesses unrelated to pharmaceuticals. And Enterprise, which holds a 49% stake, is advising the company on its search for new drug acquisitions. With Enterprise, says Polfa Chief Executive Wiktor Tomusiak, ''I have a real wall of support behind my back.''
Siwicki and Rusiecki are providing similar advice to a hefty chunk of Polish industry. Enterprise Investors has taken on 15 major turnaround cases-- more than any other venture-capital firm--in industries ranging from aluminum to packaging. Siwicki chairs the supervisory board of seven companies. Rusiecki runs the supervisory boards of Polfa Kutno and three others. Altogether, Enterprise has invested $500 million in Polish companies over the past seven years. It manages the $240 million Polish-American Enterprise Fund, which was created by the U.S. Congress in 1990. And it's investing an additional $260 million from private investors.
As Polish citizens, Siwicki and Rusiecki are arguably more effective than investors parachuting in from New York or London. ''[We] understand the mentality and the legislation. [We] know what's possible here and what foreign investors are looking for,'' Siwicki says. That ability to help local managers understand Western rivals as well as investors could prove vital to creating a vibrant Central Europe Inc.
By Peggy Simpson in Warsaw
Updated June 23, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.