MCI Capital CEO sees revival in M&A market, bets on AI solutions (interview)

"The revival in the M&A market is coming, but about a year later than we expected. The second half of 2024 did not turn out to be as active in the European market," MCI Capital's CEO Tomasz Czechowicz told an interview with PAP Biznes.

According to the CEO, the recovery can be seen, for example, in transactions involving private equity funds.

"You cannot say that we have stagnation in M&A market or exit market. I say this from our sector’s perspective, which is generally technology, software and e-commerce," CEO said.

MCI Capital in the last two years conducted 8 transactions. MCI's direct investments total PLN 600 million (EUR 140 mln).

"We continue to look for new investments and we hope to conduct 2-3 new transactions this year, either directly or as acquisitions from portfolio projects," Czechowicz said.

The CEO maintains interest in the medical segment.

"We are active, we participate in talks, and we reviewed quite a few potential investments. This is the fourth important sector for us," he added.

MCI is the largest new technology fund in Central Europe. Its gross assets under management reach PLN 2.7 billion (EUR 650 million).

Czechowicz said MCI expects about PLN 1 billion (EUR 235.5 mln) worth of exits in the 2025-2027 period.

MCI Capital currently has 11 entities in its portfolio. They generated a total of more than PLN 500 million (EUR 120 mln) in EBITDA in 2024. The companies' plans for this year are to increase EBITDA by about 15-20 percent.

MCI Capital currently has no plans to exit its companies through the stock market, but CEO Czechowicz is seeing an increase in the number of IPOs and increased valuations of companies on the public market.

The CEO added that MCI Capital will be observing major company IPOs this year not only in Poland, but also on European stock exchanges, including those of technology companies.

MCI Capital does not rule out a stock market exit path for several of its portfolio companies, including Morele, Papaya Global, eSky and PHH Group.

According to Czechowicz, exits from two portfolio companies are possible this year. The sale of shares in Gett should generate about PLN 90 million (EUR 21.2 mln) in proceeds for MCI.EV and MCI.TV. The sale of IAI Group, the market leader in e-commerce stores in CEE, has also been prepared.

The main driver for the development of the portfolio of companies owned by MCI Capital is to be based on solutions related to artificial intelligence.

"We see the transformation of AI, the implementation of AI in various areas of the company's operations, as the most significant element of value creation in the portfolio," Czechowicz said.

"However, our model of building the value of our companies through professionalisation, market consolidation, international expansion does not change, this has always been the case," he added.

The CEO pointed out that of course AI creates threats to some business models, but companies in such areas are not in the company's portfolio.

"Now, when we buy a business, we look if it does not collide with AI, this is important, because just as companies used to collide with the Internet, now they can collide with AI," Tomasz Czechowicz stressed.

"We will look through the prism of just the impact of AI and digitisation. We can analyse any industry, at the moment we have in our portfolio: food, insurance, travel, sports, electronics, energy is also interesting to us, but we will always look for the technology component in energy transformation, or the AI component in digital technology," he added.

Tomasz Czechowicz mentioned that MCI Capital is trying to build regional champions out of its portfolio companies, whether on a Central and Eastern European scale or on a European scale. As he stressed, it does not specialise in building global champions, they are generally built by venture capital funds and require a lot more money.

According to the CEO of MCI Capital, the private equity industry in Poland needs regulatory changes. In his opinion, the private market development strategy announced by Finance Minister Andrzej Domanski is needed.

"Today there are fewer large private equity funds than 10 years ago. MCI grew because we had a different business model, but from the perspective of the entire private equity industry, it is important that a private market development strategy emerges," he said.

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