• East Capital Explorer has decided to invest a total of approximately EUR 10m
(corresponding to approximately SEK 100m) in the fast growing unlisted Russian
fashion retailer MFG (OAO Melon Fashion Group)
• The investment in MFG is East Capital Explorer's first direct investment and
provides exposure to the attractive retail and consumer goods sector in Russia
Gert Tiivas, CEO East Capital Explorer says: “Behind the turbulence on global
financial markets we see many dynamic Eastern European companies with strong
track records, sound strategies and excellent growth prospects - MFG is
certainly one of them. The long term domestic consumption story in Russia
continues and this investment in MFG fits very well with our strategy to
increase East Capital Explorer's exposure to retail and consumer related
sectors.”
Mikhail Urzhumtsev, CEO of MFG says: “MFG has grown from a small sewing company
to a large Russian fashion retailer. I am pleased that both our existing core
shareholders and East Capital Explorer are committing capital to the future
growth of our company. In current markets this is a strong vote of confidence
for our company and strategy.”
Russian MFG has exhibited strong development in recent years and is now
positioned for continued profitable growth. MFG currently operates a total of
147 stores through two main retail chain concepts: Zarina and befree. While
Zarina appeals to the classic woman aged 35-45, befree has a strong position in
trendier fashion for women aged 20+.
The Russian fashion market, which is currently highly fragmented, is forecasted
to grow at an average of 12% per year over the next 5 years. The market
development and increasing consumer demand will continue to create interesting
opportunities for MFG both in terms of organic growth through new stores and
acquisitions of other fashion retail concepts.
East Capital Explorer's investment will comprise both existing shares as well
as new shares in a new share issue which is expected to be completed before
year-end 2008. The purpose of the share issue is to further strengthen MFG's
position for future growth through expansion of existing and new fashion retail
concepts as well as acquisitions. Following the new share issue, East Capital
Explorer will hold 16% of the shares in MFG. The total estimated value of East
Capital Explorer's investment is approximately EUR 10m*.
MFG is an unlisted company with a strong shareholder base that contributes with
both entrepreneurial skills and solid financial backing. These include SMApS,
controlled by the Kellermann family of fashion entrepreneurs, holding 37%;
Swedfund, the investment fund of the Swedish government, holding 14.8% and the
East Capital Group holding 11.6% of the shares (all numbers following the new
share issue). East Capital has been investing in MFG since 2002 and is
represented on the company's Board. Company management and a number of the
employees also hold a significant part of the shares.
About MFG:
MFG's vision is to be one of Russia's leading fashion groups. The company has a
strong management team that has grown the company from 14 stores in 2003 to a
total of 147 stores in September 2008, half of which are located in St.
Petersburg and Moscow. Earlier this year, a smaller retail concept was
acquired, which will add another 19 stores to the group. In 2007, MFG's total
turnover amounted to EUR 40m and the EBITDA-margin was 8%. Total forecasted
turnover for 2008 is approximately EUR 60m. 90% is manufactured by suppliers
while 10% is produced in the company's own manufacturing facility in Ostrov,
Pskov region.
For further information on MFG please see: http://melonfashion.ru/eng/,
www.zarina.ru and www.befree.ru
Contact information:
Gert Tiivas, CEO East Capital Explorer +46 8 505 977 30
Louise Hedberg, Head of Communications/IR East Capital Explorer +46 8 505 977 20
Financial reporting calendar - East Capital Explorer:
• Monthly Net Asset Value report on the fifth working day after the end of each
month
• Interim report 1 January - 30 September 2008 on 13 November 2008
• Year-end report 2009 on 18 February 2009
About East Capital Explorer │ East Capital Explorer AB is a Swedish company,
created with the specific aim of bringing unique investment opportunities in
Eastern Europe to a broader investor base. The company invests mainly in East
Capital's private equity and semi-public equity funds that provide exposure to
companies not otherwise accessible via the local stock exchanges in Eastern
Europe. East Capital Explorer targets fast growing sectors such as the power
utilities, financial, retail and consumer goods and real estate sectors. East
Capital Explorer has appointed East Capital to manage its investment
activities. Since 9 November 2007, East Capital Explorer is listed on NASDAQ
OMX Stockholm, Mid Cap.
This information is disclosed in accordance with the Securities Markets Act,
the Financial Instruments Trading Act or demands made in the exchange rules.
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* Calculated using RUB/EUR exchange rate of 34.35 on 27 October 2008.
