A newsletter from IK Investment Partners

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N 35/2014 04. A new road for traffic management group Ramudden

08. A transformative deal for Colosseum

18. Delivering value creation as Europe Snacks exits

BLUE SKIES IN THE NORDICS

BRIGHT PROSPECTS ACROSS THE REGION 16. IK’s Operational Support Group enhances the firm’s commitment to value creation

CONTENT/EDITORIAL

PORTFOLIO COMPANY NEWS

CONTENT/IK NEWS/ ISSUE 35/SUMMER 2014

P – 08

P – 04

P – 12

A green light for Ramudden

All Smiles IK-backed Norwegian dental

Strength in the Nordics

IK’s latest investment, Ramudden,

chain Colosseum has completed

IK has a long-standing affiliation

is Sweden’s leading independent

a major acquisition with the

with the Nordics. Recent moves

provider of traffic management

purchase of leading Swedish

have strengthened its commitment

services. Now the company plans

group Smile. The move

to the region and positioned the

to expand across the Nordics.

consolidates Colosseum’s

firm for further growth.

dominant position in the Nordics.

P – 16

Adding value the IK Way

P – 24

P – 18

An appetising business

VIEWPOINT

IK’s Operational Support Group

Europe Snacks grew substantially

and head of the Northern region,

provides advice and expertise

under IK’s ownership, increasing

assesses the outlook for the

at every stage of the investment

earnings and moving into new

Nordics and IK’s role within the

process, reinforcing the firm’s

geographies. Now it has been

region.

approach to value creation.

successfully exited.

editorial

IK News Foreword It is midsummer in the Nordic region, the days are long and the mood is upbeat. This year, there are many reasons to feel good about the Nordics. Economic growth has picked up, stock markets are strong and deal flow is increasing steadily. IK’s latest fund, IK VII, has already made three Nordic investments – Hansen Protection and VPS last year and Ramudden this spring. Traffic control specialist Ramudden has grown from one depot in Northern Sweden to a national market leader in just ten years. We are very excited to be working with the original management team on this business, which has real potential for expansion across the Nordics (see page 4). Staying in the North, our Norwegian dental chain Colosseum made a significant acquisition, buying Swedish Smile earlier this year. The merger substantially expands Colosseum’s Swedish presence, consolidates its position in the Nordics and positions the group well for further growth (see page 8). Reflecting IK’s Nordic roots, we have strengthened our teams in the region so they work even more closely together and use their combined resources to maximum effect. The move has helped us to secure the transactions we want, even in a competitive market (see page 12). During the past few months, we have also completed a successful exit, selling French snack business Europe Snacks after growing sales, increasing the workforce and improving its ESG footprint. The exit generated significant returns for our investors (see page 18). We hope you enjoy this edition of IK News. Happy Midsummer!

Sights set on Singapore Offshore gangway specialist Ampelmann has opened an office in Singapore. This is the first overseas office for the Netherlands-based company, which makes high-tech systems to enable safe transfer between vessels and offshore structures. Expansion in Asia is seen as a logical step for Ampelmann as demand for

editorial director:

Charlotte Laveson Girard

(IPED). This was the second time that Axtone has received an

Americas.

award in IPED’s annual Business Fair Play Programme. principles, stating that the group has proved to be a trustworthy partner with clients, employees, local community and

issue 35/SUMMER 2014

government authorities. Axtone is widely known to be a good

A new CEO for Schenck Process

employer, offering best-in-class working conditions, promoting safety at work and encouraging employee development. IPED also recognised Axtone’s successful relationship-building with the local community. Axtone is controlled by the IK2007 Fund.

Andreas Evertz has become the new CEO of Schenck Process, a global leader in ­m easuring and processing technologies. Evertz has many years of relevant industrial

Top award for Vistra

experience, having been CEO of German precision tools manufacturer Walter AG and served on the board of Swedish engineering

Vistra Fund Services, part of OV Group, received a top award

group Sandvik.

at the 2014 International Fund Awards.

“In recent years, Schenck Process has ­d eveloped into a global company with locations in all key markets. I look forward to using my international experience to shape the group’s long-term development and increase its market-leading position still further,” he Evertz takes over from Dr Jochen Weyrauch, who spent 11 years as CEO of Schenck Process, during which time the company developed into a global leader in its field,

and steel, chemicals, plastics, food and phar-

2

The certificate acknowledged Axtone’s respect for ethical

Ampelmann is controlled by the IK VII Fund.

a wide range of industries, including cement

www.ikinvest.com

prestigious ‘Fair Play Company’ certificate by leading Polish think tank the Institute for Private Enterprise and Democracy

­actively supported by IK Investment Partners.

© 2014 IK Investment Partners Ldt. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying­, recording or otherwise, without the prior per­mission of IK Investment Partners. IK News is published three times a year by IK Investment Partners, B ­ rettenham House, Lancaster Place, London WC2E 7EN, UK.

In December 2013 rail services group Axtone was awarded a

Singapore opening with further expansion in the Far East, Middle East and the

The company offers innovative solutions to

Editorial Director: Charlotte Laveson Girard, [email protected] Texts: Charlotte Laveson Girard, Joanne Hart, Ruta Rees, Mikaela Hedborg Art Direction: 25AH Design Studio AB, www.25ah.se

Fair play for Axtone

its products is growing across the region. The company expects to follow the

says.

Helena Stjernholm, IK partner

2

nd award

In recent years, Schenck Process has developed into a global company with locations in all key markets. I look forward to using my international experience to shape the group’s long-term development and increase its market-leading position still further.

The company was named ‘Fund Formation and Administration Firm of the Year – Luxembourg’ for its outstanding contribution to the fund industry and its clients during 2013. The awards celebrate excellence within private equity, venture capital, infrastructure and real estate, recognising not just fund performance but also the companies and people that form, manage and advise on funds in the current market. OV Group is a global independent provider of trust, fiduciary, corporate and fund services. Vistra Fund Services, a division of OV, focuses on the administration and formation of alternative investment funds, specialising in private equity, property and hedge funds with complex or unusual investment policies. ”This year’s winners really have gone above and beyond to

maceuticals, mining, coal-fired power stations

demonstrate their expertise and commitment to their clients,”

and the automation of transport workflows.

says Siobhan Hanley, chief coordinator of the International

Schenck Process is controlled by the IK 2007 Fund.

Fund Awards. OV Group is controlled by the IK 2007 Fund.

issue 35/SUMMER 2014

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Investing in traffic management Ramudden is Sweden’s foremost provider of temporary traffic control services. After a competitive bidding process, the company’s owner-managers unanimously chose IK as their new investment partner.

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n 2004, Hans-Olov Blom, an officer in the Swedish army, was pondering his next career move. Having been in the military for 16 years, he was ready for something different and hit upon traffic control services – ensuring that traffic moves smoothly and safely while roads are being built or maintained. “There are similarities with the army. If you are in the wrong place at the wrong time, it is very dangerous. There is a high level of risk, and road safety – like military safety – requires plenty of thinking about personal security, so I thought it might be a good business area for me,” says Blom. Keen to acquire the necessary expertise, Blom took a professional course in road safety, organised by the Swedish Road Administration (now part of the Swedish Transport Administration). Soon afterwards Ramudden was born. “The training course did not just give me the right qualifications; it also gave me a chance to meet the construction workers who would become my customers. I started out with one depot in 2004, and built the company up to where it is today,” Blom explains. “I called it Ramudden because in 2001, I was on a moose hunt in a place called Ramudden in the very north of Sweden. I shot a very big moose. Three years later, when I started my business, I thought I’d been lucky in Ramudden so it seemed a good idea to call the company by that name,” he adds. Ramudden’s growth has been impressive. The company rents out essential equipment, such as traffic barriers and signs, used during road construction and maintenance. It also educates local authorities and construction firms about compliance with road safety

regulations and helps them devise traffic arrangement plans. In addition to being the leading specialist in Sweden, Ramudden has been operating in Norway since 2009, and in Finland since 2012. Turnover last year was SEK 239 million and the underlying market is growing fast. “The sector has been growing by around 10 per cent per annum, but that includes independent operators and in-house teams from construction firms. As independent firms are specialists, they are able to do the work more effectively and provide a better service than internal teams. So the independent sector is growing faster than 10 per cent, and Ramudden is a leader in this field,” says IK partner Kristian Carlsson Kemppinen. Safety first Road safety is a growing area across Europe, and Sweden is at the forefront of this sector, with an explicit ambition to create a system so

safe that there will be no deaths on Swedish roads. Efficient traffic management during construction work is a focus of concern, and thus a highly regulated area, subject to frequent rule updates. “Before a road is built or maintenance work is carried out, a traffic arrangement plan needs to be put in place to minimise the impact on vehicles and pedestrians. Such a plan can be quite complicated, and needs local authority approval,” Kemppinen explains. Ramudden helps construction firms to produce traffic plans that enhance efficiency and comply with the latest regulations. The firm then rents out the necessary equipment to these firms, transports it to where it is needed, makes sure it is properly installed, and collects it again when the work is finished. “As Ramudden is a specialist in this sector, the company owns all the equipment that the clients might need, which makes it much more efficient for them. It also keeps abreast

Ramudden is an ideal investment for us. It is a Swedish champion which we can develop into a Nordic leader and maybe even expand beyond the Nordic area. KRISTIAN CARLSSON KEMPPINEN, Partner, IK

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RAMUDDEN

From the start, we have always tried to think ahead as we developed the business. As it grew, we realised that the company was at a crossroads. We knew we didn’t have enough know-how to build a large organisation, so it was clear that we needed a partner.

Country DATE Acquired Sector Web

HANS-OLOV BLOM, CEO, RAMUDDEN

Sweden June 2014 Business services www.ramudden.se

Ramudden is a specialist provider of temporary traffic control services in the Nordic region, operating through a network of more than 60 depots. The company, which was founded in 2005, is a leading player in the Swedish market and is also present in Norway (since 2009) and Finland (since 2012). Ramudden’s products and services include the rental of essential temporary traffic control equipment (such as traffic barriers and guide signs), traffic arrangement plans, education programmes, and

of regulatory developments, so clients can be assured they are compliant,” says ­Kemppinen. Ramudden educates construction firms and local authorities as well, to ensure they are aware of road safety developments and legislation. “This is a considerable growth driver for Ramudden, and it attracts new customers,” says Kemppinen. Whilst Sweden is Ramudden’s biggest market, the company has a growing presence in Norway and Finland too, and will develop this further with the support of IK. “Ramudden is an ideal investment for us. It is a Swedish champion which we can develop into a Nordic leader and maybe even expand beyond the Nordic area,” says Kemppinen. “The financial position of the business is very attractive, and the management team is extraordinary. They have built the business from scratch, transforming the company into a market leader in merely ten years. They are still very ambitious for further growth and the personal chemistry between us is very good,” he adds. 6

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Early introduction IK first came across Ramudden a few months before the company was officially put up for sale. “A corporate finance boutique that we know very well had been given the sales mandate,

and they introduced the business to us well before the sales process began. We started to study the company and the industry in detail, and it didn’t take long before we felt that this was something for us,” says Kemppinen. The formal sales process began in late

As Ramudden is a specialist in this sector, the company owns all the equipment that clients might need, which makes it much more efficient for them. It also keeps abreast of regulatory developments, so clients can be assured they are compliant. KRISTIAN CARLSSON KEMPPINEN, PARTNER, IK

December 2013, when interested parties were asked to submit indicative offers. In ­February, a limited number of bidders were invited to ­participate in the second round and given ­another two months to submit a final offer. “The early introduction to the company meant that we had already done a lot of work before the first round, so we were able to proceed faster than expected, which gave us an advantage. We also established a very good relationship with the management team, and in the end we submitted a winning bid before the formal deadline,” says Kemppinen. Blom agrees. Having already created a substantial business, he realised that he would need outside help to take Ramudden to the next stage. “From the start, we have always tried to think ahead as we developed the business. As it grew, we realised that the company was at a ­cross-roads. We knew we didn’t have enough know-how to build a large organisation, so it was clear that we needed a partner,” says Blom. In common with many successful ­owner-managed companies, Ramudden has a highly entrepreneurial culture, which it did not want to lose.

“Our people are very entrepreneurial, and we were keen to maintain that spirit. We spoke to IK about this and they ­completely got what we were saying. From the ­beginning, we had a very good feeling about them. They are very professional and they suit us perfectly,” says Blom. As Kemppinen explains: “The company wanted an experienced investor who could provide support and advice without ­unnecessary bureaucracy. That is what we intend to do.” By early April, the deal was done. Looking ahead, growth is expected both in Sweden and abroad. “There are still lots of places in Sweden where there is room for expansion. In addition, there is a lot of potential in neighbouring countries but Ramudden has not had the time or the resources to fully focus on these markets. We can make resources available and leverage our relationships and networks in the Nordic countries to help ­Ramudden fulfil its true potential. This is a very exciting business,” Kemppinen concludes.

surveillance and maintenance services. Key customers include civil engineering contractors and construction companies. Ramudden is headquartered in Gävle and Sundsvall, Sweden.

Value creation strategy • Organic growth in existing locations driven by strong underlying market trends • Expansion of presence in current and new markets • Operational improvements • Selected add-on acquisitions

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ALL SMILES

IK-backed Colosseum is the largest dental chain in the Nordic region. Having expanded rapidly under IK’s ownership, it is now merging with Swedish rival Smile to create a business with 41 clinics across Scandinavia.

W

hen IK invested in Colosseum in

2010, the dental group was already a successful business with 19 clinics, including seven in Sweden, two in Denmark and ten in Norway. Under IK’s ownership, however, Colosseum has grown significantly. By 2013, the group had 26 clinics, the workforce had expanded from 350 to 550 and revenues had risen from NOK 380 million to NOK 550 million. “We have grown a lot over the past few years, particularly in Sweden and Norway,” says Colosseum chief executive, Per Rehnberg. “We want to provide the best dentistry in Scandinavia and change the way dentistry is practised,” he adds. Most dental clinics in the Nordic region tend to be one or two-room businesses run by a small number of dentists, or even single ownermanagers. Colosseum is different. Operating large, state-of-the-art practices, the group offers a range of dental services, from basic check-ups to specialist care, such as surgical implants, orthodontics and advanced 3D x-ray. “Historically, the dental sector has been characterised by generalists but, just like the wider healthcare industry, dentistry is becoming more complex and more specialised so one practitioner can no longer do everything. Some dentists refer their patients to external specialists. As we operate large, multi-disciplined clinics, we have all the

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relevant experts in-house,” says Rehnberg. The Colosseum approach has many benefits. “It is better for the customer because they get direct access to the best dentists and can stay in one clinic for all their treatment. It is better for employees because there are specialists on hand to support, educate and train them. And it is ­better for us because we can offer a much broader range of treatments and specialist work is higher margin,” Rehnberg explains. Follow the leader As a leader in Norway and Sweden, Colosseum had long eyed up Swedish competitor Smile, one of the few dental practices in the Nordics with similar clinics to its Norwegian rival. “The two companies are extremely complementary with similar cultures and growth ambitions. Smile is a Swedish business operating mainly in the middle and Eastern parts of the country. Our Swedish network focuses on the West and Southern parts of the country and we are in Norway and Denmark too,” says Colosseum chairman Lennart Nylander. Nylander began talking to Smile some time ago, believing that both firms would benefit from joining forces. And in April, the two businesses merged, creating a company with revenues of around NOK 800 million and 41 clinics. “Before joining Colosseum, I managed the Swedish dental group Praktikertjänst for five

We have grown a lot over the past few years, particularly in Sweden and Norway. per rehnberg, CEO, COLOSSEUM DENTAL

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Colosseum

The two companies are extremely complementary with similar cultures and growth ambitions. Smile is a Swedish business operating mainly in the middle and Eastern parts of the country. Our Swedish network focuses on the West and Southern parts of the country and we are in Norway and Denmark too. Lennart Nylander, chairman, Colosseum

Country DATE Acquired Sector Web

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July 2010 Care www.colosseumklinikken.no

Colosseum is the leading provider of private dental care in Scandinavia. The company currently operates clinics in Norway,

Before joining Colosseum, I managed the Swedish dental group Praktikertjänst for five years so I knew Smile back then as a competitor. I always liked what they did and how they thought about the market. They have the same vision as Colosseum. We both want to create a chain, focused on quality and specialist care. per rehnberg, CEO, COLOSSEUM DENTAL

years so I knew Smile back then as a competitor. I always liked what they did and how they thought about the market. They have the same vision as Colosseum. We both want to create a chain, focused on quality and specialist care,” says Rehnberg. Rehnberg joined Colosseum in April 2012, two years after IK had first invested in the business. Founded by entrepreneur Gard Lauvsnes in Norway, the chain had grown rapidly, often buying up small practices run by highly successful dentists, operating as owner-managers. In the past couple of years, however, Nylander and Rehnberg have made a concerted effort to bring a degree of uniformity to the group. “In some cases, dentists who have done very well independently can have their own agenda, even within a larger group. We wanted to bring about a cultural shift. Dentistry is quite a local business so practices will be different and we encourage that. But we are a chain so it is important to have some level of conformity from one clinic to another both in our engagement with patients and the level of treatment that we deliver,” says Rehnberg.

Norway

Sweden and Denmark, offering a range of services from basic dental care to specialist surgery. Colosseum’s business model allows dental professionals to fully focus on the provision of dental care in a flexible and stimulating working environment, supported by centralised support functions.

Value creation strategy • Add-on acquisitions in Scandinavian dental care market

Making a difference One example is the group’s approach to new customers. Most dentists take 15 minutes or less on these initial check-ups because they are not terribly profitable. Colosseum and Smile takes up to 45 minutes so they can really get to know customers and their needs. “Our first examination with a patient is very structured. We accept it will not generate much revenue in itself but it gives us the opportunity to understand the customer and gain their trust when it comes to further treatment. The customer is the most important part of the dental team,” says Rehnberg. The strategy is clearly working. In 2009, Colosseum had 150,000 patients. By last year, the number had risen to 230,000 and it is expected to be closer to 350,000 by the end of 2014. The workforce will rise substantially as well, to around 800 employees. “Having a larger group is very helpful for recruitment. Our clinics have 12-15 rooms and ultra-modern facilities so they offer very attractive working conditions for all employees. They

can also concentrate on dentistry in our clinics as we take the financial and administrative burden from them,” adds Nylander. This is particularly useful as many dentists in Scandinavia work on a part-time basis so they are attracted to the flexibility and support of a larger chain. Following the merger, the combined group will be known as Colosseum Smile and will be chaired by Nylander. “IK is helping to create a new structure in the Scandinavian dental industry. The merger is a win-win situation,” he says. Rehnberg will remain CEO of the new company, while Smile’s managing director, David Halldén, will head the Swedish operation. Initially, the group will focus on integrating the two businesses. Further out, however, there are significant expansion plans. “By 2016, we want the business to be delivering more than NOK 1 billion in turnover. For now our focus is on the merger but we would like to expand across Scandinavia. Looking further out, the system could even be adopted beyond the Nordics,” says Rehnberg.

• Operational improvements

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Joining forces in the Nordic region The Nordics have always played a key role in IK’s Northern European focus. Now the firm’s Nordic teams have been brought closer together to leverage their experience, expertise and resources. The new structure is already yielding results.

I

K’s first investments were made in Sweden 25 years ago so the Nordics are an integral part of its culture and outlook. For many years however, there were three ­distinct Nordic teams – a Swedish team, a ­Finnish team and a Danish/Norwegian team. Recently, the teams have been collaborating more closely. First, the Finnish and Swedish teams were officially merged. Then, earlier this year, IK changed the composition of its two main regional divisions. “We have always divided our teams into two regions to manage deal-flow and other ­activities. In the past, Sweden and Finland were part of one region while Denmark and Norway were in another. Now they are all in the same region, together with the Benelux countries. It’s a very practical way of getting closer to each other,” says IK partner Helena Stjernholm, who heads up the new Northern region. “The Nordic teams have been working together and sharing resources for a long time, but we thought it would make sense to ­formalise the structure and intensify our ­cooperation,” she adds. The shift reflects some careful thought about

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how best to leverage IK’s collective Nordic ­resources in light of changing market dynamics. “Helena and I, as the two Nordic partners, felt we could maximise our resources, focus more and get more done if we worked on a ­pan-Nordic basis. Chris Masek, our managing partner, was also keen to empower the ­organisation in that way,” says IK partner Kristian Carlsson Kemppinen. “For example, if there are only two or three

real opportunities in one country over the period of a year, it may not be sensible for IK to focus an entire team’s efforts on them. But if the Nordic teams jointly look at 20 opportunities a year, we can focus on a few that look particularly interesting to us and really work hard to secure them,” he adds. In recent months, the approach has proved highly productive. “We get visibility on all the transactions in

The Nordic teams have been working together and sharing resources for a long time, but we thought it would make sense to formalise the structure and intensify our cooperation. HELENA STJERNHOLM, PARTNER, IK

our mid-market space in the Nordics and we select the ones we want to go for very carefully. Our new fund, IK VII, has three Nordic deals in it, Hansen Protection, VPS and our latest transaction Ramudden. These companies were the ones that we really wanted to go for, so we can say that we have had a 100 per cent hit rate,” says Kemppinen. The Ramudden transaction exemplifies IK’s collaborative approach in the Nordics. “Ramudden is a really good example of our Nordic teams working together. I have worked on several Finnish deals and now we have Kristian leading a Swedish deal so we are ‘walking the talk.’ He was the lead partner on Ramudden and I was the dual partner so we both met the management, we both participated in internal discussions and when Kristian presented the investment case to our investment committee, they asked for my perspective too. It was a great example of our cooperation,” says Stjernholm. The teams also worked closely together when Norwegian dental group Colosseum acquired Swedish rival Smile and when IK invested in Hansen Protection. “Hansen Protection is a Norwegian business and the sales process was highly competitive. issue 35/SUMMER 2014

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Hansen Protection, which makes survival suits for offshore workers, is also based in Norway and was acquired last year. Its suits are considered the best in the world and, with IK’s support, it is expected to expand both in its core Norwegian Continental shelf market and overseas. “We worked hard to win this business and it is already performing really well. The company is in great shape,” says Kemppinen. Swedish gym group Actic has been part of the IK 2007 Fund’s portfolio since the summer of 2012. The company opens gyms in local authority swimming baths, using vacant space on these sites to increase their financial viability and boost health and fitness in the community. With leading positions in Sweden and Norway, Actic has expanded in Germany and Finland under IK’s ownership. “Actic has a large market share in Sweden so our key focus has been internationalisation. The company is growing well, particularly in Germany, and the health and fitness trend remains very strong across Northern Europe,” says Stjernholm. Software group EPiServer was acquired by the IK 2007 Fund in 2010 and has made significant progress. A Swedish business specialising in helping companies to improve their online presence, the group has made several acquisitions under IK’s ownership. EBITDA has increased substantially and the group has Smile was a big add-on, which made the ­Swedish part of the business larger than the Norwegian part. The two Nordic teams cooperated closely on both deals,” says Stjernholm. The Swedish/Finnish team is based in Stockholm while the Danish/Norwegian team is in London, an arrangement that delivers considerable benefits. Looking ahead, the new structure is expected to result in more Nordic investments for IK, as evidenced by the three acquisitions made in the region over the past year. “We would like to increase our allocation to the Nordics compared to our previous funds so we will continue to be extremely active in the region,” explains Kemppinen. The outlook for the Nordics is conducive to increased activity too. “Macro-economic conditions are good, there is financing available, deal-flow is increasing and the pipeline is building up. The environment is very positive,” says Stjernholm. Nordic investments The IK Funds have eight Nordic companies in their portfolio, spanning a range of industries and geographies. Traffic services group Ramudden is the 14

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We would like to increase our allocation to the Nordics compared to our previous funds so we will continue to be extremely active in the region. KRISTIAN CARLSSON KEMPPINEN, PARTNER, IK

latest investment in the Nordics. A Swedish company built up by entrepreneur Hans-Olov Blom, the business has considerable scope for growth both in Sweden and across the Nordics. Road safety is an increasingly important issue worldwide; Sweden is a recognised global leader in this sector and Ramudden is a leading independent operator in Scandinavia (see page 4). VPS, a leading provider of testing and inspection services, was acquired last October as a carve-out from the Norwegian foundation Det Norske Veritas. Respected throughout the maritime industry, VPS has a commanding share in its niche market and considerable potential for expansion. Since acquiring the business, the IK VII Fund has appointed John Notman-Watt as chairman, strengthened the organisational structure and raised $70 million through a five-year bullet bond, which was over-subscribed and will provide plenty of flexibility for future growth. “This business can develop its existing customer offer, move into adjacent business areas and compete more aggressively in the market. It should deliver strong value creation,” says Thomas Klitbo, director of the Danish/Norwegian team.

EPiServer

increased its customer numbers from 3000 to more than 5000 worldwide. “This business has delivered a lot of growth, particularly outside Sweden,” explains Stjernholm. Norwegian dental chain Colosseum also joined the IK portfolio in 2010. Having made numerous small acquisitions, the group completed a game-changing transaction earlier this year, when it acquired leading Swedish dental group Smile. The deal increases the number of dental practices from 26 to 41 and should boost turnover to more than NOK 800 million. “This is an excellent move for Colosseum and a stepchange in its growth,” says Klitbo. Swedish care home operator Attendo was acquired by the IK 2004 Fund in 2007. With IK’s support, the company has made around 50 acquisitions and grown organically. The political situation has been challenging, as some critics have raised questions about private sector involvement in the welfare area. Nonetheless, Attendo has performed well, delivering care to thousands of elderly people and more than doubling revenue and earnings over the past seven years. Swedish workwear business Kwintet and Finnish chemicals group Dynea are older investments. Kwintet suffered during the financial crisis, but is now recovering. Dynea was a collection of businesses, virtually all of which have been sold off (see Viewpoint on page 24).

VPS can develop its existing customer offer, move into adjacent business areas and compete more aggressively in the market. It should deliver strong value creation. THOMAS KLITBO, Director, IK

Actic stretching into new geographies

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Adding value the IK Way IK’s Operational Support Group combines commercial expertise with in-depth industrial experience, adding value across the IK investment process.

I

K Investment Partners has a long tradition of working with specially appointed advisers to provide insight, guidance and perspective on potential investments and portfolio companies. With specialist knowledge of particular sectors, situations or geographies, these Industrial Advisers play an important role in IK’s fundamental value creation strategy. Over the past five years, IK has taken steps to sharpen this network of Industrial Advisers, so as to align their knowledge base and capabilities more closely with IK’s needs and develop stronger relationships with them. Currently a network of eight senior executives, these Advisers interact and exchange primarily with the investment professionals in their respective regions. The Operational Support Group (OSG) works in tandem with this team, providing insight and backing across the investment process and portfolio. Specially selected for their wide-ranging experience, all three members of the OSG have worked with IK extensively in the past, as CEOs or at board level in portfolio companies. They have proven abilities and experience in rolling up their sleeves to drive value and growth. Now they advise IK on potential opportunities and take on diverse roles at portfolio companies, from executive positions to chairmanships. “We created this team because we wanted to tie a few chosen people more closely to the firm,” says IK director Daniel Mogerud, who heads up the Strategy, Operations and Business Control (SOBC) team.

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“The OSG guys are there to provide genuine operational support as they have the skillset, the willingness and the availability,” he adds. A trio of experts The group currently comprises Lennart Nylander, Hans Pettersson and John Notman-Watt. Nylander’s relationship with IK goes back to the year 2000, when he became chief executive of Danish brown goods retailer F Group. The company was in crisis at the time, but Nylander nursed it back to health. He remained a member of IK’s broader ­advisory network and in 2010 was appointed chair of then-struggling Finnish supermarket chain SLK. Nylander helped IK to recruit a new chief executive, Ralf Holmlund and the two men worked tirelessly to put SLK back on its feet. The turnaround was dramatic and last year, the chain was successfully exited. “I have worked with IK for 14 years and I

think that establishing the OSG team is a very wise move – bringing in a group with industrial competence and the experience of running companies. We have all dealt with businesses in good times and bad times and I think we ­complement IK’s expertise,” says Nylander. Nylander currently chairs IK-backed Norwegian dental chain Colosseum and he was instrumental in its recent merger with Swedish rival Smile. Hans Pettersson can also trace his involvement with IK back to the turn of the century, when he became chief executive of MacGregor, a Swedish engineering group focused on solutions and services for ship-owners, ship operators and shipyards. Pettersson turned the business round, primarily by shifting its focus to Asia, now the hub of the shipping industry. “Hans more or less re-engineered the business model and entire set-up: just a tremendous achievement,” says Mogerud.

Pettersson went on to Danish plastics packaging manufacturer Superfos, where he delivered a positive return to IK investors despite a highly challenging economic environment. He also became chairman of Swedish modular housebuilder Prevesta in 2005. One of IK’s most rewarding investments, the business was

Closer involvement The creation of the OSG followed several months of strategic thinking, as IK partners considered what external support would be of most use to the firm over the coming years. Concluding that they should continue to develop closer bonds with a select set of advisers, a selection process ensued along with an adaptation of the IK Way and IK processes to cater for the inclusion of the OSG. The group now participate in monthly calls with managing partners Chris Masek and Detlef Dinsel and SOBC director Mogerud, where portfolio companies and forthcoming opportunities are discussed. The OSG

also join the tertial meetings, which include all IK’s investment professionals. “It is really good to be involved early in the investment process when potential deals are discussed. We can bring an industrial perspective and take a more active role,” says Nylander. “Thanks to the frequency of discussions with the OSG, we are getting early input from them on several potential deals. Their specific industrial and situational knowledge is extremely valuable. Their networks, combined with those of the regional Industrial Advisers, provide great access to leads and further knowledge about specific industry niches,” says Mogerud. “The role that the OSG plays really complements the value of the Industrial Advisers. The latter work closely with investment teams in their respective regions on new deals and portfolio companies, whilst the OSG is consulted on strategy, operations, execution and origination across the whole portfolio on a more frequent basis.” he adds. The OSG became operational on 1 January 2014, having been formally launched at IK’s annual investor meeting in December 2013. At the same time, IK has chosen to deepen its relationship with a broader set of niche consulting firms and smaller boutique consultancies for times when portfolio companies may need external support. “Across the piece, we are becoming more granular and more pointed in supporting our portfolio companies. We have trimmed our Industrial Advisory team and increased our use of specialist advisors and consultants. Bigger, broader consulting houses remain important for us in various settings, but we certainly feel that small, niche players can provide a different pin-pointed depth and flexibility in the execution model. The OSG is a centrepiece of this strategic change, comprising exceptional people who work well with us, for us and with our portfolio companies,” says Mogerud.

Hans Pettersson

JOHN NOTMAN-WATT

LENNART NYLANDER

The role that the OSG plays really complements the value of the Industrial Advisers. The latter work closely with investment teams in their respective regions on new deals and portfolio companies, whilst the OSG is consulted on strategy, operations, execution and origination across the whole portfolio on a more frequent basis. DANIEL MOGERUD, DIRECTOR, IK

sold two and a half years later, having generated a substantial return. In recent years, Pettersson has transformed long-standing IK portfolio company Dynea, where he remains CEO. He recently joined the board of motion-controlled gangway maker Ampelmann. “His experience of providing highly engineered hydraulic equipment for ships is a very relevant match and will be highly valuable for this business,” says Mogerud. Notman-Watt has a shorter association with IK than his fellow OSG members, but he has been a dynamic force for the firm since becoming chairman of French testing group Trigo in 2011. A veteran of the testing and inspection industry, Notman-Watt was an executive director at mineral testing specialist Stewart Holdings and before that spent almost 20 years working in the testing industry around the world. He recently became chairman of new IK portfolio business VPS, a bunker fuel testing business with global operations. “John’s deep understanding of the testing industry is particularly relevant to VPS and Trigo, and on a broader scale, his experience of growing service businesses internationally will be extremely valuable to us,” says Mogerud.

It is really good to be involved early in the investment process when potential deals are discussed. We can bring an industrial perspective and take a more active role. Lennart Nylander, OSG Adviser

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An appetising business

We had a very clear value creation strategy from the start. The company was called Snacks International but it was a purely French business. We saw that we could transform it into a pan-European player over a three to four-year period of ownership. RéMI BUTTIAUX, PARTNER, IK

When IK invested in Europe Snacks in 2010, it was the leading savoury snacks business in France. Since then, the business has grown significantly, improved its ESG and industrial practices and spread across Europe. Now IK is exiting the company, having developed a strong, international business and generated robust returns for investors.

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In 2010, Snacks International was the leading manufacturer of private label savoury snacks in France. A true domestic champion, the group had an 80 per cent market share, supplying supermarkets across the country with own-label snacks. But chairman Jean-Pierre Caillavet was 67 and keen to retire. A down-to-earth entrepreneur, he enlisted the help of an old commercial banking friend to try and sell his business. IK Investment Partners heard about the company by chance but immediately spotted its potential. “We had a very clear value creation strategy from the start. The company was called Snacks International but it was a purely French business. We saw that we could transform it into a panEuropean player over a three to four-year period of ownership,” says IK partner Rémi Buttiaux. After an unusual sales process, IK ultimately acquired a majority stake in Europe Snacks in November 2010. The price was attractive but there was work to be done. “Our first step was to hire a new CEO so in early 2011, we recruited Christophe Fenart, who had spent 20 years in the European food industry. He really changed the management style,” says Buttiaux. Fenart had spent 13 years with ­international French brands Danone and Yoplait before

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­ ecoming managing director of leading French b ready-meals manufacturer Marie. At the time, the business was in trouble but he turned it round and presided over a successful sale in 2009. “The prospect of becoming CEO of Europe Snacks was an irresistible challenge because the company was a market leader in France, yet still relatively small. The idea of creating a European champion was very exciting,” he says.

This deal highlighted what we do best, turning a business from a national champion to a European leader. Rémi BUTTIAUX, PARTNER, IK

An inviting market The underlying dynamics were favourable too. Savoury snacks is a growing market across Europe and, contrary to most sectors, price competition is limited. “Apart from crisps, there tends to be one branded product per snack, which makes the own brand proposition very compelling. Private label prices are 30 to 40 per cent cheaper but you can still make decent returns,” says Buttiaux. Once Fenart was in place, the business began to change, with IK’s guidance and support. The firm invested €28 million to add new product lines, particularly crackers, as there was no private label offer in this category in France. Europe Snacks was already in the so-called stapled crisps market, offering an alternative to Pringles but IK invested in a third production line and increased automation on site. issue 35/SUMMER 2014

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Europe Snacks

We bought well. We repositioned the group, installed best-of-breed industrial practices, initiated a pan-European strategy and delivered a strong improvement in the multiples and EBITDA.

The prospect of becoming CEO of Europe Snacks was an irresistible challenge. CHRISTOPHE FENART, CEO, SNACKS INTERNATIONAL

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“Sales grew by 50 per cent over three years and the workforce grew by 20 per cent from 300 to 360 people, all in the local region,” says Buttiaux. Growth was particularly impressive as the market experienced challenging conditions during 2010 and 2011, when raw material prices increased and energy costs rose dramatically. “We managed to pass through raw material price increases to customers,” says Fenart. “Also crackers and stapled crisps are higher growth products than other snacks.” Investment was not just made in sales however. Shortly after the acquisition of Europe Snacks, IK made several essential health and safety improvements. “We installed sprinkler systems on all three sites at the company. This was really important in view of all the hot oil being used. I did not sleep easily at night until that was done!” says Buttiaux. “We also took the waste water treatment from just about okay to best-in-class,” he adds. Two years into the investment, significant capital was also spent transitioning from palm oil to sunflower oil to differentiate Europe Snacks from its competitors. “We wanted to do this because it was the right thing to do. And our customers were very supportive of the move,” says Fenart. As part of this fundamental ESG exercise,

Europe Snacks decided to use EcoCan packaging, a 98 per cent recyclable tube, for all its stapled snacks. The most environmentally sound product in the industry, it even distinguished Europe Snacks from Pringles. By early 2013, Europe Snacks had evolved from a domestically-focused, owner-manager style of business to a company with robust financial and procurement processes, an international outlook and a strong growth agenda. Contracts had been won in Italy and Germany, and further deals were being actively explored. Caillavet had retired as chairman but the rest of the management team had remained, including the CFO, the sales director and the industrial director. At this point, IK was approached by a German competitor, the only other significant private label producer of savoury snacks in Continental Europe. “They really wanted to buy the business and they gave us some preliminary valuations, which we could use as a benchmark,” says Buttiaux. The right exit Fenart and the rest of the management team were keen to remain independent however so just before the summer of 2013, IK arranged for Fenart to give a simple presentation on the company to a select number of private equity firms. “When business resumed, Apax Partners

RÉMI BUTTIAUX, PARTNER, IK

called us and said they loved the business and the management team. They had appointed Boston Consulting Group over the summer and the firm had prepared a 300-page report on the savoury snacks sector,” says Buttiaux. This was a sensitive time. Apax appeared to be committed buyers but IK knew that if the market found out that Apax were interested and they then walked away, Europe Snacks’ reputation would be tainted. “We gave them a very specific price; they agreed to it and we then said that we wanted to keep the process very contained, using only a couple of banks that had already been involved and limiting their due diligence to two weeks,” says Buttiaux. Apax accepted all these conditions but, before the due diligence process began, IK met with them and spent three hours talking through the Europe Snacks story. “This was incredibly useful,” says Buttiaux. “We walked them through all the headline figures including the key good and bad news. This meant they could not come back to us afterwards and say that we had not been open with them. Then we gave them 24 hours to decide if they still wanted to proceed. They did – and momentum was overwhelmingly positive throughout the due diligence phase,” he adds.

A fortnight later, Apax came back with a firm proposal. “Their faces were as white as their shirts and they had dark circles round their eyes but they had done what they needed to do and they were very keen,” Buttiaux explains. Their enthusiasm was understandable. Europe Snacks had increased sales and EBITDA by 13 per cent and 8 per cent per annum respectively under IK’s ownership but there was plenty of growth still to come. The company was now generating 20 per cent of its revenues from outside France and had signed several significant contracts during 2013, including a major deal with Lidl. “Because a number of new contracts had been signed, it was clear there would be a ramp-up of sales in 2014 with lots of new business coming from Germany, Italy and the Benelux,” says Buttiaux. Once the due diligence had been done, the sales process progressed rapidly and by the 20th December, the exit had been completed. Apax was happy with its new investment and the management team at Europe Snacks were also delighted with the turn of events. “They were really pleased because the company had remained independent and they reinvested significantly in the business, which was of course very reassuring for Apax,” says Buttiaux. The transaction was also highly successful for IK and its investors, generating two times the money and 25 per cent IRR. “We bought well. We repositioned the group under a driven management team and an amazing CEO. We installed best-of-breed industrial practices. We initiated a pan-European strategy and we delivered a strong improvement in the multiples and EBITDA,” says Buttiaux. “In other words, this deal highlighted what we do best, turning a business from a national champion to a European leader,” he adds.

Country DATE Acquired Sector Web

France November 2010 Consumer goods www.europesnacks.com

Europe Snacks specialises in the production of own-brand savoury snacks. The company is the market leader in France and has a growing presence across Europe. Producing 25,000 tonnes of snacks a year and making over 200 different products, Europe Snacks is particularly well known for its wide range, its flexibility and its excellent levels of service. The company is headquartered in Saint-Denis-la-Chevasse and has approximately 360 employees.

Value creation strategy • Organic growth by leveraging strong market position • Develop the existing product range and launch new product lines • International expansion

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New recruits FOR IK IK has appointed six new associates to work on its investment teams and the Strategy, Operations and Business control team. Experienced and talented, they bring a variety of skills and capabilities to the firm.

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K has long been known as an active owner,

focused on creating value within its portfolio companies by delivering operational improvements. For new associates, this is one of the principal factors that attracts them to the firm. As the German team’s latest member Alexander Meier explains: “At IK, I can truly dive into a variety of companies and help them succeed over the long term.” Carl Jacobsson of the Swedish/Finnish team agrees. “I can combine my interest in finance with the opportunity to work closely with companies in various industries, so I really do gain a broad experience of business life. The excitement of ‘deal-making’ and the longer term, strategic approach to value creation is very attractive to me,” he says. French associate Thibaud Richard says he wanted to find out more about investing in companies, being part of a longer-term process and understanding how businesses develop. “I enjoy being involved with management teams and other stakeholders in the investment process,” he explains. New Benelux team member Frances Houweling enjoys the combination of ‘hands on’ portfolio work on the one hand and investment origination and deal flow on the other hand. The active ownership philosophy at IK means that deal teams need a variety of competences, including people skills, business acumen, intel-

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ligence and intuition. Diversity within teams plays an important role too and IK believes a female perspective confers definite benefits in the value creation process. The firm actively encourages female recruitment at a senior level and has done so for many years. It was one of the first private equity firms to appoint a woman partner, Anne Holm Rannaleet in 2004, and she remains with the business today, as senior advisor and chairman of IK’s Industrial Advisory Board. Helena Stjernholm, partner and head of IK’s Northern Region, has also been with the company for a considerable time. Diki Korniloff joined IK’s French team in 2012 and the Benelux and Norwegian/Danish teams each have a female associate now. “I enjoy combining in-depth financial analysis with long-term strategic decision making. The best day for me is one where I have worked closely with the management team of one of our portfolio companies and leave with a sense of having added value,” says Norwegian/Danish associate Nina Hoffmann. Across the board, IK aims to attract the best talent in the industry, and then develop and challenge them. Within a few months of joining the firm, Hoffmann felt there was a shared culture of “dedication, drive and passion.” “There is a sense of ‘one team’ even through we have different geographical focus areas. I always feel that every door in the organisa-

There is a sense of ‘one team’ even through we have different geographical focus areas. I always feel that every door in the organisation is open. I would never hesitate to ask a question or seek advice and guidance from any of my senior colleagues or any of the partners - I genuinely believe this is quite unique for IK and not something you will find in every private equity firm.

tion is open. I would never hesitate to ask a question or seek advice and guidance from any of my senior colleagues or any of the partners - I genuinely believe this is quite unique for IK and not something you will find in every private equity firm,” she says. Jacobsson agrees, suggesting that the IK culture supports and facilitates individual development. “My role, while clearly defined, still allows for additional responsibilities and challenges should I feel that I am ready to take them on,” he says. Meier considers the entire Hamburg team as mentors, as he has really learnt a lot from every single one of them. Richard says that he felt part

of the team from day one. “People care about each other and the atmosphere is very positive, yet everyone wants to deliver top quality work,” he explains. Today’s associates expect more out of their job than just a financial reward. They are ready to work hard, but they want to be inspired and challenged; they want to learn and grow. For Jacobsson, the inspiration comes from the experience, knowledge and enthusiasm of his colleagues on a daily basis, both his peers and those senior to him. Andersson agrees that working with talented and ambitious individuals, as well as solving complex problems, helps you to grow and learn new skills. For

Houweling, change, enthusiasm and passion are the words that spring to mind when talking about the dynamics in her deal team. Richard meanwhile, finds inspiration in everyday situations. “Talking to someone new or reading an article suddenly makes you think of an interesting business model or reminds you of a potential investment situation you are looking for,” he says. The six new associates bring new life to IK. A new generation, they are already contributing to the firm’s growth and will doubtless continue to do so as they gain in experience and expertise.

Joining the IK family

Alexander Meier joined the German deal team as an associate in September 2013. He has an MBA from Columbia Business School and worked as an Associate at Credit Suisse in London prior to joining IK.

Nina Hoffmann has been an associate at IK’s Norwegian/Danish team since September 2013. She has an MSc in Finance and Strategic Management from Copenhagen Business School and came to IK from Goldman Sachs.

Frances Houweling joined the Benelux

Carl Jacobsson became an associate in the Swedish/Finnish team in November 2013. He holds an MSc in Finance from the Stockholm School of Economics and worked for the Corporate Finance Department at SEB Enskilda in Stockholm prior to joining IK.

Thibaud Richard joined the French deal team as an associate in January 2014.Thibaut joined IK from Morgan Stanley Investment Banking in Paris and holds an MSc in Corporate Finance from ESCP Europe.

Andreas Andersson joined IK’s Strategy,

team at associate level in September 2013, having previously worked at JP Morgan as an associate in Investment Banking and Fixed Income. She completed her MSc in Finance at the University of Groningen.

NINA HOFFMAN, ASSOCIATE, IK

Operations and Business control team at associate level in April 2014. He joins from KPMG Advisory in Stockholm. Mr Andersson holds an MSc. in Industrial Engineering and Management from Chalmers University.

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IK viewpoint/ HELENA STJERNHOLM Conditions in the Nordic region are better than they have been in years and we see significant opportunities, particularly in the mid-market space.

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he Nordics have come through the financial crisis in pretty good shape. GDP growth is moving in the right direction, financing is widely accessible and stock markets are booming. There have already been several IPOs this year and we expect many more in the coming months. The Nordic region is well known for producing strong companies and there is a long tradition of private equity ownership. In recent months, these have come together. Deal flow is increasing and the outlook is brighter for both investments and exits. The picture is not entirely rosy, however. Positive momentum has been driving up vendors’ price expectations and many company owners feel they can derive more value by listing on the stock market. As management teams weigh up their options, private equity firms have to be careful about what they buy and how much they pay. Fortunately, we believe that IK has certain advantages. Our status as a firm with Nordic roots and an international footprint is a big

differentiator, particularly in the mid-market space. Clearly, management teams know their businesses through and through in the domestic market but our international expertise can be a real draw, as this is the type of expansion they invariably seek. Our Industrial Advisers make an important contribution, providing valuable input on specific sectors and regions, and highlighting our industrial credentials to management teams. Many companies remark on our operational focus. We are not just interested in the balance sheet; we really want to know how a business works. For them, it sets us apart from other financial bidders. For us, it is in our DNA. We are also responding to the current environment by being more creative, more focused and more flexible, often working outside the mainstream, in an effort to find genuine value. Our recent investment in Swedish traffic services business, Ramudden, is a case in point. The company is founder-led and smaller than we are used to, but it has plenty of potential to

Our status as a firm with Nordic roots and an international footprint is a big differentiator, particularly in the mid-market space.

grow organically and by acquisition both in the domestic market and in other geographies. Even in relatively small investment cases such as this one, however, competition is fierce. Gone are the days when an owner or a management team would sell to the first bidder if the price was reasonable and the chemistry worked. Now, company owners are keen to test the market and maximise the price so they invariably talking to several parties before signing a deal. Fortunately, our Nordic heritage means we have a broad and deep knowledge of the region and an extensive network of contacts. Through this network, we see virtually every deal in our space, frequently before the official sales process begins. This is extremely helpful once the formal bidding rounds start, as we can analyse both the company itself and the wider industry ahead of time. To meet this increase in market activity, we have recently added more people to our Nordic teams to further strengthen our position in the region. Looking ahead therefore, the outlook is positive despite the competitive landscape. Three of the four companies in our IK VII Fund are from the Nordics. We look forward to more successful investments. Helena Stjernholm PARTNER, IK