CEE Equity in the media

The Bulgarian Duo Leading an Indoor Rock Climbing Revolution. The unlikely story of how two friends created the world’s biggest climbing wall company in Europe’s poorest country. By Esmé E. Deprez From Bloomberg Businessweek

The Bulgarian village of Letnitsa (population 2,547) is a cluster of red-roof-tiled homes in a rural stretch of countryside in the Danube River valley, between the Balkan Mountains and the Romanian border. It’s a two-and-a-half-hour drive east from Sofia along a two-lane highway lined with monotone Soviet-era apartment buildings and sunflower fields. As the poorest and most corrupt member of the European Union, Bulgaria is still struggling to shed its communist past as it transitions to a market economy. A small town here is an unlikely place to manufacture walls for that most First World of sports: indoor rock climbing.

“I tend to consider myself as more clever than the others,” says Ivaylo Penchev, before leading a tour of his factory, on Letnitsa’s western edge. He and Metin Musov founded Walltopia in 1998 and have since turned it into the largest builder of climbing walls in the world. They’ve assembled more than 2.5 million square feet of them in more than 50 countries. That’s enough to cover all of the office space in the Empire State Building. They’ve surpassed older, more established companies riding the surge in interest in climbing by taking advantage of Bulgaria’s cheap labor and Penchev’s ego.

„All the time, I knew that we will succeed,” he says, circling a crew of 12 workers who are applying fiberglass to a 38-foot-long stretch of plywood ribbing. Resting on a support of rusty metal pipes, it will become a climbing structure bound for a gym in Wichita. “It was a matter of building a few climbing gyms, having people feel happy afterward, and then they would spread the word.”

Penchev, 45, had pulled up moments earlier in his immaculate 2014 silver S-Class Mercedes, just shy of 12:30 p.m., when a buzzer signaled the end of lunch. Dozens of men in blue overalls and sweat-stained T-shirts stamped out their cigarettes and went inside to weld together long, square-shaped ducts, then cut thin birch panels and smother them in layers of glue and quartz sand.

When Penchev was here earlier in the summer, he was in disguise for the Eastern European version of Undercover Boss, hiding behind a brown wig, spectacles, and a bushy mustache. “I looked like a getting-old redneck rocker-loser type,” Penchev recalls. “People were very supportive, and they were convincing me that I am quite good in what I am doing. Obviously everyone is watching too much American movies, and political correctness spreads out even on the Balkan Peninsula.”

As they walk the factory floor, Penchev and Musov crack jokes in Bulgarian amid the clamor of power tools and the stench of polyester resin, marveling at their latest creations, headed for Austria, Russia, and Dubai.

The pair, who met in high school while climbing at their local crag, both grew up poor before the collapse of communism. Musov never went to college; Penchev says he didn’t eat in restaurants until his mid-20s. Musov, who has a mop of unruly brown hair and short, bowed legs, now oversees the 250-worker factory in Letnitsa. He drives a white BMW X6. Penchev, who speaks English and Russian in addition to Bulgarian, spends as much time flying around the world for meetings as he does at the company’s headquarters in Sofia. He recently added an arrest-me-red Lamborghini to his car collection. On this humid September afternoon, he sports a casual, big-city polish: jeans, Adidas sneakers, and a fitted, pale pink polo. His head shines—he’s shaved it bare every morning since he started going bald almost two decades ago—and his hands are soft. The trademark calluses of the climber he once was were lost long ago to typing on a laptop and glad-handing.

Walltopia, which employs about 650 people, is building two factories that will double its capacity. New capital from a first round of outside investment has valued the company at $70 million. Walltopia agreed this month to take a stake in Momentum, a small gym chain out of Salt Lake City, to help it expand nationwide. “It’s very smart for them to be on both sides of this business: making the walls as the supplier but also profiting in getting people into the gyms,” says Peter Mortimer, a climber and filmmaker. “They’re going to help grow the industry, and they’re going to profit from it. It’s like Budweiser opening a bar.”

On a trip to China last year, Penchev struck a deal to build as many as 50 climbing structures over the next five years. “Asia is booming,” he says. “It’s the future—so vivid, so alive.” But the U.S. remains the company’s most important market, where climbing gyms are opening almost every week. Of the 43 new gyms in 2015, Walltopia is behind 13. Climbing gyms will total almost 400 by 2015’s end, up 11 percent from the previous year, according to the Climbing Business Journal. Demand could support a thousand more, Penchev says.

Few are as high-profile as Sender One, in Santa Ana, Calif., which is joining with Walltopia to open its second location next year in Los Angeles. Sender One is co-owned by Chris Sharma, a climbing icon who was among the first generation of climbers to get their start in gyms. For Walltopia it’s like building golf courses with Rory McIlroy—they’re re-creating the arches and cracks and overhangs that Sharma’s scaled around the globe.


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Parkiet, 25.07.2014


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Rzeczpospolita, 22.07.2014


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PEP is a titbit for funds – estimate analysts.
Parkiet, 22.07.2014


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Puls Biznesu, 22.07.2014


Merger of Kulczyk’s Companies. Enters Chinese Investor

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Rzeczpospolita, 21.07.2014


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CEE Equity Partners fund will take over 16% of shares in PEP, enlarged with Kulczyk’s energy-related assets.
Puls Biznesu, 21.07.2014


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Parkiet, 21.07.2014


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Polish M&A market should become interesting in the next few months.
Parkiet, 18.07.2014


Chinese Fund Prepares USD 250 Million for Acquisitions in Poland

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Rzeczpospolita, 11.07.2014


CEE Fund is Waiting for PIR

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Puls Biznesu, 11.07.2014


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Parkiet, 11.07.2014