Private equity funds rarely look at investments through the Bulgarian Stock Exchange. Earlier this year, BlackPeak Capital made such a debut by participating in the capital increase of Bianor Holding, a public company. The local private equity investor acquired shares worth 13.3 million levs (6.65 million euro) in the technology holding, representing a stake of nearly a 30%.
Looking for IT
BlackPeak Capital has already invested one fund worth over 110 million euro in 12 companies and is now seeking investment targets for its second fund, which amounts to 126 million euro. Half of that amount has been already directed towards companies in Bulgaria and the region. "We invest between 5 and 15 million euro per company, mainly in minority stakes," said Rossen Ivanov, managing partner at BlackPeak.
However, for the first time the fund is engaging in an investment in a public company. "Actually, we were not looking to invest in a public company specifically. For a long time we have been seeking a platform to invest in the IT sector", Ivanov explained. In his words, many of the "good Bulgarian companies" offering software as a service have already sold their businesses to international buyers, leaving few opportunities available.
The technology holding
Bianor Holding brings together several technology companies under its umbrella. It was founded in 1998 as Arexus and changed its name to Bianor in 2001. The company was listed on the Bulgarian Stock Exchange (BSE) in 2008. Until September last year its shares were traded on the BSE's alternative segment (BaSe).
The company has evolved over the years, engaging in web design, software services and e-commerce. In 2012 it set up iMediaShare for the development of a mobile multimedia application. In 2013 the subsidiary changed its name to Flips Media and relocated to the USA. Over two years, it raised 4 million dollars in two investment rounds. Later the capital of Flips Media was increased, reducing Bianor's stake to 14%. In 2021 Bianor Holding sold its stake in the streaming service for 7.5 million dollars in a cash-and-stock deal with Thriller Inc.
The other leading business of the holding is Bianor Services, or Bianor Inc, which is an U.S. subsidiary. The company is a service provider to NATO in the field of video and image processing for aerial reconnaissance.
Four mergers
In 2023 Bianor acquired four Bulgarian companies: cloud service provider GoToAdmins Group, analytics company Databreed, and software developers ITIDO Technologies and Bulbera.
"Last year we raised 8 million levs on the stock exchange, which we used for the four acquisitions (the company also borrowed 3.4 million levs from United Bulgarian Bank). Internally, we prefer the term 'mergers', not so much because of what the transactions technically represent, but from a business perspective. The structure is such that the colleagues who built these companies become shareholders in Bianor," Kostadin Yordanov, the holding's founder, explained.
According to Yordanov, the company has the necessary funds to continue with acquisitions. "We've just completed a capital increase of 20 million levs, with BlackPeak subscribing about two-thirds. So at the moment we have the necessary capital. Of course, it can be combined with debt financing for larger and more ambitious ideas," said Yordanov but declined to name potential targets. The first step however will be to unite the existing companies under one brand. No cuts in the current total staff of around 120 employees across all companies are planned.
Bianor's valuation
Analysts told the Capital Weekly that they face problems with the valuation of Bianor Holding. The numerous acquisitions confuse specialists, making it difficult to assess the current size of the business. The company's market capitalization stands at 68 million levs after the capital increase, with shares having appreciated by 64% over the past 12 months.
According to the holding's latest consolidated report, revenues amounted to 9.5 million levs in 2023, compared to 5 million levs in 2022. With the new acquisitions, the consolidated revenues total 18 million levs, in Yordanov's words.
"In fact, we fundamentally evaluated the company using various methodologies," Rosen Ivanov said. "The market price was not much different from the fundamental valuation. That gave us comfort."
Private equity funds rarely look at investments through the Bulgarian Stock Exchange. Earlier this year, BlackPeak Capital made such a debut by participating in the capital increase of Bianor Holding, a public company. The local private equity investor acquired shares worth 13.3 million levs (6.65 million euro) in the technology holding, representing a stake of nearly a 30%.
