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a t r i - a n n u a l ne w s l e t t e r f r om i n d u s t r i K a p i ta l is s ue 1 7 aut umn 2 0 0 6news
Gustavson on PE 4 Minimax’s global ambitions 8 ELFA looks east 12 Focus on France 20
fighting the epidemic
SLEEPING SICKNESS IN UGANDA
Contents
3 Portfolio company news Superfos opens packaging facilitiy in Poland, Tradeka grows, Eltel expands, etc.
6 Maximising Minimax With IK as its new major shareholder, fire protection system and services supplier Minimax focuses on expansion.
9 Scientific scenarioFrench test specialist Pasteur Cerba exports its focus on quality to new markets.
15 Exits Continental Bakeries & F GroupIK investments find new owners.
16 Eastward bound at ELFA Swedish electronic cata- logue distributor company ELFA pushes for growth in Eastern Europe.
18 Q&A Investors
Private equity invest-ments, future market developments, favorite things in France, etc.
20 France in a nutshellEmerging over the last few years as a major European private equity market, France is one of the most diversified economies in the world.
22 Open house in ParisNew office reinforces IK´s position as a key player in the French market.
23 IK & portfolio company newsPrizewinner Superfos, Myresjöhus sets up shop in northern Sweden, Danish book launch, etc.
24 Viewpoint Christopher Masek
IK News is published three times a year by Industri Kapital Limited, Brettenham House, 5 Lancaster
Place, London WC2E 7EN, England. © 2006 Industri Kapital Limited. 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 permission of Industri Kapital Limited. Editor: Charlotte Laveson,
[email protected] Assistant Editor: Maria Varvouzos,
[email protected]: Joanna Gant, Björn Raunio, Jan Lindroth,
Anne Holm Rannaleet. Cover photo: Anne Holm Rannaleet.
Production: Åkesson & Curry AB, Sveavägen 62, SE-111 34 Stockholm, Sweden.
www.akessoncurry.com. www.industrikapital.com
Weblinks to portfolio companies www.ceva.com www.consolis.com www.cpscolor.com www.dataphone.com www.dywidag-systems.com www.dynea.com www.elektrokoppar.com www.elfa.se www.eltelnetworks.com www.europris.no www.f-group.dk www.gardena.com www.idex-groupe.com www.kid.no www.kwintet.com www.minimax.de www.myresjohus.com www.pasteur-cerba.com www.polytan.de www.sia-homefashion.com www.superfos.dk www.tradeka.fi www.wehkamp.nl www.welzorg.com
Cover story An international co-operative between the academic and business worlds aim to fight sleeping sickness in Uganda.10
A hive of activityI love the “busyness” of the autumn, the excitement of new projects taking off and the ”busy bee” atmosphere that fills the air. And we are certainly very busy at IK right now!
Business is also buzzing at our portfolio companies and, with this bumper issue of IK News, I hope to share the latest news from some of the “oldies” as well as introducing our latest acquisitions: Minimax in Germany, Pasteur Cerba in France and ELFA in Sweden. We are also showing off our new office in Paris. Christopher Masek gives his perspective on the French market on page 24.
But what excites me most is being able to share with you that IK is contributing to ”stamping out” sleeping sick-ness in Uganda. As featured on page 10, IK is supporting a treatment programme initiated by our French portfolio company, Ceva Santé Animale, in collaboration with the University of Edinburgh and Makerere University in Kampala, to avert the onset of a sleeping sickness epidemic which threatens 8 million people in Uganda.
A friend, who works for the Swedish International Development Cooperation Agency in Uganda, told me about the general situation in Uganda over dinner in Stockholm recently. She was very excited to hear that foreign busines-ses and the academic world join forces taking action. At IK we are happy to be able to contribute the needed funding, via trusted partners, to where it is needed most and also to have the opportunity to apply private equity investing methods and techniques to the project. The SOS project has got off to a good start and we will be following its progress closely.
EditorialCharlotte Laveson
4 In focus
Stig GustavsonMeet an industrial advisor and IK board member Stig Gustav-son, boosting an impressive network on both sides of the Baltic Sea.
7 December Industrial Advisory Board Meeting and Investor Meeting, London
During December 30 September 2006 Reports, distributed to investors
Calendar
New recruits Eva SchadeGermanAssistantBased in Hamburg
Nils PohlmannGermanAssociateBased in Hamburg
Tommy JanssonSwedishFund Portfolio AnalystBased in London
Personnel
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n /ExPANSION/ SuPErfoS CrEATES Job oPPorTuNiTiES iN PolANdSuperfos has opened one of Europe’s most modern packaging facilities in Lubien Kujawski, Poland. The factory employs approx-imately 150 people and offers new opportunities for a region which suffers from an unemployment rate of over 20%.
Daniel Momot, Superfos Factory Manger, comments: “The completion of the factory is a significant step for Superfos. Our aim to secure a platform for excellent utilisation of our production capacity in relation to our customers in Poland and Central Europe has successfully been achieved.” He continues: “We have received great support from the town of Lubien Kujawski, which has shown us great hospitality, and we have recruited a large number of employees from the local area. We are looking forward to building on this strong local relationship.”
Superfos is controlled by the IK1997 Fund.
Portfolio company news
n /DIVESTMENT/ CoNSoliS SEllS ElEmATiC oy AbConsolis, the European market leader in prefabricated concrete, has divested Elema-tic Oy AB to Sentica Partners Ltd. Elematic is a supplier of precast concrete machi-nery and equipment, production lines and complete production plants. The company employs 150 people. “We believe that Sentica, as new owner, will give Elematic the best opportunities for long-term development as the leading player in precast concrete machinery”, says Philippe Milliet, CEO and President of Consolis. Consolis is controlled by the IK2004 Fund.
n /ACqUISITION/ ElTEl EXPANdS iN PolANdEltel Networks has acquired the Polish engineering comp-any Energoprojekt-Kraków S.A. Energoprojekt-Kraków is a key provider of design and engineering services for the Polish National Grid. With this acquisition Eltel has strengthened its position in the Polish power transmission market and will reinforce key competencies and resources for international projects. Eltel Networks is controlled by the IK2000 Fund.
n /ACqUISITION/ TrAdEkA GroWS Tradeka Ltd has acquired 37 Spar stores throughout Finland. The stores will be integrated under the Siwa, Valin-tatallo and Euromarket brands. Most of the related changes will be completed by spring 2007. Employees of the acquired stores will be on Tradekas Ltd’s payroll under their current terms of employment. Tradeka is controlled by the IK2000 Fund. biGGEr ANd bETTEr
37 former Spar stores in Finland will be managed by Tradeka.
NEW ENErGy With its new acquisition
in Krakow Eltel becomes a key provider for the Polish National Grid.
€40 m
270
n /ExIT/ iNduSTri kAPiTAl EXiTS oriflAmEIn August, the IK1997 Fund sold its remaining holding in Oriflame Cosmetics SA. The Swedish Depositary Receipts (SDRs) were sold at a price of SEK 242 each, corresponding to 4.5% of the total number of shares in the company. Oriflame was listed on the Stock-holm Stock Exchange in 2004 at SEK 190 per SDR. The IK1997 Fund retained a 16% stake, which has subsequently been reduced. “Oriflame has been a good investment for us and we believe the company has a solid platform for future development”, says Kim Wahl, Partner, Industri Kapital.
n /RECAPITALISATION/ WEhkAmPIndustri Kapital has completed a second round of recapitalisation of Wehkamp, the Dutch home shop-ping company. This brings down the net cost to approximately €18 million from the original investment of €40 million. Wehkamp is con-trolled by the IK2000 Fund.
n /SALE/ TrAdEkA SEllS ProPErTiES To EuroPEAN ProPErTy iNvESTorS lPTradeka is continuing with its new real estate strategy by selling a portfolio of approximately 270 retail properties to European Property Investors LP. The portfolio, which consists of hypermarkets, supermarkets and neighbourhood stores, contains a major portion of Tradeka Ltd’s property holdings. According to Markku Uitto, CEO of Tradeka, the capital freed up from the property holdings will be used to develop Tradeka Ltd’s capital structure and enable its growth strategy. Tradeka Ltd is controlled by the IK2000 Fund.
fACTory iNAGurATioN Superfos secures a
business platform closer to customers
in Poland and Eastern Europe.
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Who: Stig Gustavson
Where: Finland and Sweden
What: Industrial advisor
Why in focus: Chairman of
Konecranes, Dynea, Eltel Networks, Mer-
cantile, Handels-banken in Finland, Tammet Oy and
Arcadia Foundation. Member of the
boards of Fastems Ab, Rakentajain
Konevuokraamo Oyj (a.k.a. Cramo AB
in Sweden), Vaisala Oyj, Technology In-dustries of Finland.Chairman of the
Supervisory Board of Tampere Univer-sity of Technology.
Member of the Supervisory Board of Varma Mutual
Pension Insurance Company.
in focus
uPWArdly mobilE Stig Gustavson actively approached Industri Kapital when Kone sold its crane division and decided to concentrate on elevators.
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The Finnish connectionBorn in sweden, but raised in finland, stig gustavson feels equally at home on either side of the Baltic sea. after more than 20 years of leading Konecranes, finland’s group of lifting businesses, he is now a long-standing board member and industrial advisor to industri Kapital.
tig Gustavson has spent a large portion of his professional life at Konecranes, a Finnish crane maker that was bought out from the Kone Group in 1994. The company floated on the Helsinki Stock Exchange in 1996. Last year, he resigned as
CEO of Konecranes to take over as chairman. He also serves on a number of other boards and has a professional network on both sides of the Baltic Sea that few people can match.
You came into contact with the private equity world quite a while ago, didn’t you?Yes, when Kone sold its Konecranes division. A generational shift in the owner family was made easier by selling a division and concentrating on elevators, Kone’s main business. US rival Harnischfeger had already agreed in principle to buy Konecranes. I was not too happy with that situation, since I had just completed restructuring Konecranes, closing 19 plants in a year and laying off a lot of people. Har-nischfeger still had all that ahead of them. So I contacted Björn Savén to explore the possibility of another offer. Later we actually bought Harnischfeger in a hostile takeover.
How has private equity developed in Finland since the Konecranes deal?At that time, a deal of that size was truly unique. Private equity was neither well known nor an accepted part of Fin-nish business life. In fact, Industri Kapital had to come up with a cash down payment of half a million euros in order to get Kone to the table. Today, the situation is completely different – private equity is an integral, highly developed part of Finnish and Nordic business life. It’s an option that virtu-ally all managers and owners take into consideration when a change of ownership is being considered.
What distinguishes private equity in Finland?Nothing much these days, really. The most visible difference from the rest of the Nordic region and Europe is the absence of major domestic players in Finland. The large Nordic players, like Industri Kapital, are all based in Sweden. As in every market, local knowledge and presence is important. You may have more than 90% of your sales in other markets, but
the spirit of a company is still very much connected to its country of origin. Even a company like Nokia has a very Finnish soul. When you restructure a business, it is important to respect its national characteristics.
Sweden has a new government after 12 years with the Social Democrats in power. What would you like the political system to deliver?I would like Nordic politicians to review the entire tax structure for investing in the region. Given that liquidity and capital reside largely in places like London, we have to offer not only equal, but better, terms in order to attract capital and investments.
How do you view the current market situation for the private equity industry?The deal flow seems to be surprisingly healthy and of high quality. The development of the EU common market and the globalisation of the economy are very powerful drivers. The pace at which companies have to change and adapt is accelerating all the time.
You are a member of several boards, in listed companies as well as those backed by private equity. Is there any difference in the way these boards work?I am on nine boards, of which four are listed companies, and the difference is not all that significant. The non-listed companies try to do things as if we were listed, or at least that is the goal. Obviously, some things at un-listed companies are easier and quicker to do when you don’t have to respond to the market.
“Today, private
equity is an integral,
highly developed
part of Finnish and
Nordic business
life.”
S
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GLOBAL REACH Minimax aims to establish its unique product portfolio of sprinkler systems, special solutions and detection service all over the world.
minimax, the world’s third largest supplier of integrated fire protection systems and services, aims to further internationalise its business and implement a buy-and-build strategy together with new major shareholder iK.
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Company profile
laus Hofmann, chief executive of Minimax, is no stranger to management buyouts (MBOs). In May this year, IK backed Hofmann and his team in a ”tertiary buyout” – the third MBO for Minimax.
Headquartered in Bad Oldesloe, near Hamburg, Germany, the company is the world’s third largest supplier of integrated fire protection systems and services.
“We could have gone to a trade buyer but, ultimately, decided that we did not want to be part of a large group,” he says.
Independence is of key importance to Hofmann, who joined Minimax from the Swiss elevator engineering group Schindler in 2001. Backed by Barclays Private Equity (BPE), Minimax had then just staged an MBO from the German industrial group Preussag.
“I wanted to work in a company which was indepen-dently-owned. I think it is better than being in a large organisation. There is a clear corporate structure and life is far less ‘political’. I also like having the opportunity of sharing in the equity,” he says.
In 2003, Minimax changed hands again with Hofmann leading the company in a secondary buyout, backed by Investcorp. When Investcorp came to realise its investment earlier this year, Hofmann and his team were able to influence the outcome.
“With our track record in MBOs, we know the private equity industry and its participants. We are really pleased that IK was able to secure the business. We were impressed with IK and even though it was not absolutely the highest bidder, it had the best understanding of our business and the most realistic projections,” he says.
Complete supplier. Minimax offers complete fire protection systems for all possible applications and
requirements. The company’s product portfolio comprises everything from sprinkler systems and special water systems, such as mist and foam, to gas systems, ”special solutions”, industrial detection and services. More than a hundred years of experience, intensive work in national and international technical bodies and close cooperation with damage insurers and testing authorities has brought Minimax a reputation as the trouble shooter of the fire protection industry.
Minimax is already the clear market leader in Germany, where its red mobile fire protection vans are a familiar sight, as well as in a number of international markets, such as Spain, France, the Netherlands,
“The key aspect of
this plan is to develop
Minimax into a truly
global player.” ➔
KMaximised protection
minimax, the world’s third largest supplier of integrated fire protection systems and services, aims to further internationalise its business and implement a buy-and-build strategy together with new major shareholder iK.
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Poland, China and India. Minimax also benefits from the stability and growth prospects of its core market. Globally, the fire protection market is worth about ]32 billion annually. Driven by new regulations, insurance requirements and construction/GDP development, it is expanding by some 4% year-on-year.
Organic growth and add-ons. What makes Minimax a particularly attractive business from a private equity perspective is its high rate of repeat business.
“Approximately 64% of our revenues derive from recurring service and refurbishment contracts,” Klaus Hofmann points out.
Detlef Dinsel, IK’s partner in Germany who led the deal, explains that, together with management, IK plans to continue to grow Minimax organically as well as to further internationalise the business and implement a ”buy-and-build” strategy via add-on acquisitions.
“Minimax is a great brand and our aim is to grow the company significantly and gain sufficient critical mass with a ]1 billion-plus of sales,” says Dinsel.
Minimax generated revenues of some ]443 million in 2005 – a ]24 million increase on 2004. EBITDA in 2005 was ]48 million in 2005, compared with ]41 million in 2004.
“The key aspect of this plan is to develop Minimax into a truly global player. Alongside acquisitions, we also intend to accelerate our organic growth, both in terms of geographic coverage and new customer segments,” continues Hofmann.
Minimax is already active in emerging markets such as China, India, Eastern Europe and South America, and these areas are of special interest. Other key target destinations for add-on acquisitions to strengthen Minimax’s international presence are the US, Korea and Japan. The company also has plans to develop cur-rently unexploited industry segments such as explosion protection.
Minimax is also working hard to increase its share of service revenues.
“We really need to develop ways in which we can achieve high service revenue, or we risk seeing our speed of growth slow down,” says Hofmann.
Consistent strategy. When Hofmann joined Mini-
MINIMAX KEY FACTSCompany: MinimaxEstablished: 1902Activity: Fire protection systems and services Based in: Bad Oldesloe, Germany, with branch and representative offices in Europe, Eastern Europe, Asia, North America, and the Middle East.Employees: 3,200 CEO: Klaus HofmannFinancial: €470 million turnover in 2005 Strengths: Market leading position, integrated serviceStrategic priorities: To achieve global coverage and further growth through acquisitions, organic growth and increased service revenues
max in 2001, the company had been at a standstill for years. Having been owned by Preussag since 1969, it had not made a profit since the early 1970s.
“There was a long way to go, but we knew we had a good strategy and an interesting product portfolio,” Hofmann recalls.
He instigated a four-step plan designed to regain competitiveness. A priority was to restructure and rationalise the company’s European operations with non-core parts of the business closed or sold-off. The next initiative was to build up the company’s sales and service network.
Step three was to establish a dedicated product line management.
“We set this up along product lines, with our R&D staff following products all the way through to the end-user,” says Hofmann.
Step four was to finalise the group’s international strategy and establish a presence outside Europe, partic-ularly in South-East Asia, Brazil and India.
Going forward, Hofmann sees the biggest challenge for Minimax as how to best handle growth. At the heart of this challenge lies the company’s 3,200 strong workforce.
“It is often thought that you can achieve better results through cutting back on staff. But, over the last five years, we have continually grown the business, adding new people all the time,” Hofmann says. “This is a highly specialised activity which cannot be learnt quickly. Hiring, training and retaining the best staff is integral to our future success.”
“We have grown the business
by adding new people all the time.
Hiring, training and retaining the best staff is
integral to our future success.”Klaus Hofmann, CEO
➔
INTERNATIONAL ARENA Minimax supplied a sprinkler system and a hydrant system for the Allianz Arena in Munich that was specially built for the FIFA World Cup 2006.
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Industri Kapital has sold its 40% holding in F Group A/S, a leading Danish high street electrical goods retailer, to UK electrical DSGi plc. F Group A/S is one of Denmark’s largest electrical goods high-street retailers, best known for its FONA stores. With 64 stores across Denmark, FONA focuses on entertainment and
communication electronics, selling products such as flat screen TVs, home PCs and MP3 players. The F Group was formed through a merger of FONA Gruppen (owned by the IK 1997 Fund) and Fred-gaard Radio (owned by the Kjær family) in June 2001. The Kjær family will retain its 60% stake in F Group working clo-
sely with DSGi going forward. “Industri Kapital is delighted to have been closely involved with the transformation of F Group into a Danish leader in electrical goods retailing”, says Mads Ryum Larsen, Partner, Industri Kapital. “We are particularly pleased with the market position that the FONA brand has established. I would like to thank the Kjær family for its dedication and commitment to working in partnership with us. We wish
the company all the best for the future and believe that it has a solid platform for its next phase of development.”
n ik’s share in the leading danish home electronics retail chain f Group, with its foNA stores, will be sold to british dSGi plc.
ik exits f Group
Exits
Industri Kapital has sold the Dutch portfolio com-pany Continental Bakeries, a leading producer and distributor of private label biscuits in Western Europe, to NPM Capital.
Continental Bakeries designs, produces and distrib-utes sweet biscuits, bread substitutes and toast. The company is headquartered in the Netherlands and employs approximately 800 professionals. It has production facilities in the Netherlands, Belgium, Germany, Austria and Hungary.
The mission of Continental Bakeries is to build a profitable and innovative European business in pastry products, biscuits and bread substitutes, by operating as a major market player in these segments and com-bining private labels and proprietary brands, as well as products for regional markets and products that offer worldwide sales opportunities During IK’s ownership, sales went up by 40% from 126 million in 1998 to 175 million in 2005.
“We are pleased with the operational and strategic progress that we have achieved together with the management team of Continental Bakeries. We are happy to have found in NPM Capital a long-term investor that is willing to support Continental Bak-eries in the execution of its strategy”, says Kristiaan Nieuwenburg, Partner, Industri Kapital.
Ruud van Henten, CEO of Continental Bakeries, comments: ”We are looking forward to working with NPM and want to thank IK for supporting the development of Continental Bakeries over the past seven years.”
iK has sold the dutch biscuit producer and distributor continental Bakeries to npm capital. under iK’s ownership the company has seen a rise in sales of 40%.
European breadmaker changes hands
A PrivATE lAbEl ProduCEr IK exits Continental Bakeries after having implemented strategic and operational changes.
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TrEATiNG livESToCk iN uGANdA Sleeping sickness is caused by a parasite that is transmitted to humans by tsetse flies that feed on infected cattle or wildlife. Cattle often carry the parasites without themselves showing any symptoms.
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sosstamping out sleeping
sickness
Two strains of Human African Trypanosomiasis (HAT) – also known as “sleeping sickness” – threaten to con-verge in Uganda. This could have a catastrophic effect for the already stretched local health services.
In April this year IK was alerted to this accelera-ting emergency situation in Uganda by its portfolio company Ceva Santé Animale SA. The impending disaster centred on the spread of sleeping sickness, a disease which kills 100 people each day in Africa, into previously unaffected territories.
Trypanosomiasis takes two forms: trypanosoma brucei (Tb) rhodesiense – an acute form of sleeping sickness which causes death within six months; and the more prevalent chronic form of the disease, Tb gambiense, from which death may take several years but which causes serious damage to the central nervous system even before symptoms emerge.
Uganda is the only country to be afflicted by both strains – Tb rhodesiense in the south-east and Tb gam-biense in the north-west, close to the Sudanese border. But since the late 1980s, the rhodesiense sleeping sickness has been spreading north and there is now a real risk that the two forms of the disease will overlap. Surveys in 2005 put them at only 150 km apart.
“The diagnosis and treatment of sleeping sickness is
already problematic, but if the two forms of the disease were to meet then the situation would become almost impossible. These infections require different drugs but are extremely difficult to tell apart, hence diagnosis and treatment would be severely compromised,” says IK partner Anne Holm Rannaleet.
Cattle treatment recommended. The sleeping sickness problem has been exacerbated in Uganda by over 20 years of civil war in the northern part of the country, where large areas have been depopulated. With previously farmed lands left unattended and covered again by shrubbery and dense growth, tsetse flies – the main carriers of sleeping sickness – have proliferated. The flies are mainly found in vegetation next to rivers, swamps and lakes.
In addition, following years of insecurity and cattle rustling, large-scale restocking programmes are being carried out with cattle being moved from rhodesiense-endemic areas in the south-east to restock districts further north.
The population at risk in Uganda is approximately eight million. More than one million cattle are also in danger, both as carriers and the main “reservoir” of the human-infective form of the disease, as well as
when the academic and business world join forces, less
can mean much more. a focused effort combines effective drugs and the necessary field work, i.e. training,
spraying, testing, analysis and documentation.
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Cover story
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being themselves infected by various tick-born diseases which often co-exist, leading to deteriorated condition, decreased milk production and increased mortality.
The Ugandan government is well aware of the need for urgent action, and a meeting convened by the World Health Organisation (WHO) in late 2005 recom-mended the mass treatment of cattle with trypanocidal drugs in the newly affected areas. However, there was no funding available to implement such a recommen-dation.
The last five years have seen increased efforts by G8 nations and UN agencies to improve the health of the world’s 3 billion poorest people – those living on less than $2 a day. But funding has tended to focus on figh-ting the Big Three diseases – HIV/AIDS, tuberculosis, and malaria. Significantly less resources are devoted to the group of tropical diseases, trypanosomiasis among them, that exclusively affect the poor and powerless.
Enabling block treatment. The University of Edinburgh’s Centre for Tropical Veterinary Medicine and Makerere University in Kampala, Uganda, are the team behind the latest trypanosomiasis re-search findings. For years the interna-tional veterinary laboratory CEVA has also been involved in trypanomiasis treatment and prevention in animals.
But while the universities could conduct all the necessary field work (including training, spraying, testing, analysis and documentation) to fight the disease and CEVA could provide the ne-cessary drugs and insecticides, they lacked continued funding to undertake such block treatments.
This has now been provided by IK, chan-
nelled through a newly-formed independent vehicle, Industri Kapital Aid & Relief Enterprise (IKARE).
Intensive work started during the spring, in order to develop a joint work plan for the first phase of the intervention to try to stop the northward spread of Tb rhodesiense and prevent it from overlapping with Tb gambiense. A memorandum of understanding was also entered into with the Uganda Trypanosomiasis Control Council (UTCC).
IK has been involved in various charity-related activities since its inception in 1989. These, however, tended to be run on a rather ad hoc basis. “We have, over the last few years, tried to take a more formali-sed, considered approach, but it was the emergency situation in Uganda that really focused our efforts,” says Anne Holm Rannaleet.
To proceed in a structured and lasting manner, it was decided to incorporate an independent UK company limited by guarantee, accredited by the UK Charity Commission – IKARE – as a dedicated vehicle for the firm’s charitable efforts.
Business-oriented approach. As well as providing controlled, closely-targeted funding, IKARE will also endeavour to overlay private equity investment and ma-nagement tools and techniques to projects to maximise their impact. “The intention is to take a more analyti-cal, business-oriented approach to charitable causes so
that we can achieve more than by simply handing over money,” says Holm Rannaleet.
As with a standard PE investment, the Ugandan project is very much a partnership effort, combining commercial and corporate interests with academic and scientific know-how and research, coupled with local
involvement and support. “CEVA will supply the drugs, chemicals and
pharmaceutical know-how,” says Holm Rannaleet.
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“It was amazing
to see how much can actually be
accomplish-ed with
relatively limited
resources.” Anne Holm Rannaleet,
IK partner
rESTriCTEd APPliCATioN The method of applying insecticide includes bringing heards of cattle in for treatment.
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Cover story
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A SimPlE CurE Tb rhodisiense is caused by a parasite that is transmitted to humans by tsetse flies that feed on infected cattle or wildlife. Cattle often carry the pa-rasites without themselves showing any symptoms. Latest estimates suggest that nearly all cattle in endemic areas carry the parasites.
Since cattle play such an important part as “re-servoirs” for the disease, the aim is to tackle its spread in a new way, by treating the cattle as well as people. It has been calculated that a person is a thousand times more likely to acquire sleeping sickness via the bite of a tsetse fly coming from a cow than from another infected person. Encouragingly, treatment of the disease in cattle is relatively simple and cost-effective with drugs and insecticides.
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“Gardena, another of our portfolio companies, is providing the pump sprayers for this first emergency intervention. The Universities will do the testing and sampling as well as training of the veterinary students, local veterinarians and local council leaders. They will also be relying on strong local involvement by bringing the project as close as possible to the Ugandan farmers.
“This project has a big teaching and training element. We want to build awareness and transfer knowledge on the interaction of human and animal health as well as sickness prevention techniques. Ultimately it is about helping people to do it for them-selves.”
Common cause. Anne Holm Rannaleet travelled with fellow IKARE Trustee Christopher Masek to Uganda for the intervention’s official launch in Kam-pala on 11 October 2006, followed by a field trip. “It was amazing to see how much that can actually be accom-plished with relatively limited resources when a group of dedicated people representing different skill-sets get together united by a common cause,” she says.
“The enthusiasm shown by the veterinary students involved in the field work, treating and spraying as many as 700 cows per team per day, was inspirational and encouraging,” Masek adds. “We want to leave a permanent mark and develop something that will endure and become self-sustaining.”
“This emergency intervention is hopefully just the beginning,” Rannaleet continues. “If we can prove that it can be done on this smaller controlled scale then the aim is to roll it out across the country.” For this second phase, external funding also needs to be sought. IKARE envisages extending its initiative to include further sup-port from others of its portfolio companies, its corporate network and the wider PE community.
Cover story
CooPErATioN iS kEyThe emergency intervention in Uganda relies on supply-ing drugs and easily usable insecticide products to farmers in the affected part of Uganda. The farmers are to be trained by local people who, in turn, have been trained by specialists from the University of Edinburgh and the Makerere University in Kampala.
The programme is supported by a thorough educational and awareness campaign – through radio messages, posters and so on – in the districts concerned.
CEVA Santé Animale has been working in co-ope-ration with the Univer-sity of Edinburgh, Makerere University and UTCC/COCTU in Kampala to tackle the emerging sleeping sickness crisis in Uganda.
Headquartered in Libourne, near Bordeaux in France, the international veterinary company develops, manufactures and distributes animal health pro-ducts. The company’s main expertise is in anti-infectives, vaccines and reproduction control devices.
Gardena, which has provided a consignment of pump sprayers to help out in Phase 1 of the block treatment programme, is Europe’s leading gardening equipment company.
“We want to develop something
that will endure and
become self-
sustaining.” Christopher Masek, IK partner
TEll iT likE iT iS Farmers are trained by local people who, in turn, have been trained by specialists from the University of Edinburgh and the Makerere University in Kampala.
diAGNoSiS The method suppresses the spread of sleeping sickness by treating cattle as well as people. It has been cal-culated that a person is a thousand times more likely to acquire sleeping sickness via the bite of a tsetse fly coming from a cow than from another infected person.
1� ik news
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ik news 1�
Company profile
ith its recent investment in Pasteur Cerba, IK has gained the perfect base upon which to build a truly pan-European player in the medical diagnosis field. Via Laboratoire
Pasteur Cerba, the group carries out specialised tests for laboratories and hospitals. It has a leading market position in France with a 40% market share.
“Pasteur Cerba has highly-skilled staff of outstanding quality and is already firmly established in France,” notes IK partner Christopher Masek. “We plan to work with management to grow the business, organically and via add-on acquisitions, across Europe.”
Pasteur Cerba’s CEO, Catherine Courboillet, joined the group in 1999 as chief operating officer. She agrees that the strategic priority for Pasteur Cerba is to expand geographically, as well as to develop the group’s range of tests and medical expertise.
“We are already holding talks with targets in Spain, Belgium, Switzerland and Germany,” she says.
€100 million in sales. Based near Paris, Pasteur Cerba has a staff of 500 and a panel of over 1,500 different tests within infectious disease, virology, auto-immune disease, allergy, endocrinology, oncology, toxicology, molecular genomics and cytology. Major strengths are its unique position in Europe, its large range of tests, high level of expertise and strong focus on customer service. The group achieved sales of some ]100m in 2005, with 95% of its revenues coming from France and the remainder from the rest of Europe and Northern Africa. Clinical pathology represented 80% of turnover last year, fol-lowed by genetics, cytology and animal health.
Pasteur Cerba’s top management team is domina-ted by two women. Catherine Courboillet in charge of management and operations is working alongside Christine Bergeron, a worldwide specialist in the field of cytology. Bergeron is in charge of medical expertise and scientific development.
“This is actually quite common in our field. But at Pasteur Cerba it’s not a question of positive discrimi-nation, it just happened this way,” says Courboillet.
Management takeover in 2002. Pasteur Cerba was founded in 1967 to act as a new type of reference centre for specialised tests being carried out for
W
PASTEUR CERBA KEY FACTSCompany: Pasteur CerbaActivity: Carries out specialised tests for laboratories and hospitalsEstablished: 1967Based: Near Paris, FranceCEO: Catherine CourboilletEmployees: 500Financial: Sales of some €100 million in 2005Strengths: Unique position in Europe, its large range of tests, high level of expertise and strong focus on customer serviceStrategic priorities: Expansion
with a “buy-and-build” strategy supported by iK, pasteur cerba aims to expand outside its native france.
DIAGNOSIS SPECIALIST: Safeguarding a culture of scientific excellence.
medical laboratories and hospitals in the local region. In January 1999, it merged with the Special Medical Test Center of the Pasteur Institute in Paris to become the largest specialised biology laboratory in Europe, before being taken over by its management, backed by Astorg Partners, in 2002.
The company has developed rapidly over the last ten years, doubling its activity levels while safeguard-ing its culture of scientific excellence and focus on quality.
Looking ahead, Courboillet believes that Pasteur Cerba has found a well-qualified partner in IK to support its “buy-and-build” strategy.
“IK’s expertise in identifying and securing cross-border acquisitions is key to our international expansion,” she says.
Pasteur Cerba will also be buying into a buoyant market. Total medical spending in France has increased by 7%, on average, over the last five years. Steady underlying growth in the future is further expected, as in the rest of Europe.
“We plan to grow the business,
organically and via add-on
acquisitions, across
Europe.”Christopher Masek,
IK Partner
Healthy diagnosis for test specialist
Catherine Courboillet
Christine Bergeron
1� ik news
Expansive electronicselfa is a household word among electronics professionals and enthusiasts in the nordic region. with the help of industri Kapital, the catalogue distributor company is now transitioning out of family ownership.
65,000 ArTiClES Swift supplier ELFA aims to stock most electrical and electronic components, as well as cabling and tools.
ik news 1�
Company profile
“We can do a lot more
in the Baltic states and
Eastern Europe. We
can also become
much larger in Russia. The future lies largely eastward.”Bo Lindquist CEO, ELFA
wift, secure and simple”. Those are the three S’s on which Nils Jensen built ELFA, the Swedish electronic components distributor, when co-founding it in the 1940s.
The three S’s are just as valid and important today. They are largely what makes ELFA tick, enabling it to dominate its home market and leaving international competitors like Electro- components and Premier Farnell far behind.
“If you place an order with us before five in the afternoon, we ship the goods the same day,” says ELFA CEO Bo Lindqvist. “That’s swift. They will be the right ones, the ones you asked for. That’s secure. And you can order them any way you like, online, by phone or by mail. That’s simple.”
Lindqvist took over as head of ELFA in 2001, when the economic downturn was just kicking in. One of the hardest hit sectors was high-tech and electronics, but ELFA managed to steer clear of the worst storms.
“While the Nordic market dipped by around 40%,” says Lindqvist, “we lost only 10% in volume during those years. The comeback has been tough, but now it feels like we’ve gathered strong growth momentum.”
Time for a change in ownership. Industri Kapital came in as the new owner this August. The Jensen family has stayed on with a 15% stake in the company. After Nils Jensen died in 2004, it became clear that a new external owner would be the best way to manage both a generational shift and the challenge that expansion inside and outside the Nordic region was posing. ELFA was becoming too large and widespread for a traditional hands-on family approach.
The entrepreneurial and family character of the business has been present ever since Nils Jensen took a job as a steward on the Swedish-America line in 1947 with the purpose of bringing back electronic components, of which there was a severe shortage in war-torn Europe. The post-war United States, on the other hand, had a surplus of radio components. Jensen also made enough friends among his fellow crew mem-bers to secure a supply also after signing off at the end of two voyages.
The workman’s bible. Today, ELFA is the undisputed leader in Sweden, with 22,000 active customers and around 60% of the market. Elfa sells and distributes over 65,000 articles related to electrical and electronic components, as well as cabling and tools. The largest customer segment is maintenance and repair, which accounts for around 60% of its sales.
The ELFA catalogue, thicker than most phone directories, is very well known and a bible for many workmen and electronic design specialists in Sweden and the Nordic region. With 2,200 pages and editions of 130,000 copies, it is even used for training future engineers.
“If you are out of something, call ELFA,” says Lindqvist. “Our ambition is to always have enough items on stock. We should be the first option for every client.”
Today, ELFA revolves around its main warehouse and distribution centre just outside of Stockholm. For Swedes in the IT business, it is well known as the former IBM printing plant. Now, the modern and airy building has been turned into a state-of-the-art distribu-
tion hub that puts together and dispatches an average of 2,500 orders per day.
In addition, ELFA operates five larger stores around Sweden through which it channels approximately 10% of its sales. ELFA has total sales of around SEK 900 million, of which half is in Sweden. The group’s operating profit last year was SEK 104 million. To boost growth, ELFA is also looking at the small and medium-volume segment, in which contract manufactures like Note and PartnerTech would be clients.
Eastward bound. Otherwise, the company’s greatest potential lies outside Sweden, in the Nordic region and beyond. ELFA opened in Norway in 1992 and, with sales of around SEK 200 million, now has an even higher market share than in Sweden. Finnish sales of SEK 120 million amount to a 25% share of the market, leaving plenty of room to grow. ELFA just recently entered the Danish market, which is regarded as a tricky one. Current sales are SEK 35 million, too little to be efficient.
“We need to at least double that in order to be profitable, so we may be looking at some acquisitions,” says Lindqvist.
In 1999, long before Poland became a member of the European Union, ELFA entered the Polish market. Today, it has 7,000 active customers, sales of SEK 50 million and steady growth. Finally, ELFA has an export division for other markets, chiefly Eastern and Central Europe. The export sector is growing by over 35% every year and holds a lot of promise.
“We see numerous opportunities here,” says Lindqvist. “We can do a lot more in the Baltic states and Eastern Europe. We can also become much larger in Russia. The future lies largely eastward.”
S
STATE-of-ThE-ArT Elfa’s distribution hub close to Stockholm dispatches 2,500 orders per day.
ELFA KEY FACTSCompany: ELFAActivity: Catalogue distributor of electronic componentsEstablished: 1945Based: Järfälla, SwedenCEO: Bo LindqvistEmployees: About 430Financial: Sales of some €88 million in 2005Strengths: A leading distributor in the Nordic countries, Poland, the Baltic countries and Russia. Recognised for its exceptional service level.Strategic priorities: To continue expanding, largely eastward.
1� ik news
Q&A6 questions 5 persons
INVESTORS
1. Why do you invest in private equity?
2. What qualities do you look for in a good private equity manager?
3.How do you think the market may change in the future?
4.What are the biggest issues facing the PE industry?
5. What advice would you give to a new private equity investor?
6. Apart from visiting the new IK Paris office, what is your favourite thing to do when you are in France?
Peter McKellar, Standard Life Investments
Risto Autio, Varma Helen Steers, Pantheon Ventures
Kathleen Bacon, Harbour Vest
We are looking for high absolute returns and, over the longer term, significant out-performance to more traditional asset classes, such as listed equities.
We invest in private equity on behalf of over 200 institutional investors across the world. Our mission is to provide superior investment performance for our clients – an objective that we have delivered on since 1982, when we first started offering private equity investment solutions.
We have been investing in private equity over the last three decades and have proved that it can deliver superior returns to other asset classes. It can be cyclical, as well as volatile, and we diversify our business by time, geography and by stage.
Private equity provides a good diversification component in our portfolio and also gives a good level of absolute returns.
Things that are very hard for a Scotsman, such as eating, drinking and relaxing, preferably in the south of the country! Any thoughts about a Cannes office...?
The main criteria is the ability to make reasonable, sustainable returns. The manager has to be able both to make good investments and good exits.
It is crucial that the managers keep their heads cool, especially when there is a lot of competition in the market. Tur-ning down deals that you have been working on for maybe a couple of years is hard, but maintaining the discipline is the key to long-term success.
There are no quick profits available, and building the ne-cessary network to get reliable information on the actors in the market means a lot of footwork and patience. But it is worth doing, because you will be dealing with the smart guys in the market.
Notre Dame is an impressive place.
There are many great things to do, like run along the Seine and through the Louvre gar-dens, walk along the Champs Élysées, visit the smaller museums, go to the Stade de France for a match, attend the opera or ballet. However, the best thing about Paris is the romance of the city, so a weekend with my husband is my absolute favourite thing.
Important elements are past per-formance, organisational structure and the strength of the team. We want to get to know them and understand their philosophy and process. And we want a differentiated investment strategy that is well adapted to the market segment. Finally, alignment of interests between the manager and its investors is a crucial point.
Over the past few years, the industry has grown, the service businesses supporting private equity have become more pro-fessionalised, the market has become more organised and efficient, and it is attracting more attention from all quarters. This will continue as private equity evolves into a mainstream asset class.
Private equity has taken centre stage and is now a great deal more “public”. This means that industry participants have to be aware of the wider social and economic implications of their activities. The positive role of private equity in helping to pro-duce a more efficient economy often seems to get overlooked in mainstream newspapers.
To be thoroughly informed about both the returns and the risks involved in constructing a high-performance private equity portfolio. Also, they should be aware that this is a very long-term asset class and that it takes several years before performance becomes obvious – so patience is a virtue!
As a confirmed Francophile, I en-joy spending time with my French friends, eating well (very easy to do in France!), window-shopping in my favourite places, like the Marais area and the Antiquaires du Louvre, and strolling down the magnificent boulevards and avenues in Paris. If I have any extra moments, you might find me catching a French movie or going to the theatre.
quality and consistency of returns. A clear strategy that plays to the strengths of the team and investing markets. Strong leadership and depth in the team. An ability to identify value where others may not and to structure around the risks. Alignment of interests with investors and manage-ment of portfolio companies.
Further segmentation by size of fund and therefore size of investment. Further geographic expansion of managers globally or on a pan-European basis. Further sector specialisation, especially in the large buyout market.
Be decisive – you need to have a well organised due diligence process. Be patient – it takes a long time to build up a base of private equity in-vestments and an even longer time to reap the benefits. Spend time with the team.
First and foremost, a cohesive team with the requisite skills, track record and experience and, im-portantly, one that will be around for a fund’s life. We also focus on ensuring that there is a credible and coherent strategy, both for the manager and for the relevant geography and sectors.
As the market continues to grow, we shall see more transparency in track record disclosure, funding structures and access to the market. There is going to be a greater drive by investors and intermediaries for actual and synthetic liquidity, which is going to make the market a lot less “private”.
To use a fund of funds to provide access, knowledge, portfolio selection and performance! If the investor does not use a fund of funds, they should seek appropriate manager and vintage year diversification.
The global consolidation of many businesses creates investment opportunities for private equity funds. The mega-size fund managers may lose some of that entrepreneurship which is built-in in smaller teams, but there are clearly a lot of business deals to be done.
More money coming from private individuals will lead to greater regulation. At the fund level, more will be raised by retail clients through publicly listed or privately placed vehic-les, and at the portfolio level, more of the debt will be held by different stakeholders, which will all lead to difficulty knowing who your stakeholders are.
One has to be mindful that there is a cyclicality to private equity. While the opportunity set for deals continues to grow, significant liqui-dity, both from a debt and equity perspective, needs to be watched carefully and business plans need to be credible and sensitised.
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Private equity news
Andre Jaeggi, Adveq
We started Adveq as a fund of funds business in 1997, recognising that only a continuous and systematic build-up of a private equity portfolio was successfully generating a premium return compared to listed equity investments.
Consistency in strategy and a skill-set that matches. Usually, we lean towards managers with a more operational and commercial understanding of businesses than a purely financial one. It is a conservative approach that is not guaranteed to pay off when mar-kets are booming. However, we don’t know how long the current boom in buyouts will last.
Investors are behaving as if they were seeing the last opportunity to invest. Further, leverage is too easily available. It is sad to say, but the market needs a few accidents to correct the exag-gerations.
To stroll around the old streets of Le Marais and spend an evening with my wife in the side streets of Montmartre – or discover some of the up and coming quarters.
Successful fund managers will be the ones with a clear focus and specialised skill-set. That is what allows them to create exits in difficult times.
Don’t invest in private equity for the sake of being in the asset class. Go with a selection of the very best managers in any given segment of the market, even if this means placing less money than you would like. It’s an opportunities business, not an allocation business.
n /IK SPEAKER OPPORTUNITIES/ AuTumN 2006/SPriNG 2007
n /EVCA/ NEW ChAirmAN loizAGA: ”EXCiTiNG oPPErTuNiTiES AhEAd”At the EVCA annual general meeting in June, Javier Loizaga was elected EVCA Chairman for the upcoming period. Mr Loizaga is currently the CEO and Managing Partner of Mercapital, one of the oldest Spanish private equity managers.
“The industry is not only growing in size, but it is also becoming more diverse,” commented Mr Loizaga following his election. “While a large amount of money in 2005 went into mega buyouts, 78 per cent of investments by number were made in companies employing fewer than 100 people. Mid-market buyouts activity has also grown.”
“However, there are more features in common than not among these increasingly diverse segments. At the same time, the industry is increasingly becoming global. These factors create exciting opportunities for the private equity and venture capital community and EVCA is committed to nurturing and growing that community to continue delivering results.”
n /STATISTICS/ EvCA QuArTErly ACTiviTy iNdiCATor Q2 2006Funds raised increased by 80% over q1 2006, continuing the positive evolution already registered in the previous quarter.
Investments showed a 40% increase over the q1 2006 amount, mainly due to a 70% increase in buyout investments. The number of investments remained stable compared to q1.
Divestments increased by 20% over the q1 2006 amount producing an inversion of the declining trend registered in the previous two quarters.
Evolution of European private equity activity by amount (index - q1 2002 = 100)SOURCE: EVCA/THOMSON FINANCIAL/PRICEWATERHOUSECOOPERS
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ik Partners are speaking and participating in several panel discussions this autumn and next spring.
20-21 September 2006frankfurt, GermanyPrivate Equity World Germany.Keynote and panel discussion on “Present state and future opportunities in private equity in Germany” detlef dinsel
27 September 2006Copenhagen, denmarkKapitalfonde – håndtering og praktiske udfordringer, “How Private Equity funds work” mads ryum larsen
7 october 2006uppsala university, Sweden“What is Private Equity?”björn Savén
17 october 2006karlstad, SwedenPanel discussion on Private EquityGerard deGeer
26 october 2006Stockholm, Sweden Affärsvärlden, Private Equity seminar. Keynote on ”Trends in Private Equity” Gustav Öhman
14–16 November 2006 Paris, france Super Investor. Panel discussion on “Value Added: What does it actually mean and how many GPs offer it in reality?”Christopher masek
27 November 2006lund, SwedenLTHbjörn Savén
30 NovemberStockholm, SwedenSVCA training course. ”Active ownwe-ship in a Private Equity setting”Anne holm rannaleet
4 december 2006 Stockholm, SwedenSNS Monday Club Meeting. “What is Private Equity?”björn Savén
14 december 2006Stockholm, SwedenSeminar on “Understanding enterprise”björn Savén
19 January 2007zurich, SwitzerlandPrivate Equity Saved conference. Panel discussion on “How GPs position them-selves for the PE market of the future” mads ryum larsen
26 february – 1 march 2007frankfurt, GermanySuper Return. Panel discussion on ”Private Equity on a high: What strate-gies are in place to deal with a future of difficulties in a downswing?”björn Savén Midmarket panel Gustav Öhman
Björn Savén
Javier Loizaga
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France’s GDP of [1,690 billion (in 2005) makes it the fifth most powerful economy in the world. The economic structure of the country has developed significantly over the last few decades. Today, the service sector is large even by EU standards, accounting for 73% of France’s GDP, while the industrial sector accounts for 24.3% and the agricultural sector represents 2.7% (figures from 2004).
The French economy is exceptionally diversified. Areas of strength include such different outputs as motor vehicles, transport equipment, telecommunications, agriculture and food, pharmaceu-tical products, aerospace technology, banking, insurance, tourism,
and – famously – luxury products such as cosmetics, fashion, perfumes and alcohol. Exports represent 27% of France’s GDP and manufacturing accounts for around three-quarters of total exports of goods and services.
On the rebound. At present, the French economy is experiencing a rebound from the last few years’ weak performance. According to forecasts from the British magazine The Economist, the growth of the GDP in real terms is expected to rise from 1.2% last year to 2.1% in 2006 and continue at 1.9% next year. Unemployment has fallen from 11 to 9% over the past 18 months.
At the end of September, the French government also announced plans to use the extra tax revenues caused by the rebound to cut the budget deficit to a six-year low, thereby returning to a level well within EU rules and, hopefully, contributing to a better economic climate.
diverse and service-oriented
think of france, and you inevitably think of great food, wine, liquor, fashion and visits full of joie-de-vivre. and while it’s true that agriculture, luxury and tourism are all important sectors for the french economy, france has much more to offer. in fact, france is one of europe’s most diversified economies, as well as a sizeable private equity market.
CAr CrEATorSOf all cars sold in the world, 15% are manufactured
by French companies. French carmakers Renault and PSA Peugeot Citroën
have a strong presence on the European market and are aiming at emerging markets such as China and Brazil. In 2004, the global production of the French car industry reached 5.93 million vehicles.
France:PH
OTO:
CHA
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EuroPE´S Third lArGEST iNduSTry French industry is the third largest among the European countries, after Germany and the United Kingdom. Western Europe, the Near and Middle East and Africa absorb about 80% of the industrial trade. Small and medium-sized businesses (i.e. with 20–499 employees) make up 96% of companies, employ 40% of the industrial workforce and realise 16% of total exports.
75 millioN TouriSTS CAN’T bE WroNGFrance has a magnetic pull on visitors from all over the world. In fact, the country is visited by more tourists than any other, 75.1 million to be exact (in 2004). Tourism represents 6.5% of France’s GDP.
A vEry WEll-CoNNECTEd CouNTry
With 6.1 million high-speed Internet con-nections, France
ranks third in Europe. No less than 48 million Frenchmen, 69% of the population, have a mobile telephone. The sector of the new technologies of information and communi-cation makes up 11% of the total industrial turnover.
A SCENT of luXuryThe French fashion and luxury industries have a total annual turnover close to €43.7 billion. Thanks to the world leader L’Oréal and to the well-known “grandes maisons” of fashion, France is the number one exporter of perfumes and cosmetics, with a market share of approximately 35%.
FRANCE KEY FACTS
NEW buSiNESSES
forEiGN dirECT iNvESTmENT iNfloWS, € billioN60
50
40
30
20
10
0
China
56
Franc
e
54.7
US
41.3
German
y
35.6
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ands
29.8
UK
29
Spain
22.5
Italy
15.5
*UEB
L
14.1
Japa
n
9.9
Polan
d
4.4
200.000
185.000
175.000
165.000
155.000
145.000
145.000
135.000
125.000
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l-00
Oct-00
Jan-0
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l-01
Oct-01
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l-02
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l-03
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60
50
40
30
20
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0
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56
Franc
e
54.7
US
41.3
German
y
35.6
Netherl
ands
29.8
UK
29
Spain
22.5
Italy
15.5
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9.9
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4.4
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185.000
175.000
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Over 200,000 businesses are set up or taken over each year in France.
Highlight
AGro-food iNduSTry AS NumbEr 1With a turnover of €124 billion (2004), agro-food is the most important industrial sector in France, with a 21.9% share of the total industrial turnover. The more than 3,000 compa-nies in this sector employ almost 400,000 people.
A hoT SPoT for PrivATE EQuiTy France is a major player in the European private equity market, right after the United Kingdom. In the first semester of 2006, French deals represented 22% of the total number of European buyouts, and 18% of the total value. In 2005, it respectively counted for 20 and 15% of European buyouts both in number and value.
n Population (2006): 61 million
n GDP (2005): €1,690 billion
n Workforce (2005): 27.6 million
n Unemployment (Aug. 2006): 9%
n Balance of trade (July 2006): €3.7 billion
n Total domestic debt (Jan. 2006): €1,107 billion
n Nominal public debt (Jan. 2006): 66% of GDP
* overseas territories not included
22 ik news
Pasteur Cerba Carries out specialised tests for routine testing laboratories and hospitals (via Laboratoire Pasteur Cerba). Has a leading position in France. Acquired in 2006.
SIA Group Renowned brand in the interior decoration industry. Acquired in 2005.
Consolis (Ex Bonna Sabla). The European market leader in prefabricated concrete. Acquired in 2005.
Idex France’s largest independent energy and environment services company. Its core activity is the technical maintenance and management of energy. Acquired in 2004.
CEVA Santé Animale Develops, manufactures and distributes animal health products. The company’s main expertise is in anti-infectives, vaccines and reproduction control devices. Acquired in 2003.
Knowledge development
following a successful track record in the french market, industri Kapital has opened an office in paris, complementing its existing offices in london, stockholm, oslo, and hamburg.
he French market is nothing new for IK, as the firm has been investing in France since 2000. When the Paris office opened in October, IK was simply increasing its presence in and dedication to the French market, building on its team of four investment professionals with deep knowledge of this market. IK will continue its hands-on
approach of investing in businesses with strong and successful management teams where there is potential for further growth and development.
“The opening of a dedicated Paris office reflects the increasing importance of the French market to us, as well as the success of our previous transactions,” says IK Partner Christopher Masek. “This will allow us to strengthen our presence and reinforce our position as a key player here.”
IK’s impressive track record in France includes eight investments to date.
T
WiTh ThE ChAmPS ÉlySÉES ArouNd ThE CorNEr
industri kapital’s Paris office is at 6 rue Christophe Colomb, just around the corner from Avenue des Champs Élysées.
Industri Kapital6 rue Christophe Colomb75008 ParisPhone: +33-144-43 06 60
Avenue Des Champs Élysées
Rue Lord Byron
Rue Vernet
Avenue G
eorge V
Rue Pier
re Cha
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Rue D
e Bern
Rue W
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Rue G
alilée
Rue Christophe Colomb
Avenue Marceau Ru
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Grand opening in Paris
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ChriSToPhEr mASEk
Laho Equipement One of the leading construction equipment rental groups in France. Sold to Barclays Private Equity in April 2005.
Labeyrie A French company producing upmarket branded food products. Sold to SIF in December 2004.
Groupe Fives An industrial engineering group thatLille International designs and produces equipment,
primarily for the automotive, steel and aluminium industries. Sold to Barclays Private Equity France in August 2004.
FRANCE PAST INVESTMENTSFRANCE CURRENT PORTFOLIO COMPANIES
ik news 2�
IK & portfolio company news
/PEOPLE/New managers at portfolio companies
marjut ontronen has been appointed CFO of Eltel Group. Mrs Ontronen brings extensive experience from the service business. Since 1989 she has worked with Otis in Finland, and since 2004 she has served as its CFO for the Nordic countries.
lottie Svedenstedt has been appointed CEO of KID Interiør AS. After working at com-
panies such as Åhléns, Ikea and H&M she has a broad experience of the international retail business. Ms Svedenstedt also has thorough knowledge of Kid after having been a member of the company’s board.
hans Pettersson has been appointed CEO of Super-fos. Mr Pettersson, who has extensive experience with industrial and production companies, was previously President of MacGREGOR AB. Pettersson took over as Superfos’ CEO in September 2006.
Jonas karlsson has been appointed CFO of Prevesta AB. Prev-iously he served as CFO
of ProfilGruppen (publ), a Swedish company in the aluminium extrusion business. Prior to that Mr. Karlsson worked at Öhrlings Price-waterhouseCoopers. Mr Karlsson took over as CFO at Prevesta in July 2006.
n /ExPANSION/ myrESJÖhuS oPENS NEW fACTory iN NorThErN SWEdENMyresjöhus’s subsidiary Smålandsvillan has opened a new factory for house manufacturing in Sundsvall, Sweden. The factory will produce houses for the northern region of Sweden. According to Mats Walter, Head of Marketing at Smålandsvillan, the region represents a large market in need of greater competition. ”This expansion enables Smålandsvillan to have nationwide coverage”, says Mikael Olsson, CEO of Myresjöhus. “We are counting on a sales increase after hiring ten new agents to sell Smålandsvillan houses in northern Sweden.” Smålandsvillan is expected to create 80 job openings in the region.
n /NEW NAME/ myrESJÖhuS GrouP bEComES PrEvESTA Prevesta is the new name of the Group of Swedish pre-fabricated house manufactu-rers consisting of Myresjöhus AB, Smålandsvillan AB and MyresjöMark AB. The name comes from Vesta, the Roman goddess of the home and the fireside.
n /PRIZES/ Gold, SilvEr ANd broNzE STArS To SuPErfoSAt the Starpack 2006 Awards, Superfos received Gold, Silver and Bronze stars for its two new paint packa-ging solutions. The Gold and Silver star – which were in the“Best consumer Packaging Non-Food” and “Best Component” categories – went to the Superfos quick-Roll container, which is a tin of paint with a built-in roller tray. The invention allows users to roll paint right out of the bucket.
n /LITERATURE/ dENmArk by ThE bookIK advisor Waldemar Schmidt has published “Denmark Limited – global by design” along with co-author Clare McCarthy. The book describes Denmark as a highly competitive industrial nation and includes stories of a selection of some of Denmark´s many world leading companies. Royalty income from the sale will fund the ”Denmark Limited Scholarship” for foreign MBA students at Copenhagen Business School. Order your copy at www.denmarklimited.com
n /STREAMLINING/ SuPErfoS divESTS AEroSolSSuperfos, the leading rigid plastic packaging manu-facturer, is selling its Aerosols division to the company’s management. This is a result of the streamlining of Superfos operations to concentrate on thermoformed plastic packaging, which started five years ago. Superfos is control-led by the IK1997 Fund.
uP NorTh Smålandsvillan’s expansion is expected to
create 80 new jobs.
holE-iN-oNE Superfos’ new tin of paint with built-in roller tray.
2� ik news
On October 1st Industri Kapital took an important step by opening a Paris office. In addition to significantly reducing the French team’s bonus air miles, this step marks IK’s commitment to a market on which it has ranked consistently among the top five mid-market firms for the past three years.
Cool investors.When we made one of our first investments in France, one of the local newspapers wrote that the Basque separatist movement, also called “IK”, had done the deal. Today, seven years since the “investisseur venu du froid” (investor from the cold) began its French development, we have become an established and leading actor in this competitive country’s middle market. The numbers speak for themselves: over w500 million in equity invested in eight companies and over 30 add-ons acquisitions, representing aggregate sales of nearly )4 billion and 20,000 employees with five successful realisations.
Nordic touch. IK’s success in France has been achieved through the leveraging of knowledge and investment discipline acquired throughout the organisation. We would not have invested in Laho had we not done so in Cramo in Sweden, nor in Labeyrie had there not been Pieters in Belgium, nor Fives-Lille without Crisplant in Denmark. IK’s continental European style, particularly its Nordic touch, is appealing to the French psyche.
Strong track record. The Paris office is critical in increasing the firm’s edge on a highly competitive market and ensuring even closer following of portfolio companies. The fact that this office was opened after securing a strong track record with professionals born and bred in the IK culture is fundamental, as internal confidence is arguably one of the most important factors in realising investments.
The Stockholm syndrome. For Björn Savén, a passionate reader of history, flying the IK flag in France also highlights the strong ties established between the Nordics and the Gauls, whether through Viking incursions in Normandy or Count Bernadotte’s appointment as King of Sweden.
In this respect, Björn diplomatically shows a balance between both nations. Having steadily been indoctrinated in the IK culture, I would rather refer to a more modern psychological condition called the “Stockholm syndrome” in which the victims take the side of their captors. While, with the increased development of IK’s presence in the French market, the question may soon pertain as to who is actually the ”victim” and the ”captor”. The melding of qualities from both sides will hopefully result in a hybrid superbly equipped to capture more than its fair share of the action.
Christopher MasekPartner, Industri Kapital
Viewpoint“IK’s
success in France has been achieved
through the leveraging of know-
ledge and investment
discipline acquired
throughout the organi-
sation.”
A piece of the action
“the paris office is critical in increasing the firm’s edge on a highly competitive market and ensuring an even closer following of portfolio companies. the fact that this office was opened after securing a strong track record with professionals born and bred in the iK culture is fundamental,” writes iK partner christopher masek.