INVESTMENT
PERFORMANCE

Krug
Krug d.o.o.

Business Description:
Krug publishes and distributes the leading daily newspaper in Macedonia: Dnevnik. Started in 1992, shortly after Macedonia established its independence, the newspaper has prospered as the country's leading independent source for international, local, and economic news. The current daily circulation is approximately 50,000 newspapers. In addition to the newspaper's strong editorials, the company has established Macedonia's largest privately owned distribution network for print media. Established as the first network of work-for-hire newspaper delivery "boys", the company's distribution channels by-passed state controlled kiosks, a more costly and unreliable sales channel.

Management:
Krug was founded by three journalists with exceptional entrepreneurial drive and foresight. As staff reporters for the state controlled newspaper, the founders appreciated the need for an independently owned and operated newspaper publishing company. The management team, with the help of SEAF, succeeded in building the most profitable, privately held media business in Macedonia.

Investment Thesis:
When SEAF's Macedonian investment fund invested in Krug, the company had an established reputation for quality and independent journalism. SEAF realized that Krug's distribution network could be expanded to provide an opportunity to distribute third-party publications (newspapers and magazines), given that other titles in the market lacked sufficient size to self distribute. Working with the company's senior management, SEAF's equity investment in the business strengthened distribution and facilitated the purchase of capital equipment that improved the profitability of the business. SEAF also assisted the company with its business strategy and financial planning, including a critical decision to raise the prices of its flagship newspaper, and to launch an evening newspaper along with its morning newspaper.

Performance Summary:
The company's fiscal year 2002 revenue and EBITDA were over $5 million and $0.9 million, respectively. After completing a review of Krug's strategic alternatives, SEAF and senior management decided to sell the business to a leading German print media company. The transaction - completed in 2004 - represented for SEAF and Krug's selling shareholders a gain of 9 times SEAF initial investment and an IRR of over 90%.

 

 

INVESTMENT PERFORMANCE

Krug d.o.o.

Business Description:
Krug publishes and distributes the leading daily newspaper in Macedonia: Dnevnik. Started in 1992, shortly after Macedonia established its independence, the newspaper has prospered as the country's leading independent source for international, local, and economic news. The current daily circulation is approximately 50,000 newspapers. In addition to the newspaper's strong editorials, the company has established Macedonia's largest privately owned distribution network for print media. Established as the first network of work-for-hire newspaper delivery "boys", the company's distribution channels by-passed state controlled kiosks, a more costly and unreliable sales channel.

Management:
Krug was founded by three journalists with exceptional entrepreneurial drive and foresight. As staff reporters for the state controlled newspaper, the founders appreciated the need for an independently owned and operated newspaper publishing company. The management team, with the help of SEAF, succeeded in building the most profitable, privately held media business in Macedonia.

Investment Thesis:
When SEAF's Macedonian investment fund invested in Krug, the company had an established reputation for quality and independent journalism. SEAF realized that Krug's distribution network could be expanded to provide an opportunity to distribute third-party publications (newspapers and magazines), given that other titles in the market lacked sufficient size to self distribute. Working with the company's senior management, SEAF's equity investment in the business strengthened distribution and facilitated the purchase of capital equipment that improved the profitability of the business. SEAF also assisted the company with its business strategy and financial planning, including a critical decision to raise the prices of its flagship newspaper, and to launch an evening newspaper along with its morning newspaper.

Performance Summary:
The company's fiscal year 2002 revenue and EBITDA were over $5 million and $0.9 million, respectively. After completing a review of Krug's strategic alternatives, SEAF and senior management decided to sell the business to a leading German print media company. The transaction - completed in 2004 - represented for SEAF and Krug's selling shareholders a gain of 9 times SEAF initial investment and an IRR of over 90%.