Romania: Schoenherr advises Reconstruction Capital II Limited on sale of Telecredit to PragmaGO

Schoenherr's services covered the full range of corporate/M&A advice in connection with this private equity transaction, which was signed on 19 September 2024 in Bucharest. Closing is expected in the coming months, subject to Romanian foreign direct investment authority approval, RC2 shareholder approval, and other conditions precedent.

"We are pleased to have advised RC2 on this transaction, which is the private equity fund's second successful exit from a financial services business following the sale of the Top Factoring group in 2017, where we also acted as legal counsel," said partner Mădălina Neagu, who led the Schoenherr team. "We take pride in contributing to the success of this deal by combining our extensive experience in advising on private equity investments and transactions in the financial services sector."

RC2 is a closed-end investment company. Apart from its 85 % stake in Telecredit SA, it holds two other main investments: Policolor S.A., a leading producer of paints and chemicals with manufacturing plants in Romania and Bulgaria, and Mamaia Resort Hotels SRL, a 300-room hotel in Mamaia, Romania's premium Black Sea resort.

PragmaGO provides financing to SMEs in the form of factoring and loans, mainly through embedded finance (BNPL and Merchant Cash Advance), unique services that are directly integrated into the ecosystem of partners (e.g. marketplaces). Romania, with its significant growth potential in the SME financing sector, marks the first step in PragmaGO's international expansion. Over the next three years, the company plans to enter several markets in Eastern and Western Europe.

Omnicredit, which also provides non-bank financing to SMEs, has been growing dynamically for several years. Specialising in digital factoring, Omnicredit's receivables portfolio amounted to EUR 6.4m at the end of 2023.

The Schoenherr team advising RC2 on this transaction was led by Mădălina Neagu (partner) and further included Mihaela Popescu (managing attorney at law).