Denis Sabolović, Partner at Invera: We Usually Expect Double-Digit Growth Rates for Our Investments

Invera Equity Partners, a fund for managing alternative investment funds, was founded in the midst of the pandemic, in March 2020, and already has an interesting investment portfolio. Their latest investment is nine million euros in Entrio, a platform for selling tickets for concerts, festivals, and events, and they have also invested in Metamorfoza, a company that represents the largest privately owned museum chain in the world, Museum of Illusions. Their portfolio also includes Marles, a Slovenian manufacturer of wooden modular buildings, as well as Kompare.hr, a Croatian platform for comparing and purchasing insurance and telecommunications services, and they are still looking for entrepreneurs they are willing to support if they have healthy finances and growth, emphasizes partner in the fund Denis Sabolović.

What are the key factors you consider when analyzing potential investment opportunities for the fund you are currently working in?

– We focus on factors such as the business model, i.e., understanding how the business operates, what problems it solves for end customers, how it solves them, how homogeneous or unique the product or service is, what the market and competitive environment look like, and what the potentials for further growth and development are. Based on experience, we can already conduct an initial analysis of essential factors within the internal team since we have thoroughly analyzed a large number of companies in various industries, which allows us to quickly focus on the right opportunities.

What is the next step after that diagnosis?

– In the next phase of the process, we approach industry experts from around the world, most often from America and Western Europe, with whom we conduct an in-depth analysis of the market situation, analyze the business models of the most successful players in the market, and conduct detailed interviews and surveys with customers and suppliers, which gives us insight into specific growth and development potentials for products, services, and markets. After that, we conduct a detailed deep dive into the business, focusing on almost all functional aspects of the company, from production, marketing, sales, procurement, processes, human resources, and organizational design, data and technology, to acquisitions and synergy effects. Our process is quite detailed, and we are meticulous in making decisions about which companies and industries we will invest in. Throughout the entire process, the focus is on fully understanding the internal and external factors that represent growth potential and how to realize that potential, as well as understanding the level of risk that the investment carries and how to minimize it.

What results do you expect from the companies you invest in? What level of growth is satisfactory?

– Our process of analyzing investment opportunities is quite extensive. When creating a return plan, i.e., analyzing the profitability of the investment, we strive to quantify each of the activities we have identified as potential to gain detailed insight into possible growth rates. Additionally, we conduct several series of simulations to understand the impact of each assumption on profitability and returns, as well as the level of risk associated with them. When we obtain the final financial model, which we adopt as the investment scenario, it usually involves double-digit growth rates. Current results show that we often exceed initial assumptions, meaning we manage to grow at higher rates than planned, which is an indicator of the quality of our investment potential assessment process, as well as adequate attention and support after acquisition.

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