Munich / Zurich — In 2017, the pan-European equity investor Equistone once again underpinned its position as one of the leading private equity houses targeting medium-sized companies in the German-speaking region. With a total of 17 transactions for which the German and Swiss team was responsible in the past twelve months, the Mittelstand investor exceeded the previous year’s figure of 13 deals. In a challenging market, three companies were acquired, three divested and eleven acquisitions were made for portfolio companies.
Important investments in the midmarket
In 2017, Equistone acquired three companies: the refiner of fresh meat products Group of Butchers, the streetwear retailer DefShop, and the prefabricated house group around Bien-Zenker and Hanse Haus. Group of Butchers, based in the Netherlands, distributes meat and sausage products through retail, supermarket chains and out-of-home segments. The meat producer brings together six local producers in the Netherlands and Belgium under its umbrella. A stable customer base, sales at a solid level and a permanent workforce of 350 employees are the ideal starting point for further organic growth and for benefiting from market consolidation in other regions through strategic acquisitions.
DefShop is one of the leading multichannel retailers for urban streetwear, especially for young people, in Germany. The range includes clothing, shoes and accessories from well-known manufacturers such as Adidas and Nike, as well as established own and licensed brands. The articles are sold primarily via the company’s own online B2C platform, but also via stationary stores and a network of European wholesale customers. The joint work of management and Equistone on the next phase of growth will focus primarily on accelerated growth in the B2C and B2B segments, further internationalization, strategic acquisitions and strengthening the private label strategy.
In December, Equistone announced the purchase of Bien-Zenker and Hanse Haus. The companies of the Prefabricated Houses Group design, produce, sell and build prefabricated houses in Germany as well as in Switzerland and the UK. With Bien-Zenker, Living Haus and Hanse Haus, the Group has three strongly positioned brands and a broad range of prefabricated house solutions that serve different customer and price segments with consistently high-quality products. A highly fragmented market offers good opportunities here, especially for organic growth strategies.
Successful exits after successful development
Equistone transferred three of its portfolio companies to other hands in fiscal 2017. “We focus on the sustainable success of our investments. The goal is to optimize the market position of the companies in our portfolio through process and product innovations and to realize organic growth together with the management and employees,” explains Michael H. Bork, Senior Partner and Managing Director at Equistone (Photo) explains: “When we sell a company, it is very important to us to find the right partner who will open up further growth potential and take the respective company into the next development phase. We succeeded in this again last year — for example with the sale of the Hornschuch Group to Continental, of EuroAvionics to HENSOLDT and of OASE to the US private equity house Argand Partners. We expect the favorable environment for exits to continue in 2018, in which capital and the willingness to invest on the part of investors meet suitable transaction candidates,” Michael H. Bork continues.
Equistone had invested in Konrad Hornschuch AG in 2008, at that time still under the company name Barclays Private Equity, and successfully completed the resale of the group to Continental in March 2017. The company value and the market position of the surface specialist from Weißbach had developed significantly in recent years. Sales increased during Equistone’s involvement from 140 million euros (2008) to approximately 450 million euros (2016). As part of an ambitious buy-and-build strategy, two German and one US company were acquired, the product portfolio was massively expanded and new production sites were established. Together with Equistone, management succeeded in overcoming the consequences of the financial crisis and returning to a sustainable growth path.
In mid-August, the sale of EuroAvionics, a manufacturer and global technology leader of civil avionics systems, to HENSOLDT AG was completed. During the investment period, the company has continuously developed its market position and global presence, primarily through the expansion of its product portfolio and international acquisitions.
THE OASE Group, an international specialist in water gardens, aquatics and fountain technology, was sold in October. The company is a highly regarded, strong brand internationally thanks to sensational installations such as the “Dance of the Cranes” in Singapore or the multimedia fountain installation in front of the Petronas Towers in Kuala Lumpur. The drivers of organic growth in the period under review were the expansion of the product portfolio, international expansion and a targeted buy-and-build strategy in neighboring segments. With success: during Equistone’s involvement, the group’s sales grew from around 100 million euros (2011) to around 155 million euros (2017) while profitability increased. OASE employs approximately 750 people worldwide.
Targeted business development through acquisitions of portfolio companies
Equistone has been known in the industry for many years for its capital strength, but more importantly for its profound support in the further development of the asset during the investment. “The strategic development of our portfolio companies is a key element of our investment approach: We help companies to develop their growth potential. Today, 20 medium-sized companies in Germany, Switzerland and the Netherlands rely on our experience, expertise and capital strength. For example, we support market positioning and consolidation by acquiring suitable companies that fit the portfolio company’s growth strategy. We intend to continue on this course in 2018,” summarizes Dr. Marc Arens, Partner at Equistone.
In the past year, Equistone was able to realize several add-on acquisitions for its investments:
Sportgroup expanded its presence in Australia, North America and Asia through five acquisitions and consolidated its position as market leader in the global market for sports surfaces: In addition to SCM, the Australian companies ProGrass, NewTurf and Wm Loud, as well as Malaysia’s Fairmont, joined the group in 2017 as renowned suppliers of artificial turf and sports facility surfaces. Sportgroup — part of Equistone’s portfolio since mid-2015 and headquartered in Ingolstadt — is a specialist in the design of artificial turf and sports field surfaces for major sporting events and stadium construction.
VIVONIO, a strategic alliance of major furniture manufacturers based in Munich, made two strategic acquisitions in 2017. In March 2017, VIVONIO acquired the Dutch company Noteborn, a leading manufacturer of custom cabinets and complementary products. In September, fm Büromöbel Franz Meyer GmbH & Co. KG from Bösel (Lower Saxony) joined the company. The company is focused on manufacturing and distribution of office and lounge furniture. With both add-ons, VIVONIO aims to expand its presence in Germany as well as internationally and strengthen its position as a player in the European market.
Since its acquisition by Equistone in August 2016, the Swiss ROTH GROUP — a provider of services in the field of fire protection, insulation and coatings — has already acquired four companies, thus expanding its market position and service portfolio. Two add-ons of these were made in the past year: At the beginning of 2017, the Group strengthened its presence in Western Switzerland with the acquisition of INTUM SA, and in September ROTH intensified an existing strategic partnership and integrated Nyfeler + Keller.
Equistone’s portfolio company Caseking, an online retailer of gaming and PC accessories active in Europe, acquired Portugal’s Globaldata in February and Trigono in November. Trigono, based in Sweden with a subsidiary in Norway, sells hardware and software for retail and business customers. The acquisition strengthens the Caseking Group’s position in the Scandinavian market and other key European regions. At the same time, Caseking’s broad range of brands should in turn open up growth opportunities for its new partner Trigono.
About Equistone Partners Europe
Equistone Partners Europe is one of Europe’s leading equity investors with a team of more than 35 investment specialists in six offices in Germany, Switzerland, France and the UK. Equistone primarily invests in established medium-sized companies with a good market position, above-average growth potential and an enterprise value of between EUR 50 and 500 million. Since its founding, equity has been invested in more than 140 transactions, mainly mid-market buy-outs. The portfolio currently comprises over 40 companies across Europe, including around 20 active holdings in Germany, Switzerland and the Netherlands.
