PICTURED: Sergey Kornienko
Exclusive: PV Editor Ian Reynolds-Young meets Uvenco Russia CEO Sergey Kornienko as he steps on to the acquisition trail.
- Uvenco’s pursuit of an entrée into British vending is hotting up.
- Uvenco has grown year-on-year by 40%, every year since it began trading in 2007
- Based in Moscow, the company has premises in 50 Russian cities.
- Tight-lipped on SnackTime, but Uvenco will pursue further acquisitions
- Rules of engagement: Uvenco won’t pay more than three times EBITDA
- UK business owners who daydream about trousering billions of oligarchical roubles are heading for disappointment…
- Man City or Chelski? Sergey’s not saying!
It’s just after 7pm on a bleak, rainy Sunday evening when I sit down with Sergey Kornienko, CEO of Uvenco, Russia, in the deserted bar of a hotel in Wigan. As we break the ice, I ask, ‘why the UK?’ I’m wondering if the owners of Eastern Europe’s largest vending business have seen something from afar that identifies this country as a business opportunity; however before Sergey can respond, a passing colleague interjects: ‘it’s the weather!’ Sergey grabs his iPhone to demonstrate that the current temperature in Moscow is minus 9 centigrade and informs me ‘last week it was minus 21.’ Wigan, in comparison, is positively balmy. Aha…
What’s for sure is that Uvenco’s pursuit of an entrée into British vending is hotting up. In fact, the heat is on; Sergey and his team have just 48 hours in the UK and you get the impression that idle chatting is not on the agenda.
Sergey Kornienko cuts an impressive figure. Tall, powerfully built and with an excellent command of English, he’s been a Uvenco man ‘from Day One’. We return to my original, ‘why the UK?’ question.
‘We see nothing special here’, he says, ‘no miracles, it’s just the business we’re interested in. It’s something we do rather well in Russia’ he adds, with just a grain of understatement: Uvenco has grown year-on-year by 40%, every year since it began trading in 2007. Based in Moscow, the company has premises in 50 Russian cities.
‘The vending industry is not the same in the UK as it is in Russia’, Sergey says. ‘Here, it is fragmented, with many small players. We’ll get in, see the business from the inside and then decide whether or not we can be helpful.
‘Customers expect new machines, they expect touch screens, they expect an engineer to be on site in two hours if a problem needs fixing.’ Sergey Kornienko
‘In Russia, vending is a new industry. It is maybe 12-15 years old, a baby compared to the industry here. It means that all the machines in the field are new and equipped with telemetry. In Russia, vending is an innovative industry. I was surprised when I went to Japan, to see the most experienced country in vending. What I saw was an industry that was quite old, that needed innovation and investment. It’s not like that in Russia. Customers expect new machines, they expect touch screens, they expect an engineer to be on site in two hours if a problem needs fixing. It’s like an industry of the future because we have no baggage.’
I raise the question of SnackTime, but as we reported on 24th January, the Takeover Panel had to act in the interests of an orderly market and therefore make the takeover discussions public knowledge. It means that Sergey’s lips are lawfully sealed. ‘I can’t give you any details on this or I will cross the line and the boys at the Stock Exchange won’t be very happy’, he says.
‘The rules here are much the same as the rules in Russia. When we look at companies in Russia with a view to buying them, we use EBITDA times three to establish the price we ought to pay.’ Sergey Kornienko
Moving on, Sergey is happy to concede that there are other targets in the company’s sights. In fact, he’s emphatic that this is the case and keen to make known the ‘rules of engagement’ that will dictate any takeover activity.
‘The rules here are much the same as the rules in Russia’, he says. ‘When we look at companies in Russia with a view to buying them, we use EBITDA times three to establish the price we ought to pay.’
EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortisation and as its name suggests, it is created by considering a company’s earnings before interest payments, tax, depreciation, and amortization are subtracted for any final accounting of its income and expenses. The EBITDA of a company gives an indication of the current operational profitability of the business.
‘We’re interested in multiples, three times EBITDA, and that’s it.’ Sergey Kornienko
‘We see a lot of companies in the UK that would be interested in doing a deal on that basis and we’ll be approaching a couple of them to begin with,’ Sergey says, and he has a warning for potential suitors: ‘Some people look at Uvenco as ‘The Russians are coming’, and think that we don’t care about multiples, we just care about creating a presence in the UK, but that is not so. We’re interested in multiples, three times EBITDA, and that’s it.’ Any UK business owners who daydream about trousering billions of oligarchical roubles are, it seems, heading for disappointment…
Asked about whether Uvenco plans to sell its machines in the UK, Sergey is diffident. ‘The only thing that will keep us out of the market is the fact that, at the moment, our machines do not dispense tea’, he says.
Uvenco’s production of machines is a thorny issue is some European boardrooms. The rumour is that the Russian giant is wont to play fast and loose with equipment patents, but Sergey is adamant that this is not the case.
‘The marketplace for machine manufacturers is small’, he says, ‘and everybody knows everybody else. We’ve been supplying machines in other European territories for some years now and I think that if there was an issue over patents, it would have emerged by now.’
In fact, Uvenco machines, whilst they are built in Russia, use parts imported from Italian company Componenti, just like Crane and Westomatic, and Sergey says Uvenco ‘entered into an agreement with them that cost us quite a lot of money.’
Again and again, Sergey declares the intention that Uvenco UK will be ‘a national player.’ The question is, why does Uvenco feel it can succeed when the likes of Autobar, Bunzl and Selecta have failed? On several occasions in the recent past, national companies have come to the UK, swallowed up regional distributors in their quest for turnover and market domination and then have fallen by the wayside, or lost a big chunk of their purchases to the much more agile and proficiently run regional operators.
‘We’re not investment bankers, we’re in the business.’ Sergey Kornienko
‘We’re not investment bankers, we’re in the business’, Sergey says. ‘That’s what makes us different.
Whilst the quest to purchase businesses is well under way, with the exception of UK CEO Blair Jenkins, the construction of a UK management team has yet to get off the ground; but Sergey is in no doubt as to the focus of Uvenco UK recruitment. ‘We’ll be looking for operational experts who know how to improve margins and can make tough decisions. We know who to approach, we know how to do a deal but we don’t have the people yet who will work in the business and perform miracles on a daily basis, like raising the EBITDA from 5% to 15%!’
Sergey sees other recruitment opportunities. ‘We may invite people onto the UK board from the AVA or from elsewhere in the business’, he says, ‘we want to show that we can take the businesses we acquire to the next level.’
And with that, the interview draws to a close and Sergey is happy to report that he’s been able to build a little R&R into his whistle-stop schedule. As a boy growing up in Minsk, he was football mad – playing and spectating – and on Monday, he’ll take his seat at the Etihad to witness the Goliath versus Goliath encounter that is Manchester City versus Chelsea. As to which team he’ll be supporting, for the first time in our interview, he is saying nothing…
