Download IK News

No 38/2015/16A NEWSLETTER FROM IK INVESTMENT PARTNERS

04. Chilled dough specialist Cérélia offers plenty of growth potential– and it has already made a transformative acquisition

08. IK returns to fire protection with svt

13. A successful Asian exit for Vistra

11. Solina delivers attractive rewards

CÉRÉLIA

LOOKS TO A TASTY FUTURE WITH IK

ISSUE 38/WINTER 2015/16 32 ISSUE 38/WINTER 2015/16

PORTFOLIO COMPANY NEWSCONTENTS/EDITORIAL

CONTENTS/IK NEWS/ISSUE 38/WINTER 2015/16

Editorial Director: Mikaela Hedborg,[email protected]: Joanne Hart, Mikaela Hedborg, Marie RéveilhacArt Direction: 25AH Design Studio AB, www.25ah.se

www.ikinvest.com

© 2015/16 IK Investment Partners Ldt. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying , recording or otherwise, without the prior per mission of IK Investment Partners. IK News is published three times a year by IK Investment Partners, Brettenham House, 5 Lancaster Place, London WC2E 7EN, UK.

THE PAST FEW months have been extremely active for IK. We have taken advantage of the re-ceptive exit environment to make four reward-ing divestments but we have also made three exciting investments, each in sectors where we have many years’ experience and knowledge.

French chilled dough specialist Cérélia plays to our strengths in the food-manufacturing sector. We have made several excellent investments in this industry over the years, including the recent acquisition and merger of Danish food producer Løgismose Meyers. Our accumulated expertise in this field enabled us to spot Cérélia’s potential at an early stage and make a pre-emptive bid for the company. Find out more on page 4.

We were also able to draw on past experience when we invested in leading fire protection company svt, in this case, our investment in Minimax Viking, which was transformed into a global leader under our ownership. While Mini-max Viking focuses on active fire protection, svt specialises in passive fire protection. We explain the attraction of this business on page 8.

Our final investment of the past six months is French inventory finance leader, Auxiga, where we can leverage the knowledge gained from Vistra, the trust and corporate services group. Auxiga’s potential is outlined in more detail on page 22.

Vistra is also one of the businesses that we exited over the summer. Under our ownership, the company evolved from a European to a global leader, shifting its axis to Asia along the way. The exit process was both exciting and rewarding, as we explain on page 13.

Solina and Unipex were also extremely suc-cessful divestments. Food solutions specialist Solina increased sales fourfold under our owner-ship and was sold a year ahead of schedule, after a pre-emptive approach (see page 11). Chemical distribution and natural cosmetics ingredients group Unipex was exited via a three-way sale that delivered top quality returns (see page 20).

IK also parted company with Agros Nova, the Polish food and drink manufacturer. Like Unipex, the exit was achieved by splitting the business up, delivering a solu-tion that was both sustainable and rewarding.

We hope you enjoy the read.

EDITORIAL DIRECTOR:

Mikaela Hedborg

IK NEWS/FOREWORD

P – 20

TRIPLE EXIT FOR UNIPEXChemical distribution and natural

ingredients specialist Unipex was

acquired by IK in 2012. Now the

business has been divested via

a highly successful three-way

process.

P – 08

IK RETURNS TO FIRE PROTECTION IK’s experience in the fire

protection sector dates back

almost a decade. Now it is

returning to the industry,

through the acquisition of

German passive fire protection

specialist svt.

P – 22

FINANCIAL ACUMENAuxiga has a commanding

position in the inventory finance

market in France and Belgium.

Now acquired by IK, the company

is expected to grow significantly

in its home markets.

P – 25

PASTURES NEW FOR AGROS NOVAPolish food and drink producer

Agros Nova went through some

tough times in the early days but

it has now been successfully sold

via two trade sales.

P – 04

TASTY PROSPECTS FROM CÉRÉLIAFrance-based Cérélia is a market

leader in chilled dough, with a

wide range of popular products.

Now part of the IK portfolio, the

company has already made a

sizeable acquisition and is on a

strong growth trajectory.

P – 13

ASIAN EXIT FOR VISTRACorporate and trust services

group Vistra has been trans-

formed under IK’s ownership,

expanding into a global leader

and moving its HQ from Europe

to Hong Kong. Now it has been

successfully exited in Asia.

40,000€

VEMEDIA ACQUIRES A BELGIAN SPECIALISTFAST-GROWING CONSUMER health group Vemedia has acqui-

red Belgian pharmaceutical company Labima. Founded in 1952,

Labima has been family-owned until now, specialising in over-the-

counter medicines and health products for nausea and insomnia.

“Labima has developed excellent products in specific categories.

Combined with the marketing skills and commercial strength of

Vemedia Consumer Health, we can bring these brands to a higher

level and realize their full potential,” says Vemedia CEO Rob Drenth.

Vemedia is a market leader in calming and sleeping products

and medicated foot care. Headquartered in the Netherlands,

the company was acquired by the IK 2007 Fund in 2012 and is

represented in more than 40 countries around the world.

Vemedia is controlled by the IK 2007 Fund.

REFUGEE SUPPORT FROM ATTENDO AND ACTICHEALTHCARE PROVIDER ATTENDO and health and fitness chain Actic raised

around €40,000 in charitable initiatives designed to help migrants and refugees fleeing to Europe.

Attendo organised a fund-raising contest for employees and pledged to donate twice the

amount collected. The company also gave a substantial sum of money to the UN refugee agency,

UNHCR. At Actic, facilities in Sweden and Norway were open for an entire week to anyone who

wanted to run in support of Middle Eastern refugees. The fitness company then donated SEK3

to the UNHCR for each kilometre covered on any of its cardio machines. Members responded

enthusiastically and local gyms also gathered clothes and toys to donate.

“Over 750,000 migrants have crossed the European borders since January. The situation is a

growing cause for concern in Europe so felt that we really had to do something to help,” says Actic

chief executive Christer Zaar.

Attendo is controlled by the IK 2004 Fund and Actic is controlled by the IK 2007 Fund.

A STRONG PICK FOR TRIGOIK-BACKED TRIGO, a global leader in quality inspection,

e ngineering and management services in the transportation

sector, has merged with The PIC Group, which specialises in

testing and training solutions for the automotive and manufac-

turing sectors in North America.

The merger creates a single global provider of quality

services with annual sales of more than €210 million and a

global network of 7,000 professionals. Part of a long-term stra-

tegy to build TRIGO into a global leader of quality solutions for

the transportation industry, the merger follows the acquisitions

of Qualitaire in 2012 and Global Q in 2015.

“This merger between TRIGO and PIC will enable us to

provide global coverage to our clients. We will now be able to

expand the delivery of our quality services for existing auto-

motive clients and provide a better service to our aerospace

customers,” says Matthieu Rambaud, chief executive of Trigo.

Trigo Group is controlled by the IK 2007 Fund.

A DISTRIBUTION BOOST FOR TRANSNORM TRANSNORM, A GLOBAL leader in high-performance modules for distribu-

tion, parcel and airport baggage conveying systems, has acquired Sovex, a leading manufacturer

of modules and components used for loading and unloading in parcel and distribution hubs.

The acquisition will boost Transnorms’s presence in the fast-growing e-commerce market.

“The Sovex module portfolio complements our module portfolio perfectly and our

geographical footprint offers excellent opportunities to support Sovex customers on a global

basis,” says Georg Waldmüller of Transnorm.

Transnorm is controlled by the IK VII Fund.

NEW WASTE TECHNOLOGY FROM EVACEVAC, THE WORLD’S leading provider of waste and water management systems for the

shipbuilding, offshore, and construction industries, has pioneered a new technology to reduce

ship waste tenfold and cut operational costs by 25 per cent. The advanced waste compaction

system creates dry briquettes that are ten times denser than traditional plastic bags of waste.

Inspired by witnessing the way in which sawmills create briquettes, Evac’s technology is similar

but more compact. The resultant space savings, combined with reduced diesel and energy

consumption, deliver a dramatic reduction in operating costs.

“In an environment when a ship may not use its incinerator, the garbage room will be filled

floor to ceiling in two days. Evac’s briquetting technology enables a cruise ship to potentially

operate without incineration or landing the waste for a full two-week voyage,” says, Evac senior

process specialist Jari Jokela.

Cleaner than bagged waste and presenting a much lower fire risk, the briquetting technology

could also be used on offshore oil platforms.

Evac Group is controlled by the IK VII Fund.


C ÉRÉLIA IS A MARKET leader in its niche – ready-to-use dough for dishes such as pies, pastries, pizza and cake. Formed from the merger of two similar busi-

nesses, L’Alsacienne de Pâtes Ménagères (APM) and EuroDough, Cérélia is the brainchild of Guillaume Réveilhac, who has spent more than a decade in the chilled dough industry.

“I began working at Eurodough in 2000. It was part of the US company Sara Lee and over seven years, we doubled sales and opened up in new geographies, such as Italy and Scandinavia,” he says.

Despite moving to another part of the Sara Lee empire, Réveilhac retained a passionate interest in the chilled dough industry and a belief in its potential. In 2010, therefore, he left Sara Lee and joined APM.

“Between 2010 and 2012, we doubled sales at APM to €70 million and doubled EBITDA as well. Sara Lee then did what I had thought they would do and said they wanted to sell Eurodough. It was twice our size but we were ready to buy it and that was when Cérélia was born,” says Réveilhac.

The merger was highly successful. The company is the largest producer by value of chilled dough in Europe, making predomi-nantly private label products. It has more than 90 per cent of the French private label market and 80 per cent in Italy, with a strong position

in Spain and the Nordics. They also produce for third-party food groups, such as Nestlé.

BEST-IN-CLASS“Cérélia is super-lean, very efficient and best-in-class. They have four plants in France, three of which have a capacity of 40,000 tonnes of dough a year while the fourth can prepare 20,000 tonnes. They work on a three-shift system with very good automation and their scale and industrial expertise make them extremely competitive. Other private label producers just do not have the scale to compete with them,” says IK partner Rémi Buttiaux.

The company’s efficiency was a key part of Réveilhac’s strategy from the start.

“In the first year after the merger, we integrated the two businesses so we had one customer services team, one R&D division, one sales organisation and one IT department. As a result, we could present one face to our customers,” he says.

Having completed the integration, Réveilhac focused on transforming the new group by simplifying the management structure, ration-alising recipes and product lines and increasing the customer base.

Even as this work was underway, IK was keeping a close eye on the business.

“We began to look at Cérélia in 2013, shortly after the merger of APM and Eurodough. We

In the first year after the merger, we integrated the two businesses so we had one customer services team, one R&D division, one sales organisation and one IT department. As a result, we

could present one face to our customers.

GUILLAUME RÉVEILHAC, CEO, CÉRÉLIA

Cérélia Group, Europe’s foremost manufacturer of chilled dough, was acquired by IK in July. Just three months later, the company made

a transformative acquisition, with the purchase of De Bioderij, the global market leader of ready-made pancake products.

Ready-to-roll tasty growth prospects

Bre

tt S

teve

ns/G

etty

Imag

es


IN 2012, THE merger of EuroDough and

L’Alsacienne de Pâtes Ménagères (APM)

created Cérélia Group, bringing together

nearly 40 years of experience. Today, Cérélia

is a leading European manufacturer of ready-

to-use dough mainly through private label

and via two own brands, generating sales of

€212 million in 2014.

Cérélia Group has a wide product range

that includes rolled pie dough, pizza dough,

exotic dough, pastries, cake batter and

organic dough, selling its products both

through private labels and its own brands

Croustipate and Pop! Bakery. In total the

company has four production plants and

650 employees.

Cérélia Group is headquarted in Liévin,

France.

VALUE CREATION STRATEGY• Expand into adjacent segments through

various innovation projects

• Buy-and-build to accelerate European ex-

pansion and product range diversification

• Continuous operating improvement

CÉRÉLIA GROUP

COUNTRY France

SECTOR Consumer goods

WEB www.cerelia.com

acquisition of Dutch-based De Bioderij, the global market leader of ready-made pancake products.

“The management at Cérélia had already been in touch with De Bioderij but the process was interrupted by their change of owner-ship. However, they were very keen to buy the crêpe-maker and we could immediately see the rationale,” says Buttiaux.

Like Cérélia, De Bioderij’s products are inexpensive and highly adaptable, used for family meals, formal dinners or large parties.

“Our dough products have to be baked whereas the crêpes are ready to eat but both businesses include products that can be used round the clock, for breakfast, lunch or in the evening. They both have simple ingredients and people still buy them, even in difficult economic times,” says Réveilhac.

Both companies’ goods are also found in the chilled area of the supermarket so both are managed by the same buying teams.

“There are very good logistical synergies. The same sales force can sell both products and they can both be distributed in the same trucks. And the cross-selling synergies are even greater because there is almost no geo-graphical overlap between the two business-es. Cérélia is strong in Southern Europe and Scandinavia. De Bioderij is strong in Benelux and the UK in Europe and it has a growing presence in the US and Asia, with offices in Chicago and Kuala Lumpur,” says Soudry.

Fortunately, IK knew the advisers to De Bioderij and contacted them as soon as the Cérélia transaction was complete. Within a few months, the sale had been done.

“The integration of De Bioderij will involve a lot of hard work but the potential for growth is fantastic,” says Réveilhac.

Cérélia has organic growth prospects too. The group has just launched a new gluten-free chilled dough, which is more complicated to make than conventional dough but sells for a considerably higher price. Later this year, it is launching ready-to-bake chilled bread dough. Both are firsts in the industry and more innova-tion is expected in the coming years.

“We can move into areas currently made by smaller players, such as tortillas and wraps. And we see lots of potential in the US, where most ready-to-use dough is frozen and less tasty than Cérélia’s,” says Buttiaux.

Looking ahead, both IK and the Cérélia man-agement are confident that this business has the potential to deliver transformational growth.

“They have a good format, great products and a top-notch management team who keep on winning. There is geographic expansion potential, product expansion potential and potential for further add-ons. And we have the synergies to gain from the De Bioderij deal,” says Buttiaux.

“This is an extremely exciting time for us. I believe we have excellent growth prospects,” adds Réveilhac.

We are very keen on private label. Private label has no marketing costs, the goods are cheaper and there is a focus on industrial efficiency. Brands are also losing

ground to private label in many areas. RÉMI BUTTIAUX, PARTNER, IK

like food-related deals because the sector is defensive and there is a high purchasing frequency. Cérélia is particularly resilient because the products cost €1 or €2 each so they are cheap and very helpful for people who want to cook at home but don’t have time to do everything. In France, more than 80 per cent of households buy Cérélia products at least once a year and the average is nine times annually,” says Buttiaux.

Having made an initial assessment of the business, IK wanted to find out more.

“We met the CEO, Guillaume, and we really liked him so we decided to invest in some market due diligence. This confirmed that Cérélia was an attractive asset,” says IK partner Dan Soudry.

A PRE-EMPTIVE STRIKEIK also found Cérélia’s market segment attractive.

“We are very keen on private label. Private label has no marketing costs, the goods are cheaper and there is a focus on industrial effi-ciency. Brands are also losing ground to private label in many areas,” says Buttiaux.

IK’s interest in Cérélia arose when the group was majority owned by French private equity firm Sagard.

“We always prefer to transact outside of a formal sales process if possible so we ap-proached Sagard with a view to making a pre-emptive bid. They were preparing to exit but we made the whole process much smoother and faster for all stakeholders. We bid in April, having already been working on the deal for a couple of months. We signed in May and by July the deal was closed. There were some discussions with other people but no one was as ready as we were,” says Soudry.

“The management team were very happy be-cause it saved time and money and there was mini-mum disruption to the business,” adds Buttiaux.

Réveilhac agrees. “By 2015, we had access to leading retailers

and we had grown EBITDA substantially. But we had a lot more to do. We had innovations in the pipeline and we wanted to expand into new geographies. We met IK on an informal basis and there was a really good cultural and per-sonal fit. I felt that we could work well together, which is hugely important of course,” he says.

“We were also attracted to IK’s reputation as a partner and their track record in France. And we liked the fact that they had an in-depth knowledge of the food industry and plenty of buy-and-build experience,” he adds.

GOING DUTCHThe buy-and-build experience was particularly appealing to Cérélia because the company was keen to complete a particular deal – the


A return to fire prevention for IK

svt is a national leader on the German passive fire protection and restoration management markets. Given IK’s successful investment in Minimax Viking, a global player in active fire

prevention, svt was undoubtedly the perfect fit.

ONE OF THE biggest problems with fire is the speed with which it spreads. In modern buildings, fire can rampage through rooms extremely

quickly, sneaking through the tiny cable holes that are a common feature of 21st century architecture. Passive fire protection acts as a barrier that significantly slow fires down, containing them in single rooms and minimising the damage they cause.

The industry is, of course, highly regulated. Strong barriers to entry also come from customers and insurance companies’ reliance on providers with experience, expertise and a genuine understanding of their needs.

This is where svt comes into its own. The company’s name stands for ‘safety via technol-ogy’, and is the number one installer of passive fire prevention equipment in Germany. The group has also developed a comprehensive portfolio of specialised products and systems to hinder the spread of fire via cables, wiring and pipes.

As a leader in its sector, recent projects include an expansive fire protection programme for the European Central Bank in Frankfurt, as well as commissions further afield, such as a nuclear power plant in India and a tunnel in Lusail City, Qatar.

“svt is in a strong position. It is very well established with a good product offering and a dedicated product development team. It is also one of the very few players in Germany to offer an integrated service, including product delivery and installation. This gives it a real advantage over its competitors,” says IK partner, Anders Petersson.

“Growth trends in this - already large - industry are good as well. Commercial prop-erty owners recognise the importance of fire prevention devices and regulatory requirements increasingly stipulate they should be installed in non-residential buildings,” he adds.

EXPERIENCE COUNTSIK’s understanding of the fire protection mar-ket dates back almost a decade. Having invested

svt is in a strong position. It is very well established with a good product offering and a dedicated product

development team. It is also one of the very few players in Germany to offer an integrated service, including product delivery and installation. This gives it a real

advantage over its competitors. ANDERS PETERSSON, PARTNER, IK

in leading German specialist Minimax in 2006, IK merged the business with major US player Viking to create a global leader in the field. The group was successfully exited in 2014 and left IK with in-depth knowledge of this particular industry, both in Germany and worldwide.

When svt came up for sale earlier this year, IK therefore immediately spotted the company’s potential.

“Our experience with Minimax Viking helped us understand the business and its potential very quickly. We like the sector because it is growing, there are high barriers to entry and regulation is increasing. And we like svt because it has an excellent market position, real competence and genuine know-how,” says Petersson.

The company also benefits from a strong management team, led by Steffen Gerdau, who joined the business as a controller in 2000 and stepped up to the CEO position last year.

“Over the past 15 years, the company has de-veloped significantly. We have invested heavily in R&D, opened more branches in Germany, grown in terms of staff numbers and output and moved into new product lines, such as equip-ment for planes and trains,” says Gerdau.

“We now want to expand the business further and IK is a really strong fit for us. Their experience with Minimax Viking and their understanding of project management really make them stand out. When we speak to them,

it is like speaking to a partner, not an external investor,” he adds.

IK invested in svt in July but the company was founded in 1969. Headquartered in Seevetal, close to Hamburg, the group has branches across Germany, offices in Russia and Poland and an international presence via distributors and wholesalers.

CABLED UPMost of svt’s products are designed around cables, wires and pipes, a leading cause of fire spreading through buildings. Either they catch light or the fire moves from one room to another via cabling vents and sockets. svt’s products ad-dress both issues, coating wires with protective material and sealing vents in the event of fire.

“This is a growing market, not just because of regulatory drivers but also because, with technology becoming an increasing part of everyday life, cables are so much more prevalent nowadays than they used to be. As a result, the fire risks – and thus the need for protection - are that much greater,” explains Petersson.

Parts of the business is also highly scalable. “There is lots of potential to internationalise the

products division via partners and distributors. svt already produces for private labels but there is a real opportunity to develop the international reach of the company,” Petersson explains.

Correct licenses and certificates are an essen-tial component of international expansion. svt’s


WHEN IK INVESTED in Solina, the intention was to double sales dur-ing the life of the investment, via organic growth and acquisitions.

But, by 2015, sales had increased almost four-fold, from €85 million to €320 million.

“Organic growth was good, averaging just un-der 7 per cent annually. But the pace of acquisi-tions was much faster than we had anticipated,” explains IK partner Dan Soudry.

Within the first six months of IK’s ownership, two acquisitions had been completed – Swedish firm Formidabel, with €10 million of sales and Benelux-based Sfinc, a transformational trans-action which added €79 million sales to Solina. The company went on to acquire another French business and two more Nordic firms, in Denmark and Finland.

“At the time of the acquisition, Solina had no Nordic presence. Now the Nordic region is the first geography for the group so the acquisitions truly transformed its European footprint,” says Soudry.

Solina did not just grow in terms of geographic reach but also in terms of the types of customers and the range of solutions offered to them.

“Initially, Solina focused on dry blends to add flavour and functionality to food. Sfinc added a liquid expertise, which is now a significant part of

the group. The company also interacted primarily with food producers but it has now expanded into the food service market,” Soudry explains.

HEADING FOR THE EXITAssessing Solina’s growth, IK began to plan for an exit in the second quarter of 2016, analysing how the company had grown since 2011, how it could expand in the future and who the poten-tial buyers might be.

“Solina has real growth potential over the

STRONG APPETITE FOR SOLINA DELIVERS A REWARDING EXITFrench food solutions group Solina was acquired by IK in 2011. Over the next four years, the business became a European champion. Now Solina has been successfully exited a year ahead of schedule.

next four or five years. In Europe, Germany and the UK are obvious areas for the business but there are opportunities in Asia too, via joint ventures, and in the US. That is a huge market and Solina’s technology, culinary expertise and French gastronomic roots could really make a difference,” says Soudry.

Given the company’s prospects, chief execu-tive Eric Terré and his team were keen to move to another financial buyer. They were also anxious to avoid a full-blown auction, as this

At the time of the acquisition, Solina had no Nordic presence. Now the Nordic region is the first

geography for the group so the acquisitions truly transformed its European footprint.

DAN SOUDRY, PARTNER, IK

ESTABLISHED IN SEEVETAL/HAMBURG in

1969, svt is a leading provider of solutions

in Germany for preventive passive fire

protection products and installations and

restoration management post fire, water and

hazardous damages.

The Group operates in two segments

– passive fire protection (“PFP”) and

restoration management (“RM”), which share

know-how and experience, and has in total

a network of 22 branches in Germany, local

presence in Poland and Russia and a large

international partner network.

Among its clientele, svt has for instance

developed fire safety solutions for the 2014

Winter Olympics in Sochi and the new

headquarter of the European Central Bank in

Frankfurt, Germany. Solutions for fire safety

are a growth market worldwide because of

increased awareness and regulation. The

Group has 322 employees and generated

sales of €80 million in 2014.

VALUE CREATION STRATEGY• Continued focus on product development

and innovations

• Internationalise own PFP product busi-

ness and expand in OEM applications

• Increase penetration and drive growth in

Germany of both PFP and RM segments

SVT GROUP

COUNTRY Germany

SECTOR Industrial goods and services

WEB www.svt.de

products are already accredited in Germany and much of Europe. The company is now close to obtaining its Northern American license.

“This is a key development for us. Not only will it allow us to expand into the US but it will also open the door to Asia and the Middle East, where they use the same licensing system. This means that, once we are granted the Northern American ‘UL’ licence, we will be able to move into geographies such as China, India and the Gulf,” says Gerdau.

The OEM (original equipment manufacturer) sector offers significant growth prospects as well, where companies use svt’s products to make their own equipment comply with fire protection requirements. svt has only been working in this field since 2011, but it has already made considerable progress. One of the company’s first OEM customers was Airbus, where svt was asked to create a protective intumescent coating for the Airbus 380. Over the past four years, the business has developed a range of options to protect the aluminium underbodies of a new Metro line in Singapore, local transport vehicles in London and new trains in Russia. The French TGV also includes fire protective solutions based on svt’s intumes-cent coating.

“We are quite excited by this division; what it has done so far and what it can achieve in the future. There is indeed real potential to grow the OEM business, especially in the train and aerospace sectors and potentially also the ship-ping and wind farms sectors,” says Petersson.

svt’s integrated approach to passive fire prevention bears several additional advantages too. As the number one player in installation, the company is well-known for its expertise. Focused on the higher end of the market, svt works on commands that require extensive planning and project management skills.

“Technical advice is increasingly important, so companies need to be sure that products are be-ing installed by people with the proper expertise. This means that there are positive dynamics in this industry and the potential for us to make further market share gains,” says Gerdau.

In many respects, svt’s standing in both in-stallation and manufacturing creates a virtuous circle for the business.

“The installers establish a dialogue with customers, which cements the relationship but also allows them to get feedback on svt’s products. This clearly helps with product development,” says Petersson.

RESTORED TO GLORYInstallations and product sales account for around 60 per cent of svt’s revenues. The remaining 40 per cent come from restoration management for buildings damaged by fire, water or natural hazard, such as earthquakes or avalanches. svt has been in the rebuilding busi-ness for many years; it was sold by the group’s founder in 2002 and relaunched four years later when he passed away. Since then, it has achieved rapid success.

“We hired good and experienced personnel - including the former head of the business - so we had a standing start and we were able to develop quickly,” says Gerdau.

Cross-selling synergies between this division and the rest of the group have also developed overtime as customers whose properties have been damaged and restored often require ad-ditional passive fire protection.

“The restoration management business is growing very nicely. We intend to open new local branches in white spots, where there is no market presence, and drive market share. Water and natural hazard damages are also becoming much more frequent which is expanding the overall market,” says Petersson.

svt has only been part of the IK portfolio for a few months, but significant progress has already been made.

“The fire prevention market is growing stead-ily, svt is an excellent operator and the manage-ment team is dynamic, entrepreneurial and keen to develop the business further. We can now build on our experience at Minimax Viking to maximise svt’s potential in Germany and internationally. This is an exciting opportunity for us,” says Petersson.

We hired good and experienced personnel -

including the former head of the business - so we had a standing start and we were able to develop quickly.

STEFFEN GERDAU, CEO, SVT


When IK acquired corporate and trust services group Vistra in 2009, it was a European business, based in Luxembourg. Now headquartered in Hong Kong, Vistra Group is one of the top four

corporate and trust services providers in the world. Earlier this year it was sold, following a highly successful dual track exit process.

A NEW VISTAFOR VISTRASOLINA DESIGNS AND produces ingredient-

based functional, culinary and nutritional

solutions for the food industry.

Solina has 11 production sites and serves

9,000 clients in the food industry throughout

Europe with a wide range of solutions

combining texture and taste. Clients include

food industrialists, catering firms and mass

distribution companies.

The company is headquartered in Bréal-

sous-Montfort, near Rennes in France.

VALUE CREATION STRATEGY• Organic growth via leveraging strong

market position

• Develop the existing product range and to

launch new products

• International expansion

SOLINA GROUP

COUNTRY France


WEB www.solina-group.com

could have proved to be quite disruptive to the business.

“Preliminary meetings were set up for the fourth quarter of 2015 but Ardian made a pre-emptive approach immediately after the sum-mer. They knew the industry well because they had been the majority shareholder in a similar business, Diana, based in Brittany, near Solina,” says Soudry.

Ardian had also done their strategic due diligence and within a couple of weeks, an agreement was reached.

“They offered us the same terms as we were looking for from a 2016 bidder but they offered them a year early,” says Soudry.

For IK, the exit from Solina was the culmina-tion of a highly focused business plan executed with a top quality management team.

“The company was working in siloes when we acquired it but we made sure all the busi-nesses were fully integrated into one unified group with shared procurement, HR, IT, finance and such like. We also helped the man-agement team to source acquisitions and we encouraged portfolio synergies,” says Soudry.

Solina now works with former IK compa-nies Snacks Europe and Agros Nova and it has explored synergies with current portfolio company Løgismose Meyers.

“Working with Solina was a real partnership. The management team is extremely talented and Solina will almost certainly develop into a global leader. This investment highlights exactly how IK’s form of active ownership can help businesses to grow and fulfil their dreams,” says Soudry.

The company was working in siloes when we acquired it but we made

sure all the businesses were fully integrated into one

unified group with shared procurement, HR, IT, finance

and such like.DAN SOUDRY, PARTNER, IK


VISTRA GROUP CHIEF executive Martin Crawford is a dynamic Australian, with a gift for plain speaking. The business he runs is a global provider of

corporate and trust services for international corporations, institutional investors and high net worth individuals. But Crawford describes it slightly differently.

“We provide the plumbing for globalisation,” he says. “Whenever a company, a fund or an individual is doing stuff in another country, they need the right infrastructure to make it work. They need to make sure they are operat-ing in a way that is cost-efficient, tax efficient and legally correct. And that is what we help them do.”

“Like plumbing, the provision of such services may not be glamorous but it is absolutely vital – and it needs to be done well. When you stay in a five-star hotel, you don’t notice the plumbing until it doesn’t work. It’s a small but essential part of the overall experience. So it needs to be done properly and it needs to be maintained,” Crawford explains.

Of course, corporate and trust services have always had to be delivered professionally but the need has intensified in recent years, driven by stricter regulation and increased globalisation. As one of the top four players in the industry, Vistra is well placed to provide top-notch service across a range of different products and geographies.

GOING GLOBALThe group’s global positioning is no accident. It is the result of careful planning and execution by IK and the management team.

“When we bought Vistra in 2009, we had already done a lot of work on the industry and we believed it could benefit from consolidation and increased professionalism,” says IK partner Remko Hilhorst.

Vistra had been created from a buy-and-build strategy which continued under IK’s ownership. In 2011, however, the company undertook a transformational acquisition, buy-ing Offshore Incorporations Limited (OIL), an Asian business, specialising in company forma-tion and associated services.

The business was run by Martin Crawford and in 2011, he became CEO of the combined group. At the same time, the company’s head-quarters shifted from Europe to Hong Kong.

“We knew that we needed to build a strong position in Asia as this would secure the group’s competitive position in the future. There was a period of integration, but Martin was able to really drive the synergies between the two businesses,” says Hilhorst.

Frequently, post-acquisition synergies

Hong Kong is one of the hardest places to list in the world so there was a huge amount of work involved.

Also there were no other similar listed businesses so we had no peer group.

MARTIN CRAWFORD, CEO, VISTRA GROUP

involve cost-cutting, office closures and job losses. In Vistra’s case however, the phrase has a different meaning.

“A lot of the organic growth has come from internal networking, encouraging staff to cross-sell services and products,” explains Hilhorst.

For Crawford, the creation of a single busi-ness with a uniform culture was an essential part of his leadership role.

“Probably one of our biggest achievements was bringing Vistra and OIL together so they acted as a joined-up business with a single mind-set and shared values,” he says.

STRONGER TOGETHERA number of initiatives encouraged the two groups to gel, including financial incentives for cross-referrals and a broad-based equity scheme.

“Around 15 per cent of employees own shares and while this is administratively difficult the message it sends out and the commitment that you get really make a difference. The average attrition rate among professional services em-ployees is 20 per cent. Among our sharehold-ers, it is 3 per cent,” Crawford explains.

This kind of stability is particularly impor-tant among firms dealing in sensitive issues

such as corporate and trust services. “The sector is all about trust. Clients want to

work with people who understand the business so having a committed workforce and a global brand is a key differentiator,” says IK associate Frances Houweling.

The group also benefited as regulatory pres-sure drove consolidation. Vistra was one of the main consolidators, making 23 acquisitions from 2011 to 2015, including leading CEE player, Trin-ity Corporate Services, late last year. The series of purchases has enabled Vistra to be a one-stop shop for clients and intermediaries.

“For end clients, a global network is highly at-tractive because it means they can have all their needs serviced under one roof,” says Hilhorst.

The numbers tell a compelling story. Over the past three years, the company has grown revenues on average over 20 per cent per an-num, equally split between organic growth and acquisitions. EBITDA has even increased by

24 per cent annually while staff numbers have grown from c. 400 to over 1,300.

“The value creation has been tremendous,” says Hilhorst.

MOVING TOWARDS THE EXITGrowth was evident from soon after the merger and IK began to think about an exit strategy towards the end of 2013.

“We were doing a refinancing and it seemed an opportune moment to start thinking about how we might exit the business and ensure that it was well-positioned strategically. We continued to work on it during 2014 and began to crystalise our options towards the end of the year,” says Houweling.

“An IPO was a logical choice for the busi-ness. A listing creates stability and brand recognition, it allows for add-ons acquisitions being paid in shares, and makes it easier to create large scale long-term employee incentive

A lot of the organic growth has come from internal

networking, encouraging staff to cross-sell services

and products. REMKO HILHORST, PARTNER, IK

VISTRA GROUP IS a global independent

provider of corporate and trust services

delivering personal and tailored solutions

to international corporations, institutional

investors and high net worth individuals and

their families.

In 2011, Vistra became a global leader

in the trust and corporate services sector

following its merger with the Asian market

leader, Offshore Incorporations Limited, in

a transformational deal which has doubled

the size of the group and provided the

opportunity to cross-sell corporate services

on a truly international basis.

Through its Vistra brand, the group is

a leading, global, independent provider

of corporate and trust services delivering

personal and tailored solutions to

international corporations, institutional

investors and high net worth individuals.

Under the OIL brand, the group is the largest

offshore company formation and associated

services specialist in the world, and serving

clients a comprehensive range of corporate

formation and associated services.

Vistra Group is headquartered in Hong

Kong, with offices in 32 countries across the

world.

VALUE CREATION STRATEGY• International expansion

• Expansion into new service areas

• Focus on operational excellence

VISTRA GROUP

COUNTRY Hong Kong

SECTOR Business services

WEB www.vistragroup.com


plans so we started to work on a listing in Hong Kong. But we also received tremendous interest from financial buyers,” adds Hilhorst.

IK decided to run a dual-track exit process, a particularly challenging option, as it had never been done to this extent in Hong Kong before.

“Hong Kong is one of the hardest places to list in the world, so there was a huge amount of work involved. Also, there were no other simi-lar listed businesses so we had no peer group,” says Crawford.

However, informal discussions with inves-tors indicated there was appetite for Vistra shares.

“We filed an initial prospectus with the Hong Kong Stock Exchange in March 2015 and Martin did a large amount of meetings with investors in Hong Kong, Singapore, London, Boston and New York,” says Houweling.

GOING PRIVATE Even as IPO preparations were ongoing, private equity bidders continued to show strong interest in Vistra. When the decision had to be made it was not an easy one, but ultimately, the private equity route was chosen.

“We got a very good offer from Baring Private Equity Asia and management was happy with

the situation. They know that they can list in a few years,” says Hilhorst.

“At the time there was also an asset in the market that management were keen to buy and they would have found it very hard to acquire that business as a recently listed company due to several regulatory constraints,” adds Houweling.

For Crawford, the IPO preparations deliv-ered tangible benefits.

“We are definitely a stronger business as a result. We have an internal audit function, a better Treasury function and we are doing a lot more in terms of corporate social respon-sibility. Our external image has improved as well. Having a close look at what life would be like as a listed company was very interesting, but I think it will be helpful for us to have a few more years under private equity owner-ship,” he says.

For IK, Vistra Group has been extremely rewarding both operationally and financially.

“It has been a great story from start to finish. EBITDA went from $15m to $80m; the busi-ness moved from European to global; we moved the headquarters to Hong Kong, financed the company with Asian banks and planned a list-ing in Hong Kong. It has also been great fun to work on: hard work but fun,” says Hilhorst.

The sector is all about trust. Clients want to work

with people who understand the business so having a committed workforce and

a global brand is a key differentiator.

FRANCES HOUWELING, ASSOCIATE, IK

IRANIAN BY BIRTH, Etemad came to Sweden at the age of three. Studying industrial engineer-ing and management at Linköping University, Etemad graduated from Institut national des Télécommunications in Paris in 1999. He then spent six years in London, working initially for Schroders and then for Credit Suisse, before deciding a change of career was in order.

“My learning curve was no longer as steep so I came back to Sweden and worked for the management consultancy Booz Allen Hamilton, where I helped to set up the TMT team in the Nordics,” he says.

About two years later, Etemad was offered an opportunity to move to SEB (then SEB Enskilda), a return to investment banking but

PUTTING THE BUILDING BLOCKS IN PLACE WITH ETEMAD

in his home country. While at SEB, Etemad worked on numerous transactions, including several for Ericsson, which enabled the group to establish a leading position in the US.

Now he is part of the team at IK.“It’s a fantastic opportunity to work for a

firm with IK’s heritage. IK is a pioneer in the industry and there are very few firms with our geographic footprint in the mid-market space. I also fell in love with the people. They are great, and it felt very natural to join the team,” says Etemad.

“I am also really excited about the opportu-nities here in the Nordics. I think there are lots of great potential investments and I hope I can enhance IK’s position in the region,” he adds.

Aged 39 in December, Etemad is passionate about his work and focus a lot of his energy in this direction. When not working however, he enjoys spending time with his wife and family, and when time allows, building things with Lego.

“I can’t paint or write poetry but I can build with Lego so it is a great creative outlet,” he says.

Highlighting his enthusiasm for the coloured bricks, Etemad named his dog after them. A combination of a Jack Russell and a poodle, a Jackapoo, the dog is called Lego.

Alireza Etemad became a partner at IK Investment Partners on 5 October, having spent the past nine years at Skandinaviska Enskilda Banken (SEB), where he rose to the position of global head of corporate finance.

Changing climes, changing times

As global resources shrink and the impact of climate change grows, companies are under increasing pressure to consider their environ-mental footprint. Radical change can be challenging but even small

steps can make a real difference.


FROM SUPERMARKETS TO steel manufactur-ers and from banks to builders’ mer-chants, business plays a central role in today’s world.

Few people dispute the value of strong, well-functioning companies or the need for robust related organisations such as financial institutions and government ministries. But in recent years, there has been a significant shift in people’s attitude towards them.

The digital revolution has fostered dramatic change. Through the Internet, consumers and other individual stakeholders have gained unprecedented access to the workings of busi-ness, finance and politics. Not only can they find out more than ever before, they can also comment on their experiences, sharing their views with the entire world, simply by clicking a mouse or pressing send.

The impact of this is exacerbated by globali-sation, which has driven businesses to spread their operations across multiple jurisdictions. Even nationally-focused companies find them-selves with supply chains that span the world, often including emerging markets whose cul-ture and way of life can be hard to understand or monitor.

The net result is that consumer patterns and employee preferences are changing, imposing a number of environmental, social and govern-ance challenges on the businesses with which they interact.

Consumers are gradually becoming ‘citizen consumers’ – in other words, they recognise that they can drive positive social change through their consumption, voting with their wallets as well as at the ballot box.

This is prompting many companies to become corporate global citizens, with a far broader remit than ever before. Where once it was widely thought that ‘the business of busi-ness is business,’ now companies are increas-ingly judged not just on how much profit they make but how they earned it and what they spend it on.

This shift has widespread repercussions, cre-ating a complex matrix of demands on manage-ment teams, which can at first seem contradic-tory. Maximising profit for shareholders used to be the dominant corporate mantra. Now other stakeholders’ interests seem to be equally and sometimes even more important.

THE IMPACT CAN be felt in what companies buy, what they sell and how they engage their stakeholders. In marketing for example, price, placement, product and promotion were the traditional ‘Four Ps’. Now a fifth has been added: Purpose.

It can be easy to dismiss this mindset as

This shift has widespread repercussions, creating a complex matrix of demands on management teams,

which can at first seem contradictory. Maximising profit for shareholders used to be the dominant corporate

mantra. Now other stakeholders’ interests seem to be equally and sometimes even more important.

applicable only to a few liberal individuals in rich Western democracies. But a study of 8,000 people in 16 countries around the world revealed that 87 per cent of consumers believe companies should place at least equal emphasis on social interests as business interests while 80 per cent of consumers believe that corporations are in a uniquely powerful position to make a positive impact on good causes.

Against this backdrop however, one point is absolutely clear. Profit and responsibility are not mutually exclusive, even if they sometimes appear to be.

The pursuit of wealth and value creation remains a key ambition within the business community but it sits side by side with other aims, such as increasing social engagement and reducing environmental pollution. Far from jarring against one another however, value crea-tion and ESG awareness can and do comple-ment one another.

With regard to the environment, the impact of an irresponsible attitude is increasingly clear. Pollution in the air and in the sea; deforestation, water security, diminishing resources, climate

change – these affect our environment and our ability to profit from it.

According to the consultancy PwC, the amount of proven oil reserves in the world will last just 50 years at current rates of consumption, yet demand is predicted to soar by 50 per cent over the next 15 years. Over the same period, the UN estimates water demand will exceed supply by 40 per cent, and that water shortages could affect almost half the world’s population.

Perhaps not surprisingly therefore, 76 per cent of business leaders think they will need to change their business model to be fit for the fu-ture. Yet only 17 per cent have long-term business plans, stretching out more than 10 years.

During that time, companies are likely to face growing pressure to reduce carbon emissions while water consumption is also expected to rise up the agenda. Demand for change will not just come from individual stakeholders but from gov-ernments, who themselves are under pressure to deliver on their climate change promises.

CLEVER COMPANIES ARE thinking ahead and even small steps can make a long-term difference. IK

The UN estimates water demand will exceed

supply by 40 per cent, and that water shortages

could affect almost half the world’s population.

portfolio company Trigo, for example, offers its employees financial compensation on kilomet-ric basis if they cycle to work. A global leader in quality control services, Trigo is driven by com-mercial success. But the company recognises that cycling to work is good for the environment and employees’ wellbeing.

Evac designs and markets water, waste and wastewater systems for cruise ships, offshore rigs and construction sites. The company focuses on environmentally friendly products and systems and this has a noticeably posi-tive effect on sales, turning Evac into a global leader in its field.

Of course, some companies are more af-fected by environmental issues than others. Heavy industry is faced with a greater chal-lenge than technology-based service providers, for example.

But, in today’s world, businesses are inter-twined with each other and even ‘carbon-lite’ companies may be exposed to environmental polluters through their suppliers and their suppliers’ suppliers.

Overnight change is unrealistic, but an awareness of the need to change is increasingly demanded by customers, staff, investors and politicians. Even small fixes can help. Accord-ing to PwC, 20 per cent of worldwide energy consumption could be saved through energy efficiency measures, including switching to LED lights, introducing water fountains instead of bottles, encouraging employees and suppliers to adopt eco-friendly forms of transport.

No one can save the world alone but everyone can do their bit and for business leaders, defin-ing an environmental policy is at least a step in the right direction.

With the world at a tipping point, it is all about doing more with less and both enabling and encouraging stakeholders to follow suit. Far from having an adverse impact on business, early adopters will gain a commercial advan-tage. Consuming fewer resources cuts costs, engages employees and delivers reputational benefits among customers and investors.

It’s a challenge but one worth taking.


Chemical distribution and natural ingredients specialist Unipex was acquired by IK in 2012. Now the business has been divested

via a highly successful three-way process.

FOR UNIPEXTriple success

FROM THE MOMENT that IK bought Unipex, it was clear that the business would be sold in parts. On the one hand, the company had two spe-

cialty chemicals distribution divisions, one in Canada and one in Europe; on the other hand, it owned Lucas Meyer Cosmetics, a leader in the field of active and functional ingredients for the cosmetics industry.

“We always knew that we would achieve the best outcome for the company if it was sold in two or three parts because the businesses were so different,” says IK partner Rémi Buttiaux.

Initially, IK expected to exit from Unipex in 2016, four years after investing in the business. However, it began to receive serious expres-sions of interest in late 2014.

“We received proactive approaches for both the ingredients business and the Cana-dian distribution business, so we began talk-ing to a handful of potential buyers in early 2015,” says Buttiaux.

It soon became clear that the Canadian busi-ness would be sold first, following extremely strong interest from two US companies, and in April 2015, the business was divested to Koda Distribution Group.

“When I started to explore the sale of the distribution business, the offers came very quickly and they were extremely good. We decided to sell the Canadian business first and that was completed in the spring,” says Unipex

chief executive Patrice Barthelmes. Even as the sale of Unipex Solutions Canada

was going through, IK continued to receive ap-proaches about Lucas Meyer Cosmetics. During IK’s ownership, the company made two acquisi-tions, including a sizeable add-on, Southern Cross Botanicals based in Australia.

“We really developed the business. Southern Cross added a lot to Lucas Meyer, particularly in terms of scale. It took the firm above €10 million EBITDA and that made it much more visible to larger manufacturers,” says Buttiaux.

COSMETIC ATTRACTIONLucas Meyer’s size and expertise made it extremely attractive to a range of different bidders. The business produces specialised ingredients for the cosmetics and personal care industry, focusing on active and functional ingredients. The ingredients are then sold through a network of distributors and agents in more than 50 countries.

“It is a highly profitable business. There is almost no capital expenditure because the manufacturing is outsourced so it is really a grey-matter business with specific know-how and intellectual property,” explains Buttiaux.

As such, the company received interest from both large speciality chemical groups and ingredients manufacturers.

“There was no official sales process because we didn’t need one. Lucas Meyer is well known

in the industry and a heated contest developed between chemical groups and ingredients manufacturers. Both sectors could see Lucas Meyer’s potential,” says Buttiaux.

Ultimately, a shortlist of three parties emerged, all of which were roughly equal in price. But one company was the clear favourite, US-based International Flavours & Fragrances (IFF), a $9 billion company and a member of the S&P 500 index.

“They were the favourite with the Unipex management team, the Lucas Meyer manage-ment team and us. They are not in the same space as Lucas Meyer, so they really wanted to use the business as a platform to develop their presence in the active ingredients sector. And they were also keen to retain and incentivise management,” says Buttiaux.

Highlighting their commitment to Lucas Meyer, IFF chief executive Andreas Fibig came to Paris personally to meet Barthelmes, the Lucas Meyer management and IK.

“They were very supportive of the company so we could see that they wanted to grow the business and safeguard the future of our em-ployees,” says Barthelmes.

The sale provided an extremely strong IRR for IK, delivering one of the highest EBITDA exit multiples ever secured by the firm – and a year earlier than expected.

“It was a very successful exit,” says Buttiaux.While discussions were proceeding around

the Lucas Meyer divestment, IK was also keen to exit from Unipex’s European distribution arm, a strong business with around €90 million sales and a presence in France, Benelux and Africa. Three parties expressed an interest, including the management, led by Barthelmes.

“There were two strategic buyers and the management. The prices were all similar so we let the management do the deal,” says Buttiaux.

“This was a very complex exit with lots of moving parts but it worked out very well. The management teams of all three businesses were first-rate, which really helped and each of the assets was improved under our ownership. Ultimately, we sold three businesses between February and July of this year and it was very rewarding,” he adds.

For the Unipex management too, the invest-ment was both productive and a great experi-ence.

“The business was transformed under IK’s ownership. They gave us access to resources to buy add-ons, to recruit new people and they were always ready with help and advice. But they also gave us the freedom to do what was right for the business. Yes, they challenged us but they also listened. It was a great adven-ture,” says Barthelmes.

UNIPEX GROUP IS a leading global

manufacturer and distributor of natural active

ingredients and specialty chemicals for the

cosmetic, pharmaceutical, nutrition and

industrial sectors.

It is also active in the areas of vigilance

and consumer testing through its Iris

division. Its distribution and marketing

network serves more than 50 countries in

North America, Europe and Asia.

The Group employs 190 people and

has six offices across North America and

Europe.

VALUE CREATION STRATEGY• Expand the Group’s offering and leverage

its market positioning

• Expansion through selective add-on

acquisitions

UNIPEX GROUP

COUNTRY France


WEB www.unipex.com

It is a highly profitable business. There is almost no

capital expenditure because the manufacturing is outsourced so it is really a grey-matter

business with specific know-how and highly scientific

content. RÉMI BUTTIAUX, PARTNER, IK


Auxiga is a market leader in inventory finance, a form of lending that offers good value for companies and reliable security for banks.

A dominant player in France and Belgium, Auxiga is expected to grow significantly, following its acquisition by IK.

AUXIGA IS AN undisputed leader in its niche, with a 60 per cent market share in France and 100 per cent of the Belgian market. Highly profit-

able, resilient and benefiting from an excellent reputation, the company has real potential for growth. Yet banks and their customers are often unaware of inventory finance.

“Many bankers think it is complicated and only applicable in a few contexts, while compa-nies worry that it is expensive. In fact, inventory finance is a safe and reliable form of lending for banks and it is cheap for borrowers,” says IK partner, Pierre Gallix.

As the name suggests, inventory finance in-volves companies pledging a proportion of their stock as collateral against a loan. The financing can be constructed around raw materials, semi-finished goods or final products and in each case, close control needs to be kept on the stock in question.

In addition, because these loans involve physical assets, over which banks have priority if a company falls into difficulty, the choice of assets has to be right, the paperwork must be watertight and the stock in question needs to be

We do believe that, with the right marketing approach,

where we make banks aware of the existence of Auxiga and of the

benefits of asset-backed finance, we can really expand the market.

PIERRE GALLIX, PARTNER, IK

monitored regularly. “Auxiga takes care of every aspect of the

process, working with banks to make sure that a company’s inventory is properly assessed, the legal documentation is in place and that management teams are fully aware of how the fi-

nancing works. Auxiga is mandated to set up the financing agreements by the banks but it is paid by the borrowers. Auxiga also checks the chosen stock every few weeks, ensuring that the banks have effective security covering their loans,” says Auxiga chief executive Fabrice Soler.

WITH AUXIGAFINANCING GROWTH

MINIMAL RISK, MAXIMUM EXPOSUREHowever, even though Auxiga manages the process, it only does so as a service provider, taking no financial risk.

“The banks set their own valuations for the inventory, as they are the ones who are using it as collateral,” explains Gallix.

Privately owned until IK acquired the business, Auxiga has developed its market-leadership in France and Belgium over many years and now has more than 1,200 active contracts, spread over a diverse range of clients and sectors.

Traditionally, the majority of Auxiga’s clients have been companies with limited financial op-tions. Now, however, there is a real opportunity to gain market share by taking on customers who view inventory finance as a smart and ef-fective way to grow their business.

“We do believe that, with the right market-ing approach, where we make banks aware of the existence of Auxiga and of the benefits of asset-backed finance, we can really expand the market, especially if we prepare easy to use and easy to understand products. We are extremely confident about that,” says Gallix.

Gallix cites companies ranging from Cham-pagne houses to used-car dealerships, which have plenty of valuable stock on site and could benefit from inventory finance.

“They have lots of inventory and banks would be very happy to use it as collateral. Using inventory as collateral provides excellent security for banks so they do not need to set aside a lot of equity when they provide this type of finance. That means they can offer their customers good terms so it is a very attractive product,” says Gallix.

Until now however, Auxiga has tended to wait for banks to come to them, often when other forms of lending have been exhausted. Now, a more proactive approach is planned.

“We have responded to bankers’ needs and we tend to arrive at the end of the process. Now we want to dedicate time and resources to educating the banks about the advantages of our products,” says Soler.

A SHORT PROCESSIK was introduced to Auxiga in the spring of 2015 by an M&A boutique.

“We had known the boutique’s founder for a while so we were included in the process very early on. We could immediately see the poten-tial of Auxiga. And because we recognised the company’s prospects, we demonstrated a com-mitment to the deal from the start. We were able to move quickly in terms of doing due diligence and securing the necessary finance,” says Gallix.


We have responded to bankers’ needs and we tend to arrive at the end of the process. Now we want to dedicate time and resource to educating the banks about the advantages of

our products. FABRICE SOLER, CHIEF EXECUTIVE, AUXIGA

SINCE ITS ESTABLISHMENT in 1919 in

Belgium and 1975 in France, Auxiga Group

has been a bank guarantee expert, drawing

up structured and flexible credit facilities

using inventories as collateral.

The Group operates through four

business units: Auxiga and Sofigarant,

which are the leading providers of pledge

inventory services in France, Warrant, which

provides the same services in Belgium and

Auxicontrol, a specialist in asset control and

floor check services.

Auxiga Group provides an unparalleled

know-how and a complete range of services

for each phase of pledge financing, from the

setup of the security agreement to the day-

to-day monitoring of the pledged assets.

Headquartered in Paris, Auxiga Group

generated sales of €13 million in 2014 and

employs 91 people.

VALUE CREATION STRATEGY• Develop synergies between the different

entities of the Group

• Expand service offering

• Enhance capabilities to capture future

market potential

• Accelerating growth opportunities through

a dynamic commercial strategy

AUXIGA GROUP

COUNTRY France

SECTOR Business services

WEB www.auxiga.com

As a primary buyout with a bright future, Auxiga attracted widespread interest but Soler and his team were confident that IK was the firm they most wanted to work with.

“When we met IK, we could see that, beyond the financial aspect of the deal, they were hu-man beings with shared values and a commit-ment to growth. That was very important to us,” explains Soler.

IK’s early interest in Auxiga – and the pace at which they worked - were also appreciated by the selling shareholders.

“Even though the shareholders were no longer going to be involved in the business, they were still very pleased to see that we appreci-ated the work they had done, that we were com-mitted to the deal and that we wanted to grow the company.

And with Fabrice, we stressed from the beginning that we wanted to expand the busi-ness, invest in it and develop its potential, which was obviously quite reassuring for him and the management team,” says Gallix.

Auxiga has now been owned by IK for a few months and the early signs are promising.

“We are thrilled to be working with IK and investing in our business. We want to educate bankers, lawyers, accountants and others about how inventory finance can really help compa-nies to grow. This is a real opportunity and we are excited about the future,” says Soler.

DUAL DELIVERY AT AGROS NOVA

Dav

id S

uthe

rland

/Get

ty Im

ages


Agros Nova is a top food and drinks producer in Poland. Acquired by IK in 2010, the early days were challenging but the business is now well positioned for the future and has been successfully exited via two trade sales.

Given the trend towards healthier, less sugary food and looking at the performance of higher-fruit jams and juices elsewhere, we could see the potential of these categories

in Poland. MAREK SYPEK, CEO, AGROS NOVA

AGROS NOVA MAKES some of Poland’s best-known food and drink brands. Acquired in the summer of 2010, the business had great prospects, with

a strong portfolio of market-leading juices, syrups, jams and sauces.

But in IK’s first years of ownership, the com-pany was hit by soaring raw material prices and a weak zloty against the dollar and the euro. Costs of fruit, vegetables, sugar and energy rose sharply and times were tough.

“It was challenging. But we pulled up our sleeves and got on with it. We did a lot of restructuring and worked hard on operational efficiency, streamlining the product lines and focusing on value-added goods,” says IK man-aging partner Detlef Dinsel.

IK also appointed a new CEO, Marek Sypek, a highly experienced executive, who had spent the past five years in a senior position at global consumer goods group Johnson & Johnson.

“We had to comprehensively improve the ef-ficiency of the business. We renegotiated every single contract above 100,000 zloty. We also maximised sales, focusing on higher margin products,” says Sypek.

Initially, Agros Nova had focused on juices and nectars but rigorous analysis of every product in the company’s portfolio underlined what IK had long believed: that other brands had better potential.

“The company had been founded as a drinks business but we saw that there was real value in what we called the ‘solids’ business – jams, preserves and sauces,” explains IK associate director Pawel Caruk.

CHANGING THE MAKE-UPThe company began therefore to focus the investment on this area, looking for ways to differentiate its products from competitors and grow the entire market.

“In some sectors, such as jams, we were already dominant so it would have been dif-ficult to expand our market share simply by

making more of the same. Instead, we looked at expanding the entire market and repositioning our products into higher-margin categories,” explains Sypek.

Analysis of successful launches in other countries indicated that lower sugar products had proved popular in many parts of Europe and could appeal to Polish consumers too.

“Given the trend towards healthier, less sugary food and looking at the performance of higher-fruit jams and juices elsewhere, we could see the potential of these categories in Poland,” says Sypek.

In 2012, the company launched 100 per cent fruit jams and cordials with 40 per cent fruit in smaller bottles at higher prices. The jams achieved a 9 per cent market share in Poland within three years, taking Agros Nova’s total share to 43 per cent, while the cordials are now 22 per cent of the entire market.

“We took a really proactive approach. We in-troduced more branded products, created new ones and relaunched our major brand Lowicz. As a result, the quality of our top line improved and profits rose substantially. At the same time, raw material prices cooled down, which also helped the business,” says Caruk.

INDUSTRIAL APPEALAs conditions improved, Agros Nova began to attract the attention of industrial bidders.

“As a leading independent food company in Poland, Agros Nova was a strategic asset, which gave it an additional value to trade buyers,” says Dinsel.

In 2014, IK was approached by Maspex, a leading food and beverage group in CEE. Initially interested primarily in Agros Nova’s major brand Lowicz, Maspex soon became aware of the attractions of other parts of the business too.

“Selling Lowicz on its own was not a viable option for us and we knew that Maspex could not buy the entire company because it would then have too high a market share in beverages and the

regulators would not allow it,” says Caruk.Instead, IK found a creative solution.“We suggested that Maspex could buy the

entire solids business and, given its presence in the beverage market, we thought our two premium drinks brands Dr Witt and Tarc-zyn, would complement their portfolio too. These are highly profitable but they operate in different categories from Maspex’s own drinks brands so we thought they would avoid anti-trust issues. Dr Witt is a functional drinks brand and Tarczyn is glass-bottled impulse products,” Caruk explains.

HEADQUARTERED IN WARSAW, Agros

Nova is a top three player in all three of its

operational business segments, comprising

fruit and vegetable reserves, ready-made

food and non-carbonated beverages.

The company operates its manufacturing

plants in central Poland, offering a wide

range of quality products to all major retail

outlets across the country.

Agros Nova is the market leader in both

the fruit and vegetable preserves and

ready-made food segments including jams,

ketchup, tomato paste, sauces, ready meals,

soups and frozen foods. The company also

ranks third in the non-carbonated beverages

market including juices, nectars and fruit

drinks.

VALUE CREATION STRATEGY• Organic growth via leveraging the portfolio

of strong consumer brands

• Operational improvement

• Buy and build opportunity to consolidate

the market

AGROS NOVA

COUNTRY Poland


WEB www.agrosnova.com

The deal proceeded on that basis and was signed in December 2014, subject to clearance from the competition authorities.

“It was a long process but because it was begun as a one-on-one proactive approach, initiated by the purchaser, this gave both sides time to discuss the deal at length and ensure a smooth process. It was also very helpful from an anti-trust perspective because we could talk to the authorities early on, without alerting competitors or customers,” says Dinsel.

DRINKS FOR SALEThe anti-trust investigation continued in the early months of 2015, during which time IK had two pri-orities: ensuring the business continued to perform and selling the remaining drinks brands.

“The drinks division was a sizeable business in Poland, with over 700 employees, a produc-tion plant and distribution centre. Our key target was to safeguard those jobs and maintain confidence in the business,” says Caruk.

Sypek remained in place as chief executive of the entire group, so there was continuity on the solids side and the drinks division was fully supported.

“It was very important to keep our eye on the ball and minimise uncertainty through the transition period, particularly for the drinks business workforce,” says Sypek.

Fortunately, the drinks brands attracted con-

siderable interest from Polish industrial buyers. “As a carve-out, the drinks division appealed

to a number of local players. But in the end, Polmlek, the Polish dairy group, was the clear winner. They are a leading local FMCG player with around €500m of annual revenues so our drinks business was digestible for them. And they are a dairy company so our brands were complementary to theirs. That meant they would not embark on an aggressive cost-cutting spree post-acquisition. On the contrary, they were very impressed by our processes and systems so they wanted to empower our people and use their know-how,” says Caruk.

On 30 June, the Polmlek deal was signed, including a guarantee that all staff would be kept on. Two weeks later, the Maspex deal fi-nally closed as well, having been cleared by the regulators. The Polmlek deal was successfully closed early October.

“From the moment that we acquired Agros Nova, our preferred option was to sell the food and drinks businesses separately, as this we be-lieved would make more sense and create more value. Not only did we end up doing that but we added a creative element to it by selling a couple of niche drinks brands to Maspex,” says Dinsel.

“All in all, we were very pleased with this transaction. It was tough at first but we stuck at it, used our experience and our expertise and achieved a successful outcome,” he adds.

EUROPE’S BIGGEST ECONOMY Germany is expected to produce GDP growth of 1.8 per cent this year but uncertainty persists, not helped by continued

repercussions from the Volkswagen scandal. However Germany’s small and medium

sized companies, the famous Mittelstand, tell a different story. Quoted small and mid-cap companies are expected to deliver EBITDA growth of about 10 per cent this year; and many privately held businesses continue to make strong progress too.

Such growth rates explain why, over the years, there have been such high hopes for the Mittel-stand’s potential within private equity.

In the past, these hopes were often disappointed, as Mittelstand companies focused on remaining independent. Today however, attitudes are changing. The benefits of private equity ownership are more widely accepted and investment opportunities are increasing, particularly for firms, like IK, who have shown their mettle in the country over many years.

WE HAVE NOW been doing business in the DACH region (Germany, Austria and Switzer-land) for two decades. Over that time, we have

established a robust track record and a reputa-tion for delivery across the economic cycle.

This is especially important now. Yes, the Mit-telstand has delivered strong growth over the past 12 months but, in a climate of economic and politi-cal uncertainty, nothing can be taken for granted.

As such, we look for companies, which offer fundamental value creation potential either because they operate in a sector with clear prospects or because we can improve the way in which they conduct their business.

OVER THE PAST 12 months, for example, we have invested in two very different businesses in Germany, Transnorm and svt.

Transnorm makes high performance modules for complex conveyor and other sophisticated au-tomated systems. A leader in its field, Transnorm’s products are used in high-speed distribution systems, parcel centres and airport baggage handling systems across the globe. As such, it is a direct beneficiary of the growth in e-commerce, a sector which has soared in value over recent years, despite challenging economic conditions.

svt is a German market leader in passive fire protection and restoration management, both of which are expected to show steady growth over

the coming years and both of which benefit from strong barriers to entry. In this investment, IK can also leverage its experience with Minimax Viking, the active fire protection specialist which was transformed to a global leader under our owner-ship before being successfully exited last year.

Schenck Process is another German company in our portfolio. Operating across a global plat-form, Schenck has significant exposure to emerg-ing markets, including China and Brazil. Under our ownership however, we have shifted the com-pany’s model to maintenance, after-market care and spare part sales. Some 45 per cent of revenues and 90 per cent of earnings are now derived from this area, making the company considerably less vulnerable to economic tailwinds.

IK’S APPROACH TO investment and value creation in Germany is not specific to that geography. Across Northern Continental Europe, we look for companies in strong niche positions with the ability to develop into regional or global leaders. There are some differences how-ever. In Germany, perhaps even more than elsewhere, trust, relationships and references are crucial. In return, you gain access to companies with genuine potential, sometimes at more attractive multiples than can be seen elsewhere. Over the years, private equity investors have come and gone in Germany. But IK has stayed. We look forward to playing our part in the German corporate growth story for many years, whatever the macro-economic environment.

Anders Petersson PARTNER, IK

As 2015 draws to a close, the picture across the world is extremely mixed. Economic prospects in Europe have improved but absolute growth rates remain anaemic and geopolitical risks are further cause for concern.

IK VIEWPOINT/ ANDERS PETERSSON

We have now been doing business in the DACH region (Germany, Austria and Switzerland) for two decades. Over that

time, we have established a robust track record and a reputation for delivery across the economic cycle.

Documents

Download IK News