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CEE Equity Partners' GC on the Fund's First Investment in Hungary

CEE Equity Partners GC on The Fund's First Investment in Hungary


In December 2014 CEE Equity Partners Limited acquired  a majority stake in BKF University of Applied Sciences, a private higher education business in Hungary.

White & Case advised them in the transaction. The White & Case team in Budapest that advised CEEEP was led by Partner Edward Keller and included Partner Rob Irving and Associates Zita Albert, Balazs Varszeghi, and Akos Mates-Lanyi.

We reached out to Judith Gliniecki, the General Counsel at CEE Equity Partners, with several questions about the deal.


Can you explain how this acquisition fits into CEE Equity Partners' overall strategy for the region?

J.G.: The China-CEE Fund has a mandate to invest in 16 Central and Eastern European countries. Our goal is to invest in each of these countries. We are happy that we managed to invest in two countries – Poland and Hungary – in the Fund’s first year. We are looking at various opportunities in the CEE region and hope to invest in more countries in the Fund’s second year.


White & Case’s Edward Keller described the deal as “the first sizable private equity investment in a higher education institution in the region.” Did the nature of the institution involve any unexpected challenges or unusual elements in structuring the deal?

J.G.: We did not encounter any unexpected challenges of a legal nature merely due to the nature of the institution. As this was a somewhat unusual investment, we decided early one that we would need to do a more thorough due diligence to understand the market better, and we followed through on this.

From an in-house perspective, one of my biggest head-aches was dealing with Hungarian KYC requirements. I’m used to the usual requests for identity cards or passports and trade registry excerpts for the Fund subsidiary. However, Hungarian banks and tax advisors have taken requests to new levels. One particularly harrowing moment involved a request from a bank that decided days before the planned closing that the Hong Kong registry extract for a subsidiary of the  China Exim Bank (our main investor) was not sufficient to prove that China Exim Bank was the shareholder of this entity. And, by the way, we would need to provide sworn Hungarian translations of these Chinese documents. 

Edward and his team were very helpful in working with us to figure out what would be acceptable to the Hungarian bank. I was glad to be working with a firm with an extensive network at this crucial moment. We managed to close as planned.


Why did you choose White & Case as external counsel on the matter?

J.G.: It may sound old-fashioned, but when choosing external counsel, I try to determine whether I will work well with a particular lawyer. The firm is a good starting point, but service levels and expectations can differ even within firms with top-notch reputations.  When the rubber meets the road, it’s a person that I will call, not a firm.

White & Case had done some preliminary work for CEE Equity before I came on board. I appreciated that Rob Irving took the time to come to Warsaw to meet with me to discuss feedback on these preliminary matters. Rob then introduced me to Edward, who showed that he was willing to work with us to provide a fee budget that met our requirements. The rest is history.


How would you describe/define your relationship and communication with them? What roles were they assigned, and which did you keep in-house?

J.G.: In working with external counsel, I try to keep them focused on substantive work that has a real value to us. Most importantly, I try to scope matters effectively. I like to have a strategy session at the beginning of each matter to discuss what is important from a business perspective. As I was in private practice until joining CEE Equity, I think that I am well-placed to work with our external counsel to deliver legal services that my business team needs. In discussing budgets, for example, I particularly like to have a longer discussion around due diligence—to focus on those areas in which a potential risk is most likely to be discovered, and not to waste time and money on those areas in which the potential to uncover a significant legal risk is remote.

As I have not done many deals in Hungary, I had to lean on Edward and his team to explain some Hungarian-specific issues to make sure that I understood the legal implications and risks when we needed to make the business call. 

Finally, I try to take care of internal matters myself. There is no sense in paying external lawyers to help us get our ducks in a row, to get internal approvals or to provide corporate documents or other Fund deliverables.


The China Exim Bank and the Hungarian Exim Bank are the two largest investors in CEEEP. Is that why the first non-Poland deal was in Hungary?

J.G.: Our first non-Polish deal was in Hungary because we found a good opportunity. However, it is no secret that we are particularly keen to find other good opportunities in Hungary because the Hungarian Exim Bank is one of our investors.

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