TVNet provides broadband internet services via cable television networks since 1997, and as such, is the first cable modem Internet Service Provider in Budapest. TVNet also provides broadband Internet via Leased Line, microwave and ADSL. It was the first among alternative telecommunications companies to offer ADSL services. By gaining access to these technologies, TVNet is able to provide inexpensive broadband services at a flat monthly rate, and is experiencing explosive growth in demand. Hungary yields significant opportunities for a broadband ISP, as interconnection costs are comparatively high and demand for data and audio content is soaring. Moreover, traditional, dial-up type service providers have not been able to meet this demand for high speed data transfer.

The Funds acquired a controlling stake in TVNet by contributing in kind an earth uplink to provide independent international access. With the rapid growth in demand for high-speed data and voice transfer, as well as interactive video, TVNet is in an excellent position to benefit from the imminent liberalization of the Hungarian telecommunications sector.

Gyulai is an established meat processing company with leading branded dry sausage products. In the 1980's, Gyulai's production facilities were modernized with a World Bank loan to meet standards required in the most demanding markets. Gyulai is well poised to gain significantly from the approaching accession of Hungary to the EU as its production meets EU standards, while many of its local competitors will be forced to close. A growing number of international meat companies are showing interest in cooperating with Gyulai, which is now clearly emerging as the number two branded sausage/processed meat producer in Hungary.

In early 1998, the Funds increased Gyulai's capital in order to finance the development of new product lines and to facilitate an IPO planned for the end of 1998. The Russian crisis in August 1998 had a dramatic impact on Gyulai's sales and this prompted Gyulai to develop the Hungarian market and expand export sales. It restructured its distribution channels, and nearly doubled its domestic processed meat sales within 15 months. Gyulai has also started selling high quality products to new markets such as Japan and Korea, and has found a broad range of new customers in Eastern Europe.

Through a leveraged buy-out, the Funds acquired 100% of the Medicor Group, the largest manufacturer and distributor of medical instruments and hospital equipment -- such as handheld surgical tools, disposable needles, plastic drips/tubes, electrical diagnostic equipment, operating theater equipment etc. -- in Central/Eastern Europe. Medicor is the dominant supplier in the domestic market, and exports a significant portion of its production to the USA, Germany, Brazil, and Russia among others.

Strong export-led revenue growth is expected to continue over the next few years, as even greater emphasis is placed on marketing, brand building and the penetration of new markets. MAVA also aims to exploit the substantial potential for enhancing efficiency and effectiveness in the production, service and functional arenas to turn Medicor into a dynamic technology based medical hardware and software company.

The operating cash flows of the Group along with the sale of a non-core subsidiary allowed our investors to recoup a significant amount of their investment within 2 years of the acquisition. Medicor is well poised to exploit the expected demand for medical supplies in Central & Eastern Europe and Russia.

In 1995, the Hungarian American Enterprise Fund was the first significant investor in Euronet, which has since developed into the successful operator of a network of more than 2500 automatic teller machines throughout Central and Western Europe as well as in the UK and USA. The company also provides software and other services to international and local banks, card issuers and cardholders, and manages ATM networks on behalf of other financial institutions.

Euronet arranged subsequent rounds of financing, first through a private placement and then via a public offering on NASDAQ. To date, this investment has returned in excess of 7 times the amount invested.