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Penový raj is a rapidly growing network of self-service car washes in Slovakia and the Czech Republic. It uses a unique product: a patented active foam with the best-in-class washing effect on the market. The company has grown from a single site in 2014 to the current 18 branches on the Slovak and Czech markets. Its growth strategy and modern technologies will make it possible for the company to double the number of branches by 2022.

Expansion to less-developed neighbouring markets is prepared in exclusive cooperation with a renowned European technology producer. Given this, Penový raj will become one of the largest players in Central Europe in terms of the number of branches.

The goal of the growth investment is to kick-start its major expansion phase in cooperation with a financing bank. The rapid return on the investment and stable cash flow profile make it possible for investors to achieve dividends (8-13% p.a.+) that are above the market standard with a balanced risk profile.

The success of the business model is built on the coordination of professional management, modern technology and synergies ensuing from uniform infrastructure. A significant differential and competitive element is the thorough selection of localities for the individual branches, negotiated sufficiently in advance in order to underpin the future position in the given locality.

Penový raj was established in 2014 and grew from its first branch in Levice to become the number two on the market today (15 branches in Slovakia and three in the Czech Republic). Each of the branches offers 3–5 washing boxes and some are supplemented with an automatic car wash (known as tunnels). What makes Penový raj unique and secures the commercial sales of the service are:

Expertise in searching for and negotiating lucrative plots of land (the criteria are: highly frequented and possibility for long-term rental/lease); and

 the most modern technologies on the market.

Thanks to a clear strategy and early entry onto the market, Penový raj has built a unique position and successfully occupied lucrative land in Slovakia and the Czech Republic (including all the land for the planned new branches). Each of its car washes uses the most advanced technology on the market, which provides a perfect cleaning effect while being friendly to the environment and car paintwork (through which it has gained popularity among the drivers of premium brands).

The Penový raj business model was tested by the COVID-19 pandemic, during which it managed to increase sales to €1.6 million (+31% year-on-year) and to open three new branches. Several of the current branches have already “matured” economically and generate the maximum operating profit. This company reinvests into its further growth. By 2022, the number of branches in the Czech Republic and Slovakia is planned to double to a total of 35, while the built infrastructure – land, technology and general financing – represent the commercial maximum for the given markets. The company will achieve further growth in cooperation with a strategic partner, a renowned European technology manufacturer; the plan is to enter less-developed neighbouring markets and to launch the complete digitalisation of the existing network. 

The start of the international expansion is planned for 2022. Penový raj should become the largest network of self-service car washes in the region in terms of the number of branches by 2025.

About the investment opportunity

The company has had an established network of branches and a verified business model since 2014, which is confirmed by the partnership with a leading technology manufacturer.

Sales in 2021 are forecast to reach €2.5 million and operating profit (EBITDA) €0.9 million (EBITDA margin of 35%).

From the expansion using growth capital, sales are forecast to hit €5.3 million by 2023 with gradual profit growth thanks to the rising curve of new branches and subsequent maturing of the new branches.

The target investment of €2 million will be provided in exchange for direct co-ownership of the company.

The expected annual dividend yield paid to co-owners will be at the level of 5–13% p.a. (with a priority dividend for Crowdberry investors in the amount of 5% and the subsequent, already pro-rata dividend) 

The trend in developed regions signals gradual market consolidation – the sale of similar networks abroad achieves high and economically attractive valuations.

The target appreciation is on the level of 3.2x the investment (by 2025 according to the financial model).

Investors have the opportunity to participate in the stable cash flow profile of the company and the increase in value from the construction of new branches (development).

Investment with average risk due to the extensive ownership of tangible assets (technology and contracts for long-term leases of attractive land).

Opportunity

The management of Penový raj is comprised of a professional team with many years of experience in the area of business development, real estate and civil engineering. The man behind the idea and the founder, Lukáš Mucha, studied financial mathematics at Comenius University in Bratislava and he worked for more than 10 years in leading positions in CBA Slovakia, a.s. The experienced team is supplemented by an operations director, construction designers/supervision, and administration employees.

Team

The target group is comprised of all motorists; a car wash service is a basic need and obligation for every driver.

The increasing interest in the use of self-service car washes is driven by the financial affordability and quality of the washing at these stations.

The growing network and existing infrastructure – the unique placement of establishments in well-frequented and accessible localities (the customer goes to wash his car where the car wash is easily accessible and where suitable technology is also available).

The market in Slovakia is fragmented – there are several small local operators (single or 2–3 branches).

Market consolidation is expected (just like previously in Poland and England) – strategic players are buying established and built networks of a certain size.

Following the successful expansion, Penový raj will be one of the largest players in Central Europe in terms of the number of branches and will become an attractive acquisition target in the given segment

Market potential

The product’s unique nature comes from its use of patented technology, which pushes air into the cleansing foam using a built-in compressor, creating an “active foam” with a rich consistency that does not slide off the washed surface after being applied.

The active foam acts on the surface considerably longer and, thanks to high-quality chemicals, has a perfect washing effect (most of the competition still uses obsolete technologies with lower-quality micropowder ingredients with a weaker effect).

Penový raj approaches the environmental aspects of its business extremely responsibly – it exclusively uses modern filtration units (waste water treatment), whose runoff/filtered water is harmless to the environment.

The chemicals used have a protective effect on the vehicle paintwork (which makes it popular among owners of premium car brands).

It supplements the service of traditional car washing with a spectrum of additional services, eg. bactericidal carpet cleaning, devices for drying the vehicle, wringer of chamois leathers, polish for tyres, etc.

The digitalisation and connection of the entire branch network is being launched – mobile app, loyalty programme, dynamic prices, payment terminals and others.

Product

Extensive ownership of tangible assets (technology and contracts for long-term leases of lucrative land) lowers the risk of the overall failure or non-fulfilment of the set growth goals.

The demand for these services is predictable to a high degree – the main risks include weather (fewer cars are washed when it is raining), while measures related to COVID-19 did not affect the segment.

When opening new branches (expansion), the infrastructure is of key importance – the plots of land in Slovakia and the Czech Republic are prepared and contracted for all planned branches.

We do not register any potential technological risks (no significant/revolutionary technological innovations are expected in the near future; Penový raj is currently using the most modern technologies on the market and will continue to build on that advantage).

We perceive the creation of new relevant competition (in the sense of large chains) to be very unlikely; the available land for this purpose is already under lease in most of the sites in the Czech Republic and Slovakia. The early entry to new undeveloped markets makes it possible to get a sufficient number of free plots of land.

Risks

The goal of the investment is to strengthen the company’s capital and subsequently co-finance Penový raj’s expansion into new markets in a consortium with approved bank financing.

Investors have the opportunity to participate in the stable cash flow profile of the company in the form of dividend yields above standard on the market, as well as in the growth of the company’s value (growing network of branches).

The goal is to turn a leading player into the market number one in Central Europe by 2025.


Investment plan

Our investment team will be happy to provide you with more information on the investment opportunity:

Branislav Hóz (+421 917 733 884) 

Michal Ondrišek (+421 907 795 953)  

PENOVÝ RAJ - Ovládanie boxov krok po kroku

Penový raj

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Planned #1 operator of self-service car washes in CEE

Crowdberry investors have already invested over €36 million in more than 40 companies.

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