Munich / Zurich — In 2017, the pan-Euro­pean equity inves­tor Equis­tone once again under­pin­ned its posi­tion as one of the leading private equity houses targe­ting medium-sized compa­nies in the German-spea­king region. With a total of 17 tran­sac­tions for which the German and Swiss team was respon­si­ble in the past twelve months, the Mittel­stand inves­tor excee­ded the previous year’s figure of 13 deals. In a chal­len­ging market, three compa­nies were acqui­red, three dive­s­ted and eleven acqui­si­ti­ons were made for port­fo­lio companies.

Important invest­ments in the midmarket
In 2017, Equis­tone acqui­red three compa­nies: the refi­ner of fresh meat products Group of Butchers, the street­wear retailer DefShop, and the prefa­bri­ca­ted house group around Bien-Zenker and Hanse Haus. Group of Butchers, based in the Nether­lands, distri­bu­tes meat and sausage products through retail, super­mar­ket chains and out-of-home segments. The meat produ­cer brings toge­ther six local produ­cers in the Nether­lands and Belgium under its umbrella. A stable custo­mer base, sales at a solid level and a perma­nent work­force of 350 employees are the ideal start­ing point for further orga­nic growth and for bene­fiting from market conso­li­da­tion in other regi­ons through stra­te­gic acquisitions.

DefShop is one of the leading multich­an­nel retail­ers for urban street­wear, espe­ci­ally for young people, in Germany. The range includes clot­hing, shoes and access­ories from well-known manu­fac­tu­r­ers such as Adidas and Nike, as well as estab­lished own and licen­sed brands. The artic­les are sold prima­rily via the company’s own online B2C plat­form, but also via statio­nary stores and a network of Euro­pean whole­sale custo­mers. The joint work of manage­ment and Equis­tone on the next phase of growth will focus prima­rily on acce­le­ra­ted growth in the B2C and B2B segments, further inter­na­tio­na­liza­tion, stra­te­gic acqui­si­ti­ons and streng­thening the private label strategy.

In Decem­ber, Equis­tone announ­ced the purchase of Bien-Zenker and Hanse Haus. The compa­nies of the Prefa­bri­ca­ted Houses Group design, produce, sell and build prefa­bri­ca­ted houses in Germany as well as in Switz­er­land and the UK. With Bien-Zenker, Living Haus and Hanse Haus, the Group has three stron­gly posi­tio­ned brands and a broad range of prefa­bri­ca­ted house solu­ti­ons that serve diffe­rent custo­mer and price segments with consis­t­ently high-quality products. A highly frag­men­ted market offers good oppor­tu­ni­ties here, espe­ci­ally for orga­nic growth strategies.

Successful exits after successful development
Equis­tone trans­fer­red three of its port­fo­lio compa­nies to other hands in fiscal 2017. “We focus on the sustainable success of our invest­ments. The goal is to opti­mize the market posi­tion of the compa­nies in our port­fo­lio through process and product inno­va­tions and to realize orga­nic growth toge­ther with the manage­ment and employees,” explains Michael H. Bork, Senior Part­ner and Mana­ging Direc­tor at Equis­tone (Photo) explains: “When we sell a company, it is very important to us to find the right part­ner who will open up further growth poten­tial and take the respec­tive company into the next deve­lo­p­ment phase. We succee­ded in this again last year — for exam­ple with the sale of the Horn­schuch Group to Conti­nen­tal, of EuroAvio­nics to HENSOLDT and of OASE to the US private equity house Argand Part­ners. We expect the favorable envi­ron­ment for exits to conti­nue in 2018, in which capi­tal and the willing­ness to invest on the part of inves­tors meet suita­ble tran­sac­tion candi­da­tes,” Michael H. Bork continues.

Equis­tone had inves­ted in Konrad Horn­schuch AG in 2008, at that time still under the company name Barclays Private Equity, and successfully comple­ted the resale of the group to Conti­nen­tal in March 2017. The company value and the market posi­tion of the surface specia­list from Weiß­bach had deve­lo­ped signi­fi­cantly in recent years. Sales increased during Equistone’s invol­vement from 140 million euros (2008) to appro­xi­m­ately 450 million euros (2016). As part of an ambi­tious buy-and-build stra­tegy, two German and one US company were acqui­red, the product port­fo­lio was massi­vely expan­ded and new produc­tion sites were estab­lished. Toge­ther with Equis­tone, manage­ment succee­ded in over­co­ming the conse­quen­ces of the finan­cial crisis and retur­ning to a sustainable growth path.

In mid-August, the sale of EuroAvio­nics, a manu­fac­tu­rer and global tech­no­logy leader of civil avio­nics systems, to HENSOLDT AG was comple­ted. During the invest­ment period, the company has conti­nuously deve­lo­ped its market posi­tion and global presence, prima­rily through the expan­sion of its product port­fo­lio and inter­na­tio­nal acquisitions.

THE OASE Group, an inter­na­tio­nal specia­list in water gardens, aqua­tics and foun­tain tech­no­logy, was sold in Octo­ber. The company is a highly regarded, strong brand inter­na­tio­nally thanks to sensa­tio­nal instal­la­ti­ons such as the “Dance of the Cranes” in Singa­pore or the multi­me­dia foun­tain instal­la­tion in front of the Petro­nas Towers in Kuala Lumpur. The drivers of orga­nic growth in the period under review were the expan­sion of the product port­fo­lio, inter­na­tio­nal expan­sion and a targe­ted buy-and-build stra­tegy in neigh­bor­ing segments. With success: during Equistone’s invol­vement, the group’s sales grew from around 100 million euros (2011) to around 155 million euros (2017) while profi­ta­bi­lity increased. OASE employs appro­xi­m­ately 750 people worldwide.

Targe­ted busi­ness deve­lo­p­ment through acqui­si­ti­ons of port­fo­lio companies
Equis­tone has been known in the indus­try for many years for its capi­tal strength, but more importantly for its profound support in the further deve­lo­p­ment of the asset during the invest­ment. “The stra­te­gic deve­lo­p­ment of our port­fo­lio compa­nies is a key element of our invest­ment approach: We help compa­nies to deve­lop their growth poten­tial. Today, 20 medium-sized compa­nies in Germany, Switz­er­land and the Nether­lands rely on our expe­ri­ence, exper­tise and capi­tal strength. For exam­ple, we support market posi­tio­ning and conso­li­da­tion by acqui­ring suita­ble compa­nies that fit the port­fo­lio company’s growth stra­tegy. We intend to conti­nue on this course in 2018,” summa­ri­zes Dr. Marc Arens, Part­ner at Equistone.

In the past year, Equis­tone was able to realize seve­ral add-on acqui­si­ti­ons for its investments:

Sport­group expan­ded its presence in Austra­lia, North America and Asia through five acqui­si­ti­ons and conso­li­da­ted its posi­tion as market leader in the global market for sports surfaces: In addi­tion to SCM, the Austra­lian compa­nies ProGrass, NewTurf and Wm Loud, as well as Malaysia’s Fairm­ont, joined the group in 2017 as renow­ned suppli­ers of arti­fi­cial turf and sports faci­lity surfaces. Sport­group — part of Equistone’s port­fo­lio since mid-2015 and head­quar­te­red in Ingol­stadt — is a specia­list in the design of arti­fi­cial turf and sports field surfaces for major sport­ing events and stadium construction.
VIVONIO, a stra­te­gic alli­ance of major furni­ture manu­fac­tu­r­ers based in Munich, made two stra­te­gic acqui­si­ti­ons in 2017. In March 2017, VIVONIO acqui­red the Dutch company Note­born, a leading manu­fac­tu­rer of custom cabi­nets and comple­men­tary products. In Septem­ber, fm Büro­mö­bel Franz Meyer GmbH & Co. KG from Bösel (Lower Saxony) joined the company. The company is focu­sed on manu­fac­tu­ring and distri­bu­tion of office and lounge furni­ture. With both add-ons, VIVONIO aims to expand its presence in Germany as well as inter­na­tio­nally and streng­then its posi­tion as a player in the Euro­pean market.
Since its acqui­si­tion by Equis­tone in August 2016, the Swiss ROTH GROUP — a provi­der of services in the field of fire protec­tion, insu­la­tion and coatings — has alre­ady acqui­red four compa­nies, thus expan­ding its market posi­tion and service port­fo­lio. Two add-ons of these were made in the past year: At the begin­ning of 2017, the Group streng­the­ned its presence in Western Switz­er­land with the acqui­si­tion of INTUM SA, and in Septem­ber ROTH inten­si­fied an exis­ting stra­te­gic part­ner­ship and inte­gra­ted Nyfe­ler + Keller.
Equistone’s port­fo­lio company Case­king, an online retailer of gaming and PC access­ories active in Europe, acqui­red Portugal’s Global­data in Febru­ary and Trigono in Novem­ber. Trigono, based in Sweden with a subsi­diary in Norway, sells hard­ware and soft­ware for retail and busi­ness custo­mers. The acqui­si­tion streng­thens the Case­king Group’s posi­tion in the Scan­di­na­vian market and other key Euro­pean regi­ons. At the same time, Caseking’s broad range of brands should in turn open up growth oppor­tu­ni­ties for its new part­ner Trigono.

About Equis­tone Part­ners Europe
Equis­tone Part­ners Europe is one of Europe’s leading equity inves­tors with a team of more than 35 invest­ment specia­lists in six offices in Germany, Switz­er­land, France and the UK. Equis­tone prima­rily invests in estab­lished medium-sized compa­nies with a good market posi­tion, above-average growth poten­tial and an enter­prise value of between EUR 50 and 500 million. Since its foun­ding, equity has been inves­ted in more than 140 tran­sac­tions, mainly mid-market buy-outs. The port­fo­lio curr­ently compri­ses over 40 compa­nies across Europe, inclu­ding around 20 active holdings in Germany, Switz­er­land and the Netherlands.