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A NEWSLETTER FROM IK INVESTMENT PARTNERS o N 45/2019 04. IK acquires disruptive 10. Moving into specialist 14. Cybersecurity leader French asset manager Eres cables with 2Connect Infradata joins the IK portfolio LOCAL PRESENCE International REACH 18. Assessing the risks and opportunities as the world turns against single-use plastics
CONTENTS/EDITORIAL CONTENTS/IK NEWS FOREWORD /ISSUE 45/SUMMER/ THIS YEAR, IK WILL BE 30 – something of a mile- stone in private equity, an industry that was in its infancy when we were founded in 1989. Our age confers distinct benefits, especially 2019 when political, economic and market condi- tions are hard both to gauge and predict. Fortunately, we have experienced a number of cycles during the past three decades and learnt valuable lessons along the way. As we look ahead, we feel confident and well prepared. We have grown rapidly in recent years, while remaining true to our roots as a Northern Continental Europe firm combining local knowledge with an interna- tional footprint. Today, following the opening of our Copenhagen office this summer, we have offices in all the areas where we invest (see page 6). This both underlines and gives credence to our belief in the importance of a local presence. P – 04 P – 06 P – 08 We are not just financial professionals, flying DISRUPT AND GROW OPEN FOR BUSINESS A FAMILY BUSINESS in to see companies without truly understand- Eres is a pioneer in the French IK has opened a new office in NetCo specialises in the repair ing where they come from and where they employee profit-share and Copenhagen, serving Denmark and maintenance of conveyor want to go. Instead, we speak their language, retirement plan market. A and Finland. The move means systems. A family business for both literally and figuratively. Unlike most genuine disruptor, the company that IK now has a dedicated several generations, the French local firms, however, we have an international has substantial growth potential, presence in all of its chosen firm is now expected to expand network too, so we can really help portfolio as part of the IK portfolio. investment markets. internationally, with IK’s support. companies to expand beyond their borders. In recent months, this combination has helped us to secure investments in exciting businesses such as Eres (page 4), NetCo (page 8), SCHEMA (page 12) and Infradata (page 14). All fast-growing enterprises, they recognise the need for established, external expertise to allow them to fulfil their potential. But growth is not enough: companies in our portfolio have to demonstrate that they are su stainable and build their businesses accordingly. At IK, environmental, social and governance (ESG) issues have long been integral to our investment approach but we are increasingly P – 10 P – 14 P – 18 aware of their importance both among our MAKING A CONNECTION SECURITY MATTERS BEYOND PLASTICS investments and within our own firm. 2Connect is a manufacturer Netherlands-based Infradata is a Amid growing awareness Climate change is a core focus for us: we of specialised cables and leading provider of cybersecurity of plastic’s impact on the are embedding it within our investment connectors. A leading player in solutions. Having been acquired environment, concerted process and we are keenly aware of the its niche, the company has now by IK, the company is expected efforts are underway to reduce need for action (see page 18). We will been acquired by the IK Small to consolidate and extend its waste. The new mood brings also be publishing a report on our own Cap II Fund and is expected to position across Europe. challenges, but also long-term carbon footprint this year, a yardstick deliver fast-paced growth over opportunities. against which we will measure the coming years. ourselves in future. We approach the rest of the year with optimism. And we hope you Editorial Director: Mikaela Murekian, © 2019 IK Investment Partners Ltd. All rights reserved. Neither this enjoy this edition of IK News. mikaela.murekian@ikinvest.com publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, Texts: Joanne Hart Art Direction: 25AH Design Studio AB, www.25ah.se mechanical, photocopying, recording or otherwise, without the prior Mikaela Murekian permission of IK Investment Partners. IK News is published twice a www.ikinvest.com year by IK Investment Partners, T he Adelphi, 1–11 John Adam Street, EDITORIAL DIRECTOR London, WC2N 6HT, UK. 2 ISSUE 45/SUMMER 2019
IK /SPOTLIGHT ADD-ON R EBRANDING FURTHER EXPANSION FOR COLISÉE OPEN FOR BUSINESS COLISÉE, A LEADING elderly care provider in France, Italy and Spain, has HIGHLY REGARDED NORDIC payment company OpenSolution has r ebranded acquired Armonea Group, a senior care specialist in Belgium, with a growing its entire business under the name OPEN. The Sweden-based group b ecame presence in Spain and Germany. part of the IK Small Cap I Fund in 2016, since when it has made several Backed by IK since 2017, Colisée has grown significantly over the past three acquisitions, including KDR in Norway and Finnpos in Finland. Now they will all years. Combined with Armonea, it will become the fourth largest player in the use the OPEN brand. European elderly care sector, with around €1bn of revenues, more than 14,000 OPEN covers the entire value chain of payment solutions, making it a single employees and almost 27,000 residents. point of contact for more than 13,000 customers throughout the Nordics “This is the combination of two recognised players in their core geographies, altics. In conjunction with the rebranding, OPEN will launch the next and B with a clear alignment in terms of culture and shared values,” says Christine generation of point-of-sale (POS) solutions to restaurants, convenience stores Jeandel, CEO of Colisée. and cruise ships. “We are delighted to support Colisée in building the fourth largest European “We know that an innovative payment solution can increase a company’s player, thus actively participating in the reshaping of a consolidating industry,” revenue by up to 30% as well as improve employee wellbeing in the w orkplace. adds Dan Soudry, managing partner at IK. OPEN’s system is the market’s most complete cash register system with everything from hardware, payment solutions, reporting tools, integrations and support,” says Mikael Hedlöf, CEO of OPEN. AWARDS IK WINS IN FRANCE OR Mid-Cap GRAND PRIX FOR IK Fund of the IK INVESTMENT PARTNERS has been named Mid-Cap Year Fund of the Year in France at the annual awards ceremony Private Equity Magazine, France of leading industry journal Private Equity Magazine. Collecting the award, IK partner Rémi Buttiaux said: “We are proud and delighted to accept this award twice over the last three years. This rewards the hard work and dedication of the entire French team. We also gain invaluable support from the rest of IK and this award speaks ACQUISITION volumes about the way the entire firm works and interacts with each other.” A NEW FIRE PROTECTION IK made its first investment in France 2000, and opened a dedicated office in Paris since 2006. INVESTMENT FOR IK IK HAS ACQUIRED BST Brandskyddsteamet, a leading provider of active fire We are proud and delighted protection services in Sweden. Founded in 2012, the company has grown rapidly since then to become the number one operator of sprinkler system services in to accept this award twice over the Sweden, with a full-service offering and a blue-chip client base. last three years. This rewards the “We are truly impressed with BST management and employees, and we look forward to supporting the company as it continues on its growth trajectory,” says hard work and dedication of the IK partner Kristian Carlsson Kemppinen. entire French team. This is the third fire protection investment made by IK Funds, following the RÉMI BUTTIAUX, PARTNER, IK highly successful Minimax transaction and the investment by IK Small Cap I Fund in svt Group in Germany. ISSUE 45/SUMMER 2019 3
INVESTMENT: ERES IK ACQUIRES growth of about 20% for several years. It has amassed almost €3bn of assets under manage- ment and has a diversified base of around 140,000 end customers – focused on small and mid-sized LEADING PROVIDER enterprises (SMEs) and individual savers. The company is also extremely highly rated by clients, competitors and industry experts. OF EMPLOYEE MAKING WAVES “Eres is a truly disruptive business in profit sharing and retirement savings management. It is swift, agile and taking share from the incum- PROFIT-SHARE bents. It also operates in an area that has been under penetrated to date. Around 70% of large companies operate employee profit-share and retirement plans but that falls to just 10% in the AND RETIREMENT SME space. As such, it is a very sound business with real scope for growth,” says IK partner Rémi Buttiaux. Eres was founded by four industry experts, PLANS IN FRANCE Jérôme Dedeyan, Olivier de Fontenay, Hervé Righenzi de Villers and Nicolas Vachon, who met at the end of the 1990s. Having already built successful businesses together, they identified the gap in the employee savings market and set up Eres to fill it. Eres is a leading provider of employee profit- The business has grown steadily from the b eginning, leveraging the founders’ share and retirement plans for SMEs and entrepreneurial spirit and their experience of the individuals in France. A disruptor in its field, financial sector. Today, much of the distribution function is outsourced to specialist and independ- the company has substantial growth potential. ent operators (for example, wealth managers, insurance brokers) but some larger clients are And it is now part of the IK portfolio. handled by Eres’ own experts. The combination of internal and external salespeople has allowed Eres to establish a nationwide presence, while retaining a lean culture, with just 40 employees. T HE FRENCH ASSET management industry client. Second, profit-share and retirement The company also has a strong management is large, well established and dominated plans are sometimes considered as non-core team, led by Mathieu Chauvin, who started his by banks and insurers. Most of these areas for them so their people are less trained career in commercial banking and joined Eres groups focus on products manufactured and up to date on the technical and regulatory soon after it was founded. in-house and distributed by internal retail aspects. Eres has adopted an open-architecture “I have known the founders for 18 years and networks. model so it can select and promote the best asset helped them build up Eres almost from the managers for its products, and its salesforce beginning. We launched the first employee ERES IS DIFFERENT have real expertise in the financial, HR and savings product together,” says Chauvin. Founded in 2005, the company structure legal complexities associated with retirement Having built up Eres into a highly profitable, products from a range of leading international and profit-share investment plans for both well-rated and fast-growing disruptor, Dedeyan fund managers to create optimal plans for companies and individuals.” and his colleagues began thinking about selling clients. Eres also works with more than 3,000 The numbers speak for themselves. The the company. Fortunately, IK was already well highly trained and independent distributors. market has been expanding at around 7% per prepared when the sales process started, because As a result, clients have access to an extensive annum but Eres has been delivering annual IK partner Thomas Grob knew the business well. choice of products and can discuss them with genuine specialists in the sector. As IK director Vincent Elriz explains: Eres is a truly disruptive business “Under the conventional business model, in profit sharing and retirement savings financial institutions sell their own products via their own distribution network. But there management. It is swift, agile and taking are two flaws with this. First, their offer lacks share from the incumbents. diversity and external benchmarking allow- RÉMI BUTTIAUX, PARTNER, IK ing for best and independent advice to the end 4 ISSUE 45/SUMMER 2019
INVESTMENT: ERES ERES COUNTRY France The underlying market for retirement and FUND IK VIII Fund SECTOR Business services employee profit-share plans is growing fast and is WEB www.eres-group.com likely to continue doing so. Eres is the only size- ACQ. DATE July 2019 able operator in its field pursuing the open-archi- ERES IS THE LEADING French independent tecture and independent distributor model. player in the advisory and structuring, asset management and distribution of employee VINCENT ELRIZ, DIRECTOR, IK profit sharing plans (PEE, PEI, PERCO and PERCOI), retirement schemes (PERP, PERE) A financial services expert, Grob was a manag- Chauvin and his team had already taken on and employee shareholding plans. Eres ing director at Tikehau Capital and a partner at day-to-day management of the business so the distributes its products through a network Equistone Partners before joining IK in 2018. He process has been extremely smooth. The transi- of more than 3,000 distributors (wealth had been following Eres for some time. tion is also well timed. management advisors, insurance brokers, “I had identified the business as one to watch “We are the only company in France that sells accountants) and addresses small and mid- some time ago. I had studied it closely and rec- a complete suite of employee savings and retire- sized companies. ognised its potential so when I joined IK, it was ment solutions. And the law has just changed in an obvious target for us,” says Grob. France to say that companies need to package VALUE CREATION STRATEGY “Thomas helped us originate and execute these two products together. This is something • Increase penetration of profit sharing and the deal. Thanks to him, we met the founders that the founders called and now it has so it is a retirement products before the sales process officially started and very exciting time for us,” says Chauvin. • Gain market share driven by its dynamic we already had a good understanding of the “Our employees are very excited too. It can distribution network, open architecture and business. Because we had done our homework be a difficult moment when founders leave a well-invested IT platform in advance, we were able to present them with business but everyone is really committed to • Use existing granular and diversified a strategic plan for the future, which they really the business – and has invested significantly in distribution network to achieve product appreciated,” says Buttiaux. it too,” he adds. diversification Looking ahead, there are multiple opportu- AHEAD OF THE PACK nities for growth. When the sales process began, it was limited “The underlying market for retirement and to a few parties who had demonstrated a real employee profit-share plans is growing fast interest in Eres. Competition was keen but rival and is likely to continue doing so. Eres is the bidders were local French firms, against whom only sizeable operator in its field pursuing the IK had a natural advantage. open-architecture and independent distributor “The founders could see that we had a lot model. The distribution network is growing to offer, in terms of a local presence allied too and Eres is both acquiring new clients and with an international footprint, that could selling more products to existing ones. So there help them expand inside France and abroad,” is a really strong base case for growth and we Buttiaux explains. will look at appropriate add-ons in France and The transaction was signed in March, with the abroad on a selective basis,” says Elriz. founders reinvesting as minority shareholders. “The scope for expansion is substantial. This They remain associated with the company but is an excellent company and we are confident will work on specific assignments, such as merger that it will deliver rewarding growth for all and acquisition opportunities and lobbying. stakeholders,” says Buttiaux. ISSUE 45/SUMMER 2019 5
ARTICLE: IK COPENHAGEN IK OPENS UP IN COPENHAGEN IK has opened an office in Copenhagen to serve the Danish and Norwegian markets. The move highlights IK’s commitment to the Nordic region and its multi-local approach. 6 ISSUE 45/SUMMER 2019
ARTICLE: IK COPENHAGEN F ROM THE TIME that IK was founded in 1989, the firm has focused on combining international reach with local expertise. Regional offices in key locations have Being in Copenhagen will played a major role in that approach. Over the years, new sites have been opened, as IK has help us to build out the IK brand expanded across its chosen investment space and franchise. There will be clear of Northern Continental Europe. These offices reflect and underline IK’s advantages as we know from our belief in the potential of certain jurisdictions experience in other regions. and localities. In 2017, for example, IK opened MADS RYUM LARSEN, PARTNER, IK a dedicated office in Amsterdam, a recognition of the role that Dutch and Benelux companies play within the IK portfolio. “We have completed a number of transac- tions in the Benelux over the years and we “We describe IK as pan-European but really enmark and Norway and we are highly D felt the time was right to establish a local we are multi-local and the Copenhagen office proactive in our deal sourcing but being on presence with an on-the-ground team,” says reinforces that approach,” he adds. the ground will give us a lot more flexibility. IK partner and head of investors relations The Copenhagen team will include six profes- We can meet more companies, engage in more Mads Ryum Larsen. sionals focused on the mid-cap market, as well bilateral discussions and develop even stronger The opening of an office in Copenhagen this as a local small-cap team and Ryum Larsen. long-term relationships,” says Klitbo. spring follows a similar logic. “I will still be travelling a lot to meet with “Being in Copenhagen will help us to build investors but it’s going to be great to be back in out the IK brand and franchise. There will be TRANSFORMATIVE M&A Denmark after such a long time,” he says. clear advantages, as we know from our experi- “It is a natural step for us. It completes the IK currently has three Norwegian and two ence in other regions,” Ryum Larsen explains. branching out of our deal teams, so they sit in Danish companies in its portfolio and has a the jurisdictions we invest in. The team covering long history of successful investments in both LOCAL ADVANTAGES Denmark and Norway was based in London but countries. Looking ahead, Ryum Larsen and The decision has environmental benefits too. we have now reached a point where it makes Klitbo believe there is considerable potential to Currently, the Danish/Norwegian deal team more sense for us to be based locally,” says IK develop IK’s regional presence still further. spends hours on planes each week. Now com- partner Thomas Klitbo. “We already have a good network in panies and intermediaries are just a short car or bike ride away. “Everything becomes that much easier and We are already seeing the benefits of more convenient, and it really helps our envi- ronmental footprint,” says Klitbo. moving here. And we believe it will only get Some investors have asked why IK has better. Above all, this underlines our commitment chosen to open the Copenhagen office now, as it has already been investing in Denmark and to the Nordics and our local approach. Norway for many years. THOMAS KLITBO, PARTNER, IK “It is a process and the time is right. The team is ready, IK is ready and, with ESG rising up the investor agenda, being local is more important than ever,” says Ryum Larsen. IK is already working on several add-on transactions and there is a strong pipeline of new deals. “We are already seeing the benefits of mov- ing here. And we believe it will only get better. Above all, this underlines our commitment to the Nordics and our local approach,” says Klitbo. There is a personal element for both Klitbo and Ryum Larsen too. Both are Danish and both have spent more than a decade away from home. “It will be really interesting to return to Copenhagen, after all this time,” says Ryum Larsen. “Being based in the place where you were born does have certain lifestyle benefits,” adds Klitbo. ISSUE 45/SUMMER 2019 7
INVESTMENT: NETCO IK INVESTS IN CONVEYOR MAINTENANCE SPECIALIST GROUPE NETCO NetCo is a European specialist in the maintenance of conveyor systems, with a leading market position in France. A family business for several generations, NetCo is now expected to expand internationally, with IK’s support and expertise. N ETCO CAN TRACE ITS ROOTS back to waste management quarries and logistics. NetCo has real oppor- 1902, when Monsieur Perriez opened a “NetCo’s business is key. Customers have small business in Bordeaux, providing carry conveyor belt systems, which are subject tunities to expand in Europe, general supplies to the navy, industry to extreme weather conditions and constant particularly in Germany, the and agriculture. use. Over time, the belts break and when Today, NetCo is still run by descendants of that happens, they need to be repaired or Nordics and Spain. We see this the founder but the company has evolved to replaced as soon as possible. Otherwise, the full business becoming a genuine become a leading provider of conveyor belt production lines are down and factories are left maintenance services, with clients in various sitting idle,” says IK partner Arnaud Bosc. pan-European player. end-industries such as, food manufacturing, The work is complex, highly technical and PIERRE GALLIX, PARTNER, IK 8 ISSUE 45/SUMMER 2019
INVESTMENT: NETCO on-core so very few companies have the n First, the company is a clear leader in expertise to do it in-house. Repairs are France but still has a clear scope for further NETCO generally regarded as emergency operations consolidation. Second, the client base is so proximity is essential. Yet the industry is extremely diverse: the top ten clients are fragmented, comprising hundreds of small responsible for less than 20% of sales between players across Europe. them. Third, the company has delivered In recent years, NetCo has proven to be the impressive growth in recent years, not just natural consolidator on the French market: through acquisition but organically too. the company has made 30 acquisitions since And of course, there is significant 2000, 12 of which have been completed in the i nternational potential. past three years. As a result, sales have soared “NetCo has real opportunities to expand in from €50m in 2016 to €110m last year. The pace Europe, particularly in Germany, the Nordics of change reflects the ambition of the current and Spain. We see this business becoming a managers, Samuel and James Perriez. genuine pan-European player with an even Samuel, 47, joined the family business in more dominant position in France and a 2000 and began to run the company in 2008. strong second leg in Northern Europe and the James, 40, joined from international consul- Iberian Peninsula,” says Gallix. COUNTRY France tancy Mazars in 2009. The distribution arm has scope for growth FUND IK Small Cap II Fund “We could really see NetCo’s potential: we too. It has already begun to expand in Europe SECTOR Business services have focused on growth over the past decade and discussions are underway with potential WEB www.groupe-netco.com but we know there is still room for further clients in Asia and Latin America. ACQ. DATE March 2019 expansion in France and huge opportunities abroad,” says Samuel. LEVERAGING KNOWLEDGE NETCO Founded in 1902 in France, NetCo From the start, conversations with the Perriez has grown to become a European leader in TIME TO GROW brothers were constructive. IK’s international the maintenance of conveyor systems across The company now operates from more than footprint and strong European presence key industries including quarries, food and 50 locations in France and has also moved into meant it was ideally placed to help NetCo heavy goods. Belgium, supported by former minority share- achieve its ambitions. In addition, IK recently Thanks to its robust operating model, holder Andera Partners. completed a successful exit from German NetCo has become a strategic partner for NetCo has also developed a distribution conveyor belt specialist Transnorm and is customers by supporting critical parts of their arm, leveraging its purchasing power to currently invested in LINXIS, a French engi- industrial processes. NetCo is headquartered procure conveyor belts for its own use and neering firm focused on specialised equip- in Bordeaux and operates 55 agencies with for competitors’. ment solutions. 500 employees across France. The business “This new business brings several advan- “Our pan-European presence and previ- has a further presence across Belgium tages. It provides NetCo with another string ous investment in Transnorm increased our and Luxembourg. to its bow, it bolsters margins and it gives the credibility and gave us access to people with company access to rivals, which can then be in-depth knowledge of the sector. Samuel and VALUE CREATION STRATEGY acquired, if appropriate,” IK partner Pierre James could see that we had experience in • Strengthening organic growth in existing Gallix explains. their industry and that we were relevant part- geographies IK first came across NetCo soon after the ners to accompany the European expansion • Consolidation of the fragmented European Andera investment, keeping a close eye on the and, over time, we developed a good relation- market business, particularly after the 2017 ship with them,” Bosc explains. • International expansion of the Distribution Belgian acquisition. The transaction was completed in March Business line “We knew Andera from a previous transac- and there is already considerable momentum • Further consolidation within the French tion and, given the firm’s size and focus, it was around the investment. market clear that NetCo would need a larger partner in “This is a real buy-and-build story with time,” says Bosc. strong potential at home and abroad. We are INVESTMENT HISTORY The business duly came on the market in very excited to be working with the Perriez • Acquired from Andera Partners in late 2018, by which point IK had already made brothers and are really optimistic about the March 2019 some preliminary assessments of the company future,” says Bosc. and gauged its potential. Our pan-European presence and previous investment in Transnorm increased our credibility and gave us access to people with in-depth knowledge of the sector. ARNAUD BOSC, PARTNER, IK ISSUE 45/SUMMER 2019 9
INVESTMENT: 2CONNECT H ARLEY-DAVIDSON MOTORBIKES are famously loud, so much so that riders’ behaviour is restricted in certain loca- tions. The Jekill & Hyde Company has created a novel solution to this problem. The firm specialises in GPS-linked exhausts, which allow Harleys and other bikes to roar when they are on the open road but quieten down in built- up areas. The technology is highly effective and the wiring that makes it possible is designed and manufactured by 2Connect, a Dutch company based in the town of Waalwijk. Founded by Marc van der Put in March 2000, 2Connect produces bespoke intercon- nection devices, used in a vast array of end products, from MRI scanners to agricultural vehicles to smart lighting. The market is extremely dynamic, driven by growing automation, miniaturisation and digitisation across industry. “2Connect is a truly impressive business. It’s focused on a niche segment of industry, it’s highly specialised and it’s delivered double- digit organic growth since Marc founded the business nearly 20 years ago,” says Sander van Vreumingen, IK partner and adviser to the IK Small Cap II Fund. The bespoke nature of the product range is highly beneficial too. “Larger peers are not interested in this area MAKING A because volumes are lower and the solutions custom made, which requires a specific business set-up. The cables and connectors are embedded into the end products’ design CONNECTION IN so customers are very sticky,” says IK director Frances Houweling. REACHING OUT THE BENELUX Most of 2Connect’s clients are based in the Netherlands but they ship their p roducts around the world, giving the firm a real international footprint. Apart from the Waalwijk headquarters, there are two factories in Romania and an office in Hong Kong to 2Connect is a manufacturer of specialised serve clients operating in the Asian market. However, as van der Put himself explains, the interconnection solutions. A leading and opportunity in his home country has been so differentiated player in its niche, the great that he has not really needed to look for customers elsewhere. company has now been acquired by the “More than 80% of our sales are generated by companies operating within a 150-mile IK Small Cap II Fund and is expected to radius from our offices,” he says. When van der Put launched 2Connect in 2000, deliver fast-paced growth over the there were no customers, no orders and no office. But there was an idea – to supply specialised coming years. cables for original equipment manufacturers (OEMs). The strategy resonated with van der Put’s target audience and the business grew. “Initially, we outsourced production. But 10 ISSUE 45/SUMMER 2019
INVESTMENT: 2CONNECT over time, we brought production in-house and were very enthusiastic about the business and extended our range to specialised connectors. we had ideas for the future that even Marc had 2CONNECT Today, we are responsible for design, manufac- not thought about. He really responded to our ture and assembly. We become involved with vision for the company, we developed a great our customers’ needs at a very early stage so we connection, established a relation of trust and are much closer to them. In essence, we have everything fell into place,” says Houweling. evolved from a component supplier to an inte- The transaction was noteworthy too because grated solutions provider,” says van der Put. it was IK’s first small-cap investment in the Having built up the business over the years, Benelux, highlighting the benefits of opening however, van der Put realised he needed some an office in Amsterdam and establishing a dedi- external support. cated small-cap team for the region. “The company was growing at a really fast “We’re happy to have signed such an exciting pace, but I realised that we needed external first transaction here and it is always good to support to take it to the next level. There were work with a founder too, especially someone highly skilled people in the business but it was who is so passionate about his business,” says not enough and, to be honest, I’d been running van Vreumingen. the business for 19 years and I felt it was time The deal was signed at the end of 2018 COUNTRY Netherlands to get an external perspective. Ultimately, IK and work is now underway to strengthen, FUND IK Small Cap II Fund seemed like the best partner. Their approach professionalise and grow the business. A COO SECTOR Business services to the business was really appealing, we had and a CFO have been appointed and a strategic WEB www.2-connect.info several constructive meetings and the feeling plan has been drawn up, focused on expansion ACQ. DATE November 2018 was right. In the end, that was the most impor- and efficiency. tant thing for me – that they had the skills, the In terms of client acquisition, van 2CONNECT is a leading manufacturer resources and the mindset to take 2Connect to Vreumingen and his colleagues are working of specialised cables and connectors, the next stage,” says van der Put. with IK’s Operations team, particularly the designing, developing and producing representative in Amsterdam. tailored interconnection solutions for GROWTH OPPORTUNITIES “We are also developing a greater under- OEM and ODM customers worldwide. For IK, the appeal of 2Connect was clear. standing of the existing client base so we can “It’s an excellent business in an interesting find out more about their needs and increase VALUE CREATION STRATEGY sector and Marc is a really dynamic and entre- 2Connect’s share of wallet from these busi- • Continue to grow share of wallet with its preneurial guy. We clicked with him immedi- nesses. And we intend to drive operational current customer base ately and we could really see the potential of excellence, not least through the appointment • Intensified focus on new customer his company,” says van Vreumingen. of the new COO,” says van Vreumingen. acquisition Keen to partner with van der Put, IK did “There may be M&A opportunities further • Broaden end-market applications within extensive due diligence to understand the busi- down the line but for the moment, there is so adjacent niche segments ness, its growth drivers and the opportunities much organic growth potential that we are con- • International expansion for expansion early on. centrating on that and making sure we remain “We worked hard early on in the process, we focused,” he adds. ISSUE 45/SUMMER 2019 11
INVESTMENT: SCHEMA IK ACQUIRES SOFTWARE SPECIALIST SCHEMA Nuremberg-based SCHEMA is a market-leading developer of software solutions for the management of technical content, with a broad list of blue-chip clients across multiple industries. Over the coming years, the company is expected to continue to deliver strong growth through the addition of new customers, services and geographic expansion. M ARCUS KESSELER AND STEFAN and even on the machines themselves. Finally, Kesseler and Freisler felt that SCHEMA could FREISLER first met at an academic companies have to produce dynamic main- benefit from external support. event in Nuremberg in 1992 where tenance guidance and ensure that product “We felt that we needed a partner to help us they discussed hypertext, a content information is adapted if their customers ask grow to the next level – a partner with experi- presentation concept, which allows users to click for machines with individual specifications. ence working with companies of our size and on a link and jump to different content. acquisition expertise and an understanding of Three years later, the duo was captivated by A MODULAR APPROACH internationalisation,” says Kesseler. the flotation of Netscape, the first commercial “All these demands can be very costly, but In 2018, SCHEMA was put up for sale and web browser. The highly successful IPO gave we provide an optimal solution through IK quickly realised that the business was, in Kesseler and Freisler an idea: our Component Content Management and the words of IK partner Nils Pohlmann, “We thought this World Wide Web could be Distribution System,” says Kesseler. “a hidden gem”. the next big thing,” says Kesseler. In essence, this allows SCHEMA’s customers “It is in a niche area but one that has Shortly afterwards, they founded SCHEMA, to manage complex content in a modular fash- significant growth drivers, such as increased a company that helps clients to manage content ion, increasing compliance, ensuring reliability document complexity, digitalisation, regulatory in a modular format. and improving efficacy through reuse in a cost- requirements and automation. Companies also “Our business works with companies – effective way. SCHEMA enables customers need to be able to display information on differ- generally high-tech engineering and manu- to realise substantial cost and time savings ent devices and software needs to be adaptable facturing firms, but also top-tier MedTech while also increasing their process security of to different IT systems and infrastructures. and Pharma firms – to solve their product technical content. SCHEMA is at the centre of all these trends and information challenges,” says Freisler. The business model has proved highly able to address and manage the complexity of These challenges are many and varied. successful. SCHEMA is deeply integrated within semi-structured data,” he says. Companies need to offer detailed explanations its clients’ core IT systems in conjunction with Having recognised SCHEMA’s potential, of their products in an accessible online format. having a high level of recurring sales from its IK worked hard at getting to know the In addition, most of SCHEMA’s customers are existing and continuously growing customer management team and gaining a deeper export oriented and need to provide information base. SCHEMA has over 400 blue-chip custom- understanding of the business. in multiple languages, often over 20, and are ers, including some of the biggest names in “The basis of the business was strong – a subject to different regulatory requirements. German industry such as Bosch, Miele, Bayer, clear market leader with sophisticated software Companies also need to ensure that information ZEISS, Lufthansa Systems, Diebold Nixdorf solutions deeply integrated into its blue-chip is kept up to date, as technology evolves and and Siemens. Moreover, SCHEMA has begun to clients’ IT infrastructure and a high share of specifications change. successfully acquire customers in Sweden, the recurring revenue, but we could see that there They also need to deliver comprehensive Netherlands, the UK and Japan. were opportunities to expand its position both health and safety information, online, in print After more than 20 years of steady growth, organically and through acquisitions,” says 12 ISSUE 45/SUMMER 2019
INVESTMENT: SCHEMA SCHEMA COUNTRY Germany FUND IK Small Cap II Fund SECTOR Business services WEB www.schema.de ACQ. DATE November 2018 SCHEMA is an innovation leader and has set international industry standards regarding the range of features and standardisation of CCMS over the last 20 years. Its products enable customers to realise substantial cost and time savings and increase content Pohlmann. Together with the founders, IK create cross-selling and upselling opportunities processes efficiency. developed the growth strategy and vision for and create a broader, tech-enabled services the company in the future. offering. Together, the two companies form VALUE CREATION STRATEGY the fundament for tech-enabled services and • Upselling opportunities and increased PREPARATION PAYS enable customers to unlock further service customer penetration IK’s efforts and enthusiasm did not go sales potential,” says Pohlmann. • Roll-out of new content delivery solution unnoticed. Looking ahead, there is significant potential (CDS) “It was clear from an early stage that IK was for growth and expansion. • Expansion into new end-industries and the best partner for us. The sheer competence “SCHEMA is a leading software company international markets of the team and their understanding of our in its chosen field, with strong development • Strategic add-on acquisitions business was really striking. And they moved opportunities through further penetration quickly and efficiently through the investment of its existing customer base, as well as the process, which was also very helpful,” acquisition of new customers in Germany, says Freisler. Austria and Switzerland (the DACH region) By December 2018, the deal had closed. and more globally,” says Pohlmann. Freisler has moved to the advisory board and “In combination with TID, we can create Kesseler is joint CEO with a colleague who has an intelligent content provider that allows been at SCHEMA for 15 years. enterprises to become more efficient across a In April 2019, the company made its first range of different services. Over time, we can acquisition, TID Informatik, a market-leading add features and partners to this platform so it e-catalogue software provider which enables becomes increasingly comprehensive and effec- customers to manage their service and spare parts tive,” he adds. information in an efficient and automated way The first few months have already delivered and thereby improve their service value chain as progress, as IK has worked with SCHEMA to well as better support their sales organisation. professionalise processes and the company’s TID clients, including Bosch, Kärcher, Voith, sales approach. ZEISS and Leica, benefit from significant process “It’s all working out as we hoped and expected. and cost improvements. SCHEMA already had IK has continued to act professionally, reliably a minority stake in TID: now it has acquired the and supportively, just as they did during the entire business, with IK’s support. due diligence process. We are excited about the “Both SCHEMA and TID are impressive in future and looking forward to jointly growing their own right but putting them together will the business,” says Kesseler. ISSUE 45/SUMMER 2019 13
INVESTMENT: INFRADATA IK ACQUIRES CYBERSECURITY SPECIALIST INFRADATA Netherlands-based Infradata is a leading provider of cybersecurity and secure networking solutions. Now part of the IK portfolio, the company is expected to consolidate and extend its position in key geographies across Europe. T HE EUROPEAN CYBER AND NETWORK In each case, Infradata operates a vendor- security market is estimated at c. €40bn, agnostic business model, working with a of which c. €25bn worth is in countries variety of skilled vendors across its operations. where Infradata has a presence, and is expected to substantially outpace the broader IT FLEXIBLE MODEL market growth on the back of rising cybercrime, “Infradata owns the relationship with clients increased network complexity and digitisation, whereby it acts as a reseller of third party regulation and technology developments. products combined with in-house t echnical Infradata is ideally positioned to benefit skills and services. This means it works with from that growth trajectory. Founded in 2004, multiple vendors and can introduce new the company has expanded rapidly to become ones when the need arises. That flexibility is a highly regarded player in both cybersecurity particularly useful in a field like cybersecurity, and secure networking solutions, ensuring that which is changing all the time,” says IK networks are safe, scalable and reliable. With a associate d irector Frederik Jacobs. presence in the Netherlands, France, Germany, Infradata is also one of the very few players We knew the sector, the UK, Belgium, Poland and the US, the group in its field with a footprint that extends we liked its position in it and focuses on large enterprises and communica- beyond its home market, a position that can tion service providers with complex and wide- be p articularly helpful when d eveloping we could see the o pportunities ranging IT needs. partnerships with large, multinational for growth. We also have “Infradata provides software, hardware and clients. As Bremer explains: “The market is ongoing services to clients that tend to use a lot of highly fragmented, especially when it comes experience in the field, data and have complex IT infrastructures. These to cybersecurity. There are plenty of small thanks to, for example, our enterprises need outside help managing their consultancies and systems integrators but very infrastructure and keeping it secure. Infradata few operators work across multiple regions.” investment in Visolit. can design, build and manage networks for them,” “Large enterprises often prefer partnering NORMAN BREMER, PARTNER, IK says IK partner Norman Bremer. with a larger, international business, like “Infradata is renowned for its technical Infradata, and the company itself benefits from capabilities and deep knowledge of its clients’ IT its geographic spread as people within the growth in the company’s core markets network, so it builds trusted relationships and group have different skills and relationships and beyond. close, long-term partnerships,” he adds. that can drive cross-selling and upselling “We will continue to pursue organic growth These clients include telecommunications opportunities,” says Jacobs. in Infradata’s biggest markets, France and the groups such as KPN and TalkTalk, as well as Over time, IK intends to leverage Infradata’s Netherlands. We plan to scale up in Germany multinationals such as eBay and ArcelorMittal. position and knowledge base to accelerate and the UK, as there are some interesting op- 14 ISSUE 45/SUMMER 2019
INVESTMENT: INFRADATA portunities in both these markets and we will IK’s blend of local presence and international build out the business in Poland and Belgium,” footprint was a real advantage too. INFRADATA says Bremer. “We are based in the Netherlands so it was Given the current market fragmentation, great to work with a firm that has a full-time there is scope for add-on acquisitions as well, team here, especially one with offices and both to consolidate Infradata’s position in key investments across Europe,” says Infradata geographies and gain access to new vendors, CEO Nino Tomovski. new clients and new technical capabilities. Fortunately too, the company has already DRIVING OUTPERFORMANCE proven its ability to absorb acquisitions and Looking ahead, the potential is clear. Infradata’s develop greenfield opportunities overseas, underlying markets are growing fast and including key transactions in France and the expected to continue doing so but the company UK in recent years. is expected to outperform peers, by building on its strong, blue-chip client base, established STRONG KNOWLEDGE BASE reputation for excellence and broad set of rela- IK first came across Infradata several years ago tionships with skilled vendors. when the firm was looking at opportunities in “The space that we work in is really COUNTRY Netherlands the IT space. Having spotted the business as attractive and we are ideally placed to grow, in FUND IK VIII Fund one to watch, IK followed Infradata over the terms of cross-selling, upselling and recurring SECTOR Business services years, and was in a prime position when it came management services. There are also plenty of WEB www.infradata.com on the market in 2018. opportunities to continue and accelerate our ACQ. DATE January 2019 “We knew the sector, we liked its position geographical expansion,” says Tomovski. in it and we could see the opportunities for Having closed the transaction earlier this INFRADATA was founded in the growth. We also have experience in the field, year, IK has already begun to strengthen the Netherlands in 2004, where it continues to thanks to, for example, our investment in Infradata team and the underlying business. be headquartered. The company has an Visolit. We started talking to people close to Founder Leon de Keijzer has moved onto the additional presence in Germany, the UK, Infradata well before it was officially put up for board as a non-executive director, paving the France (Nomios), Belgium, Poland and the sale,” says Bremer. way for Tomovski, previously international US, with ambitious expansion plans. The “The actual sales process was both swift and vice-president at Infradata, to become CEO. company provides cybersecurity and secure competitive. The deal was done in a few weeks IK’s strategy, operations and business control networking solutions, from design and but that was perhaps because we were well (SOBC) team is working with Infradata to delivery to aftermarket support and prepared and dedicated significant time and analyse the company and identify the best op- managed services. resource to the transaction,” Jacobs adds. portunities for future growth. Infradata supports many large blue- chip clients with high security and data requirements across the industrial, advanced manufacturing, financial, telecommunications and e-commerce sectors. VALUE CREATION STRATEGY • Organic growth via geographical expansion • Leverage cross selling potential between countries (networking & security solutions) • Product-mix shift (shift towards more recurring revenue streams via managed services offering) • Buy & build to enable acceleration of organic growth trajectory • First add-on has already been completed (DIM in Poland) ISSUE 45/SUMMER 2019 15
ESG: PINARD PINARD: A PLASTIC PIONEER Pinard Beauty Pack specialises in the design and manufacture of high-quality plastic bottles for some of the best-known brands in the cosmetics and fragrance industries, including Chanel, Clinique, Clarins, Guerlain, L’Occitane and Estée Lauder. 16 ISSUE 45/SUMMER 2019
ESG: PINARD PINARD COUNTRY France FUND IK VIII Fund SECTOR Consumer goods/Food WEB www.pinard-emballages.com ACQ. DATE July 2017 PINARD is recognised as a trusted supplier to several French and international prestige brands because of its technical know-how, product quality and service level. Managed by brothers Thomas and Pierre-Olivier Pinard, the family business employs approximately 90 people and operates two production facilities O and a logistics site close to Oyonnax, in the WNED BY THE IK VIII FUND SINCE 2017 In the past two or heart of France’s “plastic valley”. alongside the founding Pinard f amily, the company produces over 150m three years, awareness VALUE CREATION STRATEGY bottles a year and is at the forefront of has really changed. People • Continued organic growth in its core the sustainability trend. “In the past two or three years, awareness has know about global w arming markets leveraging existing customer base and gaining new customers both in France really changed. People know about global warming and marine pollution and and in export markets and marine pollution and they want to be part of the solution, not part of the problem,” says they want to be part of the • Buy-and-build strategy to secure further decoration capabilities, gain technical Pinard sales director Delphine Delaroche. solution, not part of the capabilities (closures and caps) and build “They realise that their buying choices can influence manufacturers’ behaviour so they are problem. capacity in other geographies • Maintain operational excellence and asking for sustainable products. Brands are tak- DELPHINE DELAROCHE, SALES DIRECTOR, PINARD protect margin level/cash generation ing this seriously. They understand that if they use recyclable plastic, it is better for them and pportunities and possibilities. We are looking o their customers,” she adds. at plastic made from ocean waste, for example, Pinard has been developing more ecological and, in future, we may help to set up collection plastic products since the 1990s – including points, where consumers can drop empty bottles made from recycled plastic (RPET) cosmetics containers,” says Delaroche. and glass polymer, which looks like glass but is Over time, greater use of recyclable plastic lighter, easily recyclable and has a lower carbon and increased recycling of all plastic products footprint than glass. Both materials already are inevitable trends. Pinard, however, intends represent 20% of Pinard’s plastic raw materials to remain ahead of the pack. and are growing double digit. Now, new ideas “We are at the beginning of a major shift. are underway, such as bio-plastic, made from Looking ahead, we expect RPET usage to sugar cane, and refillable bottles. increase dramatically. Pinard is not a large “Plastic itself has a lighter carbon footprint company but it is already a leader in the field. than many other materials, including glass. Looking ahead, we will focus on making The key challenge we face is the need to sure that it stays ahead of the pack,” says IK recycle more. But this presents us with fresh associate director Thibaut Richard. ISSUE 45/SUMMER 2019 17
ESG: PLASTICS THE PLASTIC PROBLEM AND HOW TO ADDRESS IT Amid a growing awareness of plastic’s impact on the environment, concerted efforts are underway to reduce plastic waste. The new mood can be challenging for industry but there are long-term opportunities too. P LASTIC IS CHEAP TO MAKE, highly efficiently and effectively than any other mate- use or do not have access to plastic packaging efficient and extremely versatile. It is rial,” says Gummer. suffer from food waste of up to 30%. With that also ubiquitous in today’s world. Back In the food industry, for example, plastic is packaging, supply chain waste tumbles to low in 1950, global production of plastic able to protect goods, extend their shelf life and single digits. amounted to just 1.5m tonnes. Today, we pro- reduce waste. The humble cucumber can last So plastic is phenomenally useful. But the duce around 325m tonnes of plastic every for two weeks wrapped in film. Without that way it is treated needs to change, specifically year, almost half of which is used once and protection, it will last no more than four days. in the areas of consumer products, house- thrown away. More broadly, supply chains that do not hold goods and packaging, which, in Europe, Until recently, few people gave plastic much thought. But attitudes are changing fast, driven by a growing realisation of the harm caused to the environment by single-use plastics. One of the biggest problems with plastic is that, The statistics speak for themselves. At sea, in most applications, it does the job more efficiently the world’s oceans are sullied by more than 150m tonnes of plastic; the amount increases and effectively than any other material. by between 5m and 13m tonnes each year; and FELIX GUMMER, DIRECTOR OF ENVIRONMENTAL CONSULTANCY SANCROFT the economic cost alone is estimated at up to €690m. Marine life is suffering, plastic is entering the food chain and tourists are turning away from plastic-infested waters. On dry land, single-use plastics create further issues, littering streets, affecting bird life and causing severe environmental damage. The tangible effects of today’s throwaway culture have united politicians, regulators, NGOs, the media and consumers in a concerted bid to reduce plastic waste. As Felix Gummer, director of environmental consultancy Sancroft, points out: “No environ- mental issue has ever remained so consistently on the front page of the mainstream media as this one.” FROM THEORY TO PRACTICE But, even though almost everyone agrees that plastic consumption has to come down, turning ideology into action is not that easy. “One of the biggest problems with plastic is that, in most applications, it does the job more 18 ISSUE 45/SUMMER 2019
ESG: PLASTICS account for more than 60% of plastics use. EU legislators are already planning to ban certain products, such as fast-food expanded polystyrene containers. Widespread targets have been introduced to reduce the consump- tion of single-use plastic items, such as straws and cotton buds. And manufacturers are under pressure to increase the recycled content of plastic drinks bottles and other items. Emerging markets can be even more hard- line. In Kenya, for example, anyone caught making, selling or even carrying a plastic bag faces up to four years in prison or a fine of up to $38,000. Europe is taking a more gradual approach but the direction of travel is clear. Businesses already face both inducements and penalties, to encourage a shift towards recyclable and recycled products. In future, industry is likely to be charged with funding the entire recycling process. Known as Extended Producer Responsibility (EPR), this places the onus of recycling squarely on the shoulders of companies across the supply chain, from manufacturers to retailers. non-recyclable option might be being used. If “Companies need to set a target that their this is left unaddressed, however, it will cost products should be 100% recyclable,” HOW TO COPE the company more in the long term.” advises Gummer. The cost of compliance has been estimated at In this regard, a rigorous streamlining Transitioning may involve extra cost initially. up to £1.5bn in the UK alone, and many compa- exercise can be helpful. In the long term, however, creating a recyclable nies are understandably concerned. But busi- “If companies reduce the number of different business model can deliver tangible benefits. It nesses that are ahead of the game can derive plastics and packaging materials they use, can encourage companies to focus on what they huge benefits, gaining market share and earn- it makes life easier for stakeholders along really need, what they can discard and where ing a reputation as environmental stewards. the supply chain, including consumers,” improvements can be made. So what should companies do? First, and says Gummer. The stakes are high. Those ahead of the perhaps simplest, they can remove items that And even if companies find there is no curve will almost certainly gain competitive are no longer needed, such as plastic straws alternative to non-recyclable items today, they advantage over time. Those that fail are likely and stirrers in bars and restaurants. should focus on finding new options tomorrow. to face serious challenges in the years ahead. Second, they can alter their practices so they no longer use certain products, such as excess or harmful packaging. Third, they can address their processes and procurement – questioning the provenance and make-up of every product in their supply chain and taking steps to replace non-recyclable items with recyclable ones. “This is often easier than it sounds,” says Gummer. “In most cases a recyclable option exists, but through lack of engagement or knowledge or current price differentials the Extended Producer Responsibility places the onus of recycling squarely on the shoulders of companies across the supply chain, from manu- facturers to retailers. ISSUE 45/SUMMER 2019 19
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