How Poland's Private-debt Pioneer Made It Through The Country's Latest Crisis

RAFAL LIS ALMOST single-handedly created Poland’s private-debt market. In seven years he built his company, CVI Dom Maklerski sp. z o.o., into a 5.9 billion zloty ($1.5billion) boutique asset manager.

- Maciej Onoszko

Then, late last year, he feared it would all come crashing down.

The worst day, he says, was Nov. 20. “My knees buckled as I saw the redemption requests,” Lis recalls in an interview at CVI’s Warsaw headquarters.

The flood of requests from investors, which eventually totaled about 20 percent of CVI’s assets, came as a corruption scandal involving a regulator shook Polish markets still reeling from the nation’s biggest corporate default. Lis was forced to put on hold plans to raise hundreds of millions of euros from new global investors and instead raced to sell liquid holdings. The sale of domestic and euro-denominated bonds and exchange-traded funds enabled Lis to meet the redemptions without holding a fire sale of the financial instruments that make up the bulk of his funds—small private- debt securities, specifically tailored by, and for, his firm.

By the next day, the deluge of redemptions started to slow. “I knew we would survive a month,” Lis says. “And by the beginning of December it was all fine.”

LIS’S NOVEMBER SCARE was a rare setback for the holder of the second investment-adviser license issued in Poland after the fall of communism. Returns from the closed-end funds that hold the bulk of CVI’s assets under management aren’t made public, keeping with the norm in Poland. The company’s first open-end mutual fund returned 14.9 percent from inception in April 2016 to the end of 2018. In March, Private Debt Investor magazine in its 2018 awards named CVI the Lower Mid-Market Lender of the Year, Europe, the first time a lender in the Central and Eastern European region had won.