Award-winning and fast growing digital marketing services and media group

Brief profile

Company data

Company history

Primavera Digital Group is a story of true European entrepreneurship. Pietro Ranieri was successfully running Ranieri Agency with five operating units in the UK, Germany, and France, looking for further expansion and looking to boost the digital element in the agency’s service portfolio.

Raluca Mateiu was the CEO of Internet Corp, the digital powerhouse in Romania, which had just become de-invested from a fund, looking for new growth routes outside the home market. Internet Corp at that time, was about to put “IC_Events” to market, a digital events and client engagement platform developed by themselves.

Via his vast network, Aaron Michelin, a renowned Finnish investor, was the connector of the two. All together, they hired Bernhard Hafenscher, an Austrian start-up entrepreneur and former Red Bull executive, to develop the growth strategy for a merged approach, which led to the founding of Primavera Digital Group in 2020.

Within PDG, Ranieri Agency takes the role of the client facing unit. Internet Corp is the delivery engine for creative services, video productions and software development (in addition to holding a leading position on their home market and that way generating substantial revenue and margin for the group).

On the PDG group level, CEO Bernhard Hafenscher oversees operations, marketing, business development and HR, that way making sure that the operating units can fully concentrate on client business and revenue growth.

Service offerings

PDG service lines provide essential support for any project related to product innovation and digital marketing – regardless of their maturity or how far they have come.

Awards & press

The business model

The management

Company structure

Primavera Digital Group is a limited liability company (“Oy”) registered in Finland. It has 100% ownership of Internet Corp, based in Bucharest (RO) and Ranieri Agency, based in London (UK). Ranieri Agency operates on three more locations with companies that it has 100% ownership in respectively.

On the group level within Primavera Digital Group, the following functions are set up: group marketing, group HR, operations, finance, and group business development. These functions are operated for the subsidiaries, charging a management fee to keep a neutral balance on the group level.

Profits are generated in the subsidiaries. The use of profits is subject to the performance, the cash needs, and the investment plans of each subsidiary, as well as tax aspects. With that in mind, it may be assumed as a rule that 50% of profits are taken to the group level.

Distribution of the company shares

Corporatum

Aaron Michelin directly holds 42% of Primavera Digital Group Oy and has been a serial entrepreneur for over 20 years through his fully owned company Corporatum Oy.

Corporatum’s current portfolio companies have an accumulated annual revenue of over € 100 million and a total workforce of more than 2000 staff. Among them is Enersense Group which was listed to Nasdaq First North in Helsinki in April 2018.

Aaron is an accredited Business Angel of European Angel Fund and a board member of BioCapital Oy, Biuro Baltic and Aqsens Health Oy, Chairman of Tyson & Blake Ab, and PCBDroid Oy.

For PDG, Aaron brings extensive knowledge in scaling up the profitability of companies to the table as well as the experience to execute the right exit strategy, both in terms of timing and way of execution. With his current and past investments, he has vast experience: trade sales, IPOs as well as technical listings.

PDG further benefits from Aaron’s vast network in Scandinavia and Hungary, opening access to clients, acquisition targets and investors.

Tyson & Blake

Founded by Chris Tornblom, a notable venture investor in several successful enterprises, Tyson & Blake’s purpose is to identify and support visionary founders of growth companies with unique approaches and innovative technologies, including Primavera Digital. Aaron Michelin is also a Director and Investor in Tyson & Blake.

Tyson & Blake and its group of companies are also a source of revenue and lead generation for PDG, providing growth opportunities in other sectors such as energy, fintech, health and medtech. Currently Ranieri Agency is the retained corporate marketing & communications agency for Tyson & Blake. The agency also provides B2B and B2C services for their investment companies including FellowPay, MindBerry and StrongRoom AI.

Use of funds (listed by raised amount)

Events

Marketing Services & PR

Like many others, the comms industry suffered a downturn in 2020, but the latest report across the UK’s 150 biggest PR firms (which Ranieri Agency continues to be recognised as one of) reveals that revenue surged by almost one-fifth last year.

Data from PR Week’s Top 150 UK Consultancies project calculates aggregate revenue among the top 150 agencies at £1.68bn for the calendar year 2021, up 19.2 per cent on the previous year (£1.41bn). This followed a decline of 4.3 per cent in 2020, when the onset of COVID-19 put a halt to budgets and workforces were temporarily reduced.

Growth in 2021 was on a level last seen in the 2000s, when industry growth figures around 20 per cent were the norm for a while, until the 2008 financial crisis caused huge disruption to the business world. PR once again proved its worth during an unprecedented time and embedded itself at the heart of every organisation and their purpose.

Primavera unites top growing markets under one umbrella.

The projected financial figures and explanations on financial planning published here are from company. If you have any questions about financial planning, please feel free to write to us at: service@invesdor.com. We are in contact with the company and will try to clarify any ambiguities for you as quickly as possible.

Numbers are displayed in € and rounded to the nearest thousand

Further explanations regarding the financial figures

Review

2021 numbers are to be understood as pro-forma consolidated, i.e., cumulative figures of Internet Corp and Ranieri Agency, as if they had already been fully integrated into Primavera Digital Group. Whereas integration of Ranieri Agency will be done in 2022 with the consequence being that also this year will be the first year for PDG to financially consolidate.

Forecast

The financial planning is based on the results of previous years and the experience of the managing directors. The calculation was based on a participation by the crowd of € 1.5 million.

Organic growth by expansion of multi-country accounts

First growth driver is organic growth. For Internet Corp, this will come from bringing services provided to the European market. For Ranieri Agency, this will come from an expansion of existing and from winning of new multi-country accounts. For both companies, there will be increased and new revenue streams from digital tools: the client engagement platform “IC.events”, 360° comms dashboard “RA.space” and the influencer tool “TRIX”.

Expansion of offered services with “in-house” agencies reduce external cost

Due to the possibility to offer cross-channel services through the existing agencies, customers may book all desired campaign services, such as video productions, data/analytics, creative design, or bespoke content marketing in their partner agency. Instead of having to outsource these services to other agencies, PDG may cover all desired services with in-house agencies. This saves external costs and provides a one face to the customer strategy which leads to a higher customer satisfaction and re-booking rates.

Cost savings by near-shoring services to Romania

Savings will be achieved by near-shoring services like creative design, software development, video post-production and data analysis to Romania. This will lead to reduced personnel expenses and a substantial gross-profit increase.

This funding round may be followed by one or two similar rounds in 2023 and in 2024.

The payment of dividends in the future has yet to be decided.

Internal IT resources increase development power and operational excellence

Due to internal IT resources, PDG may provide insights to campaigns without external cost. Development power leads to innovative technical dashboard overviews for customers and helps PDG to steer their campaign accordingly without scattering loss.

Furthermore, it helps to merge companies very efficiently and gain operational excellence through tools used in all subsidiaries, which leads to easy communication within the cross-border company and a highly professional project management.

Company valuation

The pre-money valuation of Primavera Digital Group for this funding campaign is 11.34 MEUR. This valuation is based on the forecasted 2022 revenues of the group (12.66 MEUR) by applying a discounted peer group revenue multiple of 1.00x. The peer group consists of ten publicly listed medium and large size corporates, which are active either in the media or marketing communication industries. At year end 2021 the median revenue multiple of this peer group was 1.54x and for the valuation analysis a relatively aggressive discount rate of 35% has been applied. Furthermore, PDG has reduced the valuation by taking into account the net debt position of € 1.3 million.

Exit Scenarios

Text by Invesdor

There are several risk factors involved in making an investment, which can be significant if they materialise. Each risk may have a material effect on PDG's business, results of operations and financial condition and on the PDG's potential ability to achieve its financial objectives.

Risks related to investing include for example, but not limited to:

RISKS RELATED TO THE LEGAL STRUCTURE OF THE SECURITY OR INVESTMENT AND THE SECONDARY MARKET

Shareholders may lose all or part of their invested capital.
Shareholders of the company are equity investors and have no creditor position vis-à-vis the company in the event of insolvency. Shareholders may lose all or part of their invested capital. In the event of insolvency, shareholders only participate in the insolvency assets after the creditors have been satisfied.

The subscription price of the new shares may have been set too high.
The subscription price proposed by the Company is based on the Company's own estimates and was determined based on the enterprise value used for the last capital increase in the Company. The assumptions for the value of the company on which this assessment is based for the capital increases in the company could therefore be incorrect (in the absence of an enterprise value report) or prove to be incorrect in the future due to internal and external factors, so that the issuer's enterprise value would be set too high in this case.

There is no regulated secondary market for the shares and the shares are therefore not publicly tradable.
There is currently no organised secondary market for the issuer's shares. The decision as to whether the issuer's shares will in future be listed on a stock exchange, included in trading on a multilateral trading facility or another system is at the sole discretion of the issuer. Even if the shares are listed on a stock exchange or multilateral trading facility, there may be no significant active trading in the Company's shares. Currently, no listing of the shares on a stock exchange is planned. In addition, there is a risk that the determined value does not correspond to the calculated true value per share.

The value of the Company's shares may fluctuate significantly for other and completely different reasons, in particular as a result of fluctuating actual or forecast results, changed profit forecasts or the non-fulfilment of the profit expectations of securities analysts, changed general economic conditions or even in the event of the realisation of one or more risks.

In the event that the shares are not listed on a stock exchange in the future or are included in trading on a multilateral trading system, shareholders will not have the opportunity to sell the shares via the market and will have to look for other disposal options on their own. This can be time consuming and costly. In addition, there is then no reference price formed via the market at which transactions can be made with the shares. Any suspension or interruption of trading, in the case of public tradability of the shares, may also have a negative impact on the tradability of the Company's shares and thus on the price of the shares.

The transferability of the shares is limited and the pledging and/or other encumbrance requires approval.
The shares may only be transferred to natural or legal persons who have joined the Minority Shareholder Agreement of the issuer valid at the time of the transfer. In accordance with the Minority Sharhoder Agreement, the pledging and/or other encumbrance of the shares requires the approval of the issuer in the form of a Management Board resolution. There is therefore the risk of not being able to sell the shares without the consent of the Management Board, remaining a shareholder of the issuer and thus not being able to generate any proceeds from the sale.

Any future capital increases of the Company may dilute the share of existing shareholders in the Company's share capital and affect the price of the shares.
Should a capital increase of the company be carried out without granting or exercising subscription rights by the shareholders, this may lead to a dilution of the shareholders' shares. Such capital increases may affect the value of the shares and, in the event of an exclusion of subscription rights, dilute the share of existing shareholders in the Company's share capital.

Obligations of shareholders in the event of exit may lead to an obligation to carry the shares.
Under the terms of the Minority Shareholder Agreement, in the event of a transfer of all or substantially all of the shares, a sale of all or substantially all of the Company's assets, a merger, restructuring or other transaction in which all existing shareholders will hold less than 50% of the Company's shares after the Transaction or, in the event of the listing of the Issuer's shares in a recognized  Exchange ("Exit") to take all necessary and appropriate actions to enable the implementation or completion of the exit. This obligation may also include the obligation to transfer the shares at a price not to be determined by the shareholder himself. In such a case, the shares of all shareholders are transferred on equal terms.

RISKS INHERENT IN SOCIETY OR ITS INDUSTRY

Entrepreneurial risk.
The shares are an entrepreneurial investment. The investor participates in the issuer's entrepreneurial business risk with his paid-in capital. Statements and assessments of future business development may be or become inaccurate. Economic success depends on many influencing factors, in particular the development of the respective market and circumstances that the issuer cannot or only partially influence.

Risks relating to the Company and its shareholder structure.
The capital increase will be carried out by issuing up to 1,578,948 new shares (no-par value shares). The existing shareholders hold 10,000,000 no-par value shares. The voting rights of shareholders depend on the number of no-par value shares. Accordingly, one vote per share is due. The issuer's dividend policy provides for no distributions to shareholders at least until the end of the 2023 financial year and for retaining any profits in order to increase the value of the company through further investments in the market and in new products. A plan regarding the company's dividend policy for the years after 2023 is not yet available. In the case of future, planned distributions to the shareholders of the company, the de facto financial situation may mean that there could be no distribution of dividends to shareholders in these financial years.

Risks related to the company's business model.
The company is a pure holding company. Revenues of the company are generated exclusively and only on the basis of distributions from the subsidiaries to the issuer. These are provided in the form of turnover-dependent, annual management fees. If a subsidiary shows operating losses or other economic reasons, the issuer may temporarily suspend the collection of management fees. Further revenues may result from interest income from the issuer's internal loans to the subsidiaries.

Risks related to the business model of the Company's subsidiaries.
As a holding company, the issuer is dependent on the business development of its subsidiaries. The business activities of the subsidiaries extend to services in the fields of digital marketing, digital media, public relations and public relations.

Risks due to the pandemic.
So far, the corona pandemic has not noticeably affected the development of the market for advertising and market communication. However, the future impact of the corona pandemic is difficult to assess.

Personnel risks.
There is a risk that Primavera Digital Group Oy will not be able to retain or hire sufficiently qualified employees in the necessary number to implement the business strategy.  This applies in particular to employees from the areas of IT (software developer) and online marketing. Due to the loss of employees with corresponding key qualifications, there is a risk that expertise in the developed software and in the field of online marketing or expertise for the further development and maintenance of the software will no longer be available. This could lead, at least temporarily, to difficulties in maintaining the provision of services and the level of performance.

Risks in the development of new software.
When developing new software, misjudgments can occur. In particular, there is a risk that the specified range of functions of the newly developed software does not  correspond to the market requirements and/or that the chosen pricing model does not correspond to the prices of competing offers

Risks related to existing and new competitors.
If Primavera Digital Group Oy fails to compete with existing and potential new competitors or to respond to changes in the competitive environment, this may have a negative impact on Primavera Digital Group Oy's revenues, profitability   and reduce Primavera Digital Group Oy's customer base.

Risks related to potential litigation.
There are currently no legal proceedings against Primavera Digital Group Oy. However, there is always a risk that Primavera Digital Group Oy will be sued. This could lead to high procedural and legal costs that would adversely affect Primavera Digital Group Oy's financial situation.

RISKS RELATED TO THE MARKET ENVIRONMENT AND REGULATORY FRAMEWORK 

Decisive factors for the economic development of Primavera Digital Group Oy with its business activities just described are the development of the market for advertising and market communication. The market can be negatively affected by rising personnel and purchase prices as well as a weak global economy.  Should this market show little or even negative growth, this would lead to cuts in the advertising, marketing and PR budgets of Primavera Digital Group Oy's clients. Macroeconomic changes such as inflation or changes in the regulatory framework can also have a negative impact on the economic development of the issuer and its subsidiaries. Currently, inflation rates in many countries are at record levels, which could lead to an increase in cost pressure and correspondingly to cuts in the advertising, marketing and PR budgets of Primavera Digital Group Oy's customers.

RISK RELATED TO THE POSITION OF THE INVESTOR IN THE EVENT OF INSOLVENCY

Total loss risk.
In the event of insolvency, the shareholders are only satisfied after all creditors have been satisfied from any remaining assets. The shareholders thus bear the full entrepreneurial risk of the company. There is therefore a risk of partial or total loss of the capital invested.

The purchase of the security does not result in any obligation to make additional contributions.

RISK RELATED TO THE FINANCIAL SITUATION OF THE ISSUER

According to the preliminary financial statements for 2021, the issuer has no negative equity.

According to the preliminary annual financial statements for 2021, the issuer has a balance sheet loss of EUR 164,110.80. The annual financial statements prepared for the 2021 financial year have been prepared by the issuer and have not yet been audited.

No insolvency proceedings have been opened against the issuer in the past three years prior to the issue.

The risks listed above are not the only risk factors affecting operations of the company. Also other risks and uncertainty factors that the company currently does not identify or currently considers to be irrelevant may have an integral effect on the business operations, business result, and financial standing of the company.

Notice:

In this update section you will find, among other things, answers to investor questions that reach us. The answers shown originate from the respective entrepreneur and are therefore marked accordingly. Invesdor does not undertake any separate verification of the information received after the start of the financing phase.

If you have any questions about the company, send them directly to us at service@invesdor.com.

UPDATE on 30.06.2022: Prolongation of the funding round

The Board of Directors decided to prolong the subscription period until July 31st 2022.

UPDATE on 23.06.2022: Investor FAQ

Investor question: Could you please provide revenue, profit progress and asset details of subsidiaries? Holding company PDG information is necessary but not giving any information about business figures.

UPDATE on 22.06.2022: Webinar with the management

On 21.06.2022 you could ask your questions about PDG live in the webinar to the CEO of the company and the integrated agencies Ranieri Agency and Internet Corp. If you missed it, you can watch the recording again here.

Here, after a short round of introductions by Bernhard Hafenscher, Petro Ranieri and Raluca Mateiu, the following questions were answered, among others:

• What is the business model of Ranieri Agency and Internet Corp?
• What is the expansion strategy?
• How do you enter into a client relationship and how do you develop a client relationship?
• What are the growth plans? Are there details from the past?

The webinar was held in English. 

UPDATE on 09.06.2022: An investor was critical and asked whether the CEO of Primavera himself would invest in a similar situation - you can read the response here

Let us assume you have similar background information and the chance to invest in an IT Service Provider, for example. The valuation and business are more or less comparable to PDG despite being slightly different and likely a bit of an unknown business area for you. With similar background information that is provided on Invesdor materials, would you invest 1-3% of your net worth? 

Remember, you don't know the people behind the business, the only historical information about the business is last year's revenue and relatively low profitability. No asset, revenue or profit information on the underlying business are available, just a newly set up holding company. And estimated revenue and profitability are growing without any provided basis for the growth. 

Would you invest, and on what basis?

ANSWER BHA> I’ve founded four startups, of which only one failed in 2004 (whereby nobody lost money). I helped build Red Bull’s media business and my last project there generated close to EUR 100m in revenue. This is my first scale-up and the private money I’ve put in totals more than all my previous start-ups combined. So why did I do this:

• My co-investors know European M&A/VC markets better than anyone else. I completely trust their judgement on where we need to take PDG to do a great exit.
• Pietro Ranieri, CEO and founder of Ranieri Agency and Raluca Mateiu, CEO of Internet Corp are among the most committed senior executives I’ve ever met.
• I focused on the 2019/20 numbers of the two companies, as this is what I find important: how did they manage through the pandemic? There is no harder stress test for the health of a business.
• Both companies are generating good profit and keep growing organically at a rate of 20%. Why is that?
  • Because of long standing client relationships, clients that pay guaranteed retainers every month because they feel well serviced.
  • And also because PDG has an own near-shoring capacity in Romania that allows rapid service development at very low cost – and it works!

And then, how can I express this, there is the ME factor: many of my friends and my wife (20k EUR) invested, because they know me and they believe I can do it. When we started this campaign, I knew that this could be the real challenge: convince investors that you never met and that you will never have the chance to meet of a business model that works, because the people steering it make it work.

In the end, it is up to your judgement.