On October 20, 2021, CEE Legal Matters reported that Kinstellar had advised 4i Capital Partners on its sale of Ukrainian online payment platform Portmone to Kazakhstan’s financial technology firm Kaspi.kz subsidiary Kaspi Pay. CEE In-House Matters spoke with Konstantin Vasiuk, Investment Manager at 4i Capital Partners, to learn more about the deal.
CEEIHM: Let's start with a quick overview of 4i Capital Partners.
Vasiuk: 4i Capital Partners is a private equity investment firm managing investments in Ukraine, Belarus, and Moldova.
The company’s principals have been making buyouts, expansions, restructurings, and realizations in the region for nearly two decades. 4i Capital Partners was founded with the aim to capitalize on the opportunities resulting from the fundamental overhaul of Ukraine, one of the largest European countries.
The investment team currently manages Europe Virgin Fund, with instrumental support from international finance institutions such as the European Bank for Reconstruction and Development, the Black Sea Trade and Development Bank, or the Swiss Investment Fund for Emerging Markets.
CEEIHM: What about the target in this deal – Portmone – what is its history and what was the rationale behind the sale?
Vasiuk: We invested in Portmone in 2013. At the time, the company was a leading online payments platform and a pioneer of card-to-card transfers in Ukraine. Back in 2013, Portmone’s founders felt that they might need a partner with fresh ideas and capabilities to give a new impulse to the business. Our fund acquired a majority stake in the company and it was the start of a new journey for us and Portmone.
Over the next seven years, the business increased manifold. Working closely with founders, we brought new managerial talent aboard, who drove changes and successfully grew the business. Today, the company covers a wide range of regular payments such as mobile top-ups, utilities, internet, insurance, tax payments, and provides acquiring services for e-commerce.
Of course, we planned to exit the company at some point in the future - as it is an ultimate goal of every private equity investment. Though in the case of Portmone, we felt that we might need a couple more years to develop the company. We saw that we might still add value to the business.
So at the time Kaspi.kz approached us, we were not planning to sell. Nevertheless, in the course of our dialog with Kaspi, we understood that they might be the right investor to further develop this story and take the company to a whole new level.
CEEIHM: And what do you believe made it particularly attractive for the buyer?
Vasiuk: Kaspi.kz is a star in fin-tech and marketplaces. They were historically strong in payments, that is why entering a new market through the acquisition of a payment platform was a logical move. Portmone was a natural fit for them with a sizable base of loyal clients and a wide pool of merchants and billers.
CEEIHM: What would you say were the most complex aspects of this deal?
Vasiuk: Overall, such deals are rather complex processes with a lot of moving parts. The deal was a bit stretched in time as it required clearance of two regulators in Ukraine - the Antimonopoly Committee and the National Bank of Ukraine. It was very important to see the whole picture, working on a deal structure and documentation. And we were thankful to the Kinstellar team who helped us a lot with this.
CEEIHM: And why did you choose Kinstellar as your counsel on the deal?
Vasiuk: We try to work with legal advisors, who we already know from our previous deals and who proved themselves in action. Illya Muchnyk, who was the leader of Kinstellar’s legal team on this engagement, also had advised the fund on the acquisition back in 2013. So in terms of legal support, Illya provided full-cycle advice from our initial investment in 2013 to the exit in 2021.
Illya and the team understand the specifics of private equity well. They are well versed in all the aspects of M&A transactions and very attentive to the details. Their experience in M&A deals is indeed very helpful in negotiating documentation and the overall process.