CHRISTOPHER MASEK AND DETLEF DINSEL: - IK Investment ...

news issue
a newsletter from
Ik investment partners
30 WINTER 2011/2012
CHRISTOPHER MASEK AND DETLEF DINSEL:
JOINT FORCES
STEER IK INTO
THE FUTURE
PC NEWS 3 TEAM PRESENTATION 24 IKARE UPDATE 30 VIEWPOINT 32
IK NEWS 2/11 – 1

IK NEWS ISSUE 30
CONTENTS
EDITORIAL
04
SAVENA GROUP
IK produces a recipe for success for
French food business.
06
TRIGO
Buy and build strategy at the
quality inspection specialist.
08
MAGOTTEAUX
Golden returns for the Belgian supplier
to the mining and cement industries.
14
ETANCO
How value was built in the French
construction sector.
17
CHRIS & DETLEF
Share their opinion on the current
economic climate and their vision
for the future.
24
FINANCE
AND ADMINI­
STRATION
Meet the first
class team which
ensures the
smooth running
of finance and
administration
at IK.
Welcome to the latest issue of IK News – a
bumper edition which reflects a particularly
busy period for the firm. IK has recently
completed three exciting new investments –
savena Group, Trigo and Doedijns International;
and achieved three healthy exits – magotteaux,
Idex and Etanco. All these transactions are
featured in this issue which, we hope, will
give greater insights into IK’s strategic and
operational approach to business improvement.
Despite the ongoing global economic and
financial uncertainties, we remain convinced
that Europe’s mid-market will continue to
provide the best opportunities for value creation.
The extent to which private equity companies
add value to mid-market portfolio companies,
borne out in a new report from the Center for
Entrepreneurial and Fiscal Studies, is explored
in Viewpoint on page 32.
The mid-market has served IK and its fund
investors very well over the past 22 years
and we are confident it will continue to offer
opportunities. Christopher Masek and Detlef
Dinsel, our Managing Partners, set out their
vision for the firm going forward on page 17.
Despite all this activity, we have still found
room in this issue for regular features, including
the Team Presentation on page 24. This profiles
our finance and administration people in
london, Jersey, Luxembourg, Stockholm and
Hamburg who ensure the smooth running
of IK and its financial transparency. We also
bring you a briefing on EU regulations set to
impact the private equity world and an update
on IK’s charitable IKARE/SOS sleeping
sickness project in Uganda.
We hope you enjoy this
super-sized issue – our biggest
yet, and look forward to
bringing you more good
news coming through from
our investment pipeline
next year.
EDITORIAL DIRECTOR:
CHARLOTTE LAVESON GIRARD
NOTEBOOK
CALENDAR
11 January
Investor meeting, New York
31 January
EVCA Responsible Investment
Summit, Brussels
27 February – 1 March
Super Return International 2012
conference, Berlin
14 – 15 March
EVCA Investors’ Forum, Geneva
news
Editorial director: Charlotte Laveson Girard,
charlotte.laveson@ikinvest.com
Texts: Joanna Gant, Charlotte Laveson Girard,
Anne Holm Rannaleet, Joanne Hart
Art direction: 25AH Design Studio
www.25ah.se
www.ikinvest.com
© 2011 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 per mission of IK Investment Partners. IK News
is published three times a year by IK Investment Partners,
Brettenham House, Lancaster Place, London WC2E 7EN, UK.
weblinks to portfolio companies www.doedijns.nl www.trigo.net www.savena-group.com www.episerver.com www.hansa.de www.europesnacks.com
www.gesundheitsgmbh.de www.agrosnova.com www.colosseumklinikken.no www.vistra.com www.axtone.eu www.flabeg.com www.schenckprocess.com www.attendo.se
www.minimax.de www.polytan.de www.kwintet.com www.lahikauppa.fi www.sia-homefashion.com www.europris.no www.dynea.com
2 – IK NEWS 2/11

PORTFOLIO COMPANY NEWS
NOTEWORTHY
GROWTH ACQUISITION
Schenck Process establishes presence in Brazil
Schenck Process Group has completed the acquisition of Pentec, a leading
manufacturer and supplier of polyurethane and rubber screening products, based in Caeté,
Brazil. Serving both the new equipment and after-sales markets, this strategic add-on reinforces
Germany-based Schenck’s position as a global market leader of solutions in measuring and
process technologies, with a combined product offering enabling customers to purchase both
capital equipment and spare parts from one source.
“This acquisition is an important step in the globalisation of our mining business. It provides
a platform in Brazil for us to introduce our complete range of products and solutions for the
mining industry,” says Dr Jochen Weyrauch, President & CEO of Schenck. He adds that both
companies, operating in often the harshest of industrial environments, share the same business
philosophy of optimising customers’ processes and safeguarding them in the long-term through
excellent after-sales service.
Schenck Process is controlled by the IK2007 Fund.
GROWTH ACQUISITION
Colosseum acquires
dental clinics in Sweden
Colosseum acquires SDIC Dental Clinic in
Stockholm and Slottstadens Tandvårdsgrupp in
Malmö, Sweden. SDIC is one of Stockholm’s largest
private dental clinics, with an annual turnover of
approximately SEK 30 million. The clinic has about
20 employees. Slottstadens Tandvårdsgrupp is one of
Malmö’s largest private dental clinics, with an annual
turnover of approximately SEK 25 million. The clinic
has about 25 employees.
Colosseum today has over 400 employees spread
over 23 clinics, 10 in Sweden, 11 in Norway and two
in Denmark, with an estimated annual turnover of
approximately NOK 550 million.
Colosseum is controlled by the IK2007 Fund.
NEW MOBILE WEB APPLICATION
New software launch for EPiServer
EPiServer, the fast-growing provider of web content management
platforms, has recently launched Mobile Pack – a generic mobile web application
to any website running on EPiServer CMS 6 R2 (more current). Instead of more
expensive ‘native’ applications, this new software employs familiar analytics
tools to enable users to cater for visitor preferences. The growing mobile web
application to any market presents excellent opportunities for development with
EPiServer using its ‘know–how’ to support mobile platforms.
In addition, EPiServer’s CMS 6 technology has recently been named the
‘Trend-Setting Product of 2011’ by KMV Magazine, in recognition of its market
leading functionality. EpiServer has also been chosen by Variety, a leading US
daily and weekly entertainment trade publication, to help develop its online presence.
EpiServer is controlled by the IK2007 Fund.
GROWTH ACQUISITION
A formidable footprint
in Scandinavia
Savena recently acquired Formidabel, a leading supplier
of culinary solutions in Sweden, which provides functional and
aromatic mixes to the food industry and is involved in the trading
of ingredients. The company has very strong R&D capabilities with
more than 110 recipes designed each year. By acquiring Formidabel,
Savena has strengthened its position in Scandinavia, allowing the
group to benefit from technological cross- fertilisation. Located in
Malmö, Sweden, Formidabel has 44 employees.
Savena is controlled by the IK2007 Fund.
IK NEWS 2/11 – 3

NEW INVESTMENT SAVENA GROUP
RECIPE FOR SUCCESS:
IK PUTS
SAVENA GROUP
ON THE MENU
IK RECENTLY ADDED the French food ingredients business
Savena to its portfolio, with plans to maximise the group’s development
potential through cross-border acquisitions and organic growth.
IK has a big appetite for food sector
deals with Savena, the French
ingredients manufacturer, becoming
the latest to join the firm’s portfolio.
It follows on from IK’s investments
in Snacks International, the leading salted
snacks private label producer in France and
the Polish food company Agros Nova last year.
IK has also exited successfully from Labeyrie,
the French speciality foods producer, in 2004
and the Dutch biscuit producer Continental
Bakeries in 2006.
These deals were instrumental in the
decision by Savena’s CEO and founder, Eric
Terré, to choose IK as its next private equity
partner, succeeding the French private equity
firms Azulis Capital and Céréa Capital which
had backed the business since 2007.
Eric Terré says: “Our advisers pre-selected
ten potential private equity partners for us,
all of which were interested in buying into the
business. However, we identified IK as our
preferred candidate quite quickly. They were
impressive and it was clear that with their
credentials in the food industry - particularly
in France with Snacks and Labeyrie – and of
building-up businesses internationally, that
they would understand our business and
contribute valuable ideas and experience.”
Terré explains that this is Savena’s fourth
management buyout with IK far larger and
more international than any of its earlier
investors. “With IK we have the opportunity
to go further faster, particularly through
making acquisitions abroad,” he says.
IK is also long-term and therefore not so
likely to be deterred by short-term market
conditions. “With a strategy to build-up the
business through acquisition, the current
economic climate may produce some good
opportunities for us,” Terré says. “We are
already looking closely at two possible targets
in Europe. IK is an owner well-placed to help
us make these deals happen and accelerate our
pan-European development plans,” he adds.
“We are very excited to be working
alongside a management team with such a
successful growth track record, and look
forward to sharing our experience in the
European food-processing industry,” says Dan
Soudry, Partner and head of IK’s Paris office.
Food industry solutions
Savena, which was founded by Terré in 1988,
designs and produces ingredient-based culinary,
functional and nutritional solutions for the
food industry. Its head office is in Bréal- sous-
Montfort in France but across Europe it employs
250 people and serves about 4,000 clients.
Alongside completing two add-on
acquisitions, Savena was able to achieve
annual organic growth of more than ten per
cent between 2008 and 2010 by successfully
increasing its sales force. The company
generated a €79 million turnover in 2010 with
“Our advisers pre-selected ten
potential private equity partners for
us, all of which were interested in
buying into the business. However,
we identified IK as our preferred
candidate quite quickly.”
Eric Terré, CEO, Savena Group
4 – IK NEWS 2/11

its revenues for the current financial year
expected to reach some €90 million.
International sales currently represent more
than 50 per cent of the group’s consolidated
turnover with Savena already established
in Belgium, Germany, scandinavia, Eastern
Europe and Italy, with fledgling operations in
Asia and Russia.
The group’s factories are at Bréal,
weyersheim and Manziat in France and
Eupen in Belgium. Savena also recently
announced plans to open another new factory
in Bréal in 2013, representing an investment
of €11.3 million.
Savena operates under five brands - Saveur,
Dena, Laboratoire PYC, Cap Traiteur and
Nutrinal – and is organised into four business
units, namely: Taste Solutions, Meat Solutions,
Nutrition Solutions and Food Service.
Taste Solutions, which operates in France
and Denmark as ‘Saveur’, produces creative,
tailored culinary products for the food
industry which combine taste, texture and
functional characteristics. Savena’s Meat
solutions business operates as ‘Dena’ – in
Germany and Belgium, and ‘Nutrinal’ in
France. It offers the meat processing and
delicatessen industries ways by which the
taste, appearance, texture and stability of the
finished products can be improved.
Savena’s Nutrition Solutions unit produces
dietary ingredients, nutrition supplements and
health foods – for weight-loss, sport, health and
beauty – via its subsidiary Laboratoire PYC. Its
tailored approach enables the company to offer
products with specific ‘organoleptic’ properties
and to satisfy all the demands of its clients’
specifications.
Through Cap Traiteur, Savena Food Service
serves the catering market with a complete
range of products, recipe ideas, and usage
advice for restaurant and catering professionals,
butchers and charcuterie specialists.
Savena also has an R&D and innovation
capability comprising five technical centres
staffed by 27 experts – chefs, delicatessen
specialists, nutritionists and flavourists –
offering technical assistance to clients either
at their own production sites or in Savena’s
own workshops.
In addition to its expertise in all stages of
production, Savena is equipped with the best
industrial tools to create tailored recipes and
satisfy the most demanding specifications.
“These tools enable us to guarantee optimal
quality and flexibility and to ensure a rapid
response to client requirements by reducing
our delivery times to a minimum,” says Terré.
IK is excited by the high growth
potential presented by Savena which is
set to be maximised through innovation,
the introduction of new products and the
extension of the company’s commercial
presence. “All being well, the strategy of
organic growth in France and abroad, as
well as the completion of external growth
operations through M & A, should allow
savena to double its size over the next five
years,” Dan Soudry concludes.
“We are very excited to be working
alongside a management team
with such a successful growth
track record, and look forward
to sharing our experience in
the European food-processing
industry.”
Dan Soudry, Partner, IK
IK NEWS 2/11 – 5

NEW INVESTMENT TRIGO
TRIGO
Consolidation, diversification and development
GETS READY FOR
INSPECTION
WITH IK’S SUPPORT, Trigo aims to strengthen its leading position in
the automotive sector, introduce a broader service offering and continue
with geographic and sectoral diversification.
6 – IK NEWS 2/11

Trigo, the global components quality inspection specialist,
is set to accelerate its expansion into new markets
following its recent acquisition by IK Investment
partners (IK). The plan is to increase Trigo’s service
offering in its core automotive activities while pursuing
both geographic and sectoral diversification.
“Trigo has all the business attributes that IK seeks in an investment.
It is a clear leader with opportunities to build on already strong market
positions, develop its service range and expand its
geographic presence both organically and through
the acquisition of local competitors and companies
in adjacent services,” says IK partner, Dan Soudry.
“Trigo has a strong track record of organic
growth and a credible strategy going forward.
However, we count on acquisitions to accelerate
the group’s development.” continues IK deputy
director Benoît Leblanc. “Buy-and-build is in
IK’s DNA and, ahead of closing a deal, we will
always explore build-up opportunities. This
has intensified post-investment and discussions
have been initiated with several possible targets
predominantly outside of the automotive
industry,” he says.
IK acquired its majority stake in Trigo in
August this year from the French private equity
house Atria Capital Partenaires which had held its
interest in the business since 2006.
“IK is exactly what I was counting on during
the sales process – a strong, dynamic partner
who entirely shares our strategic views on
consolidation, development and diversification,”
says Trigo’s CEO, Stéphan Pham. “IK is really
focused on the future and will actively support us
as we grow the business,” he says.
“We are particularly looking to IK to help us
accelerate our diversification strategy in which
acquisitions will play a key role,” he continues. According to Pham,
Trigo currently has 90 per cent of its turnover in the automotive sector.
“However, if we were to complete half of the deals we are currently
looking at then we would have one third per cent of our business in
non-automotive areas,” he notes.
Introducing new services
Trigo’s current focus is on providing quality inspection services to
automotive original equipment manufacturers (OEMs) on behalf
of their suppliers. But Trigo also has a growing client base in other
industries, notably electronics, aeronautics and rail transportation; is
looking to expand into new sectors including electrical appliances and
telecoms; and to intensify the development of complementary services
such as quality engineering and quality auditing.
In terms of geographies, Trigo is already the clear leader in automotive
inspection services in France and Hungary. It also has a
strong presence in key emerging markets such as China,
India and Turkey. Trigo is now looking for further
opportunities across Europe, Russia and Asia and is in
the process of entering Brazil, Thailand and Morocco.
“These are going to be big automotive manufacturing
countries and are where, ideally, we would most like to
increase our activities,” Stephan Pham explains.
Meanwhile, Trigo will continue to exploit strong
underlying growth in central and eastern Europe
and Asia for its core automotive quality
control services. “These are markets in
which Trigo is already well-positioned with
a blue-chip client base,” says Leblanc.
Motivated management team
Headquartered in Nanterre in France,
“IK is exactly what I was counting
on during the sales process – a
strong, dynamic partner who
entirely shares our strategic views
on consolidation, development
and diversification.”
Trigo was founded in 1997 by Pierre Hervo, a senior engineer in
the automotive industry. The company grew rapidly in the fields of
inspection and quality control for French-based automotive clients and,
in 2002, began to expand its customers base and serve more and more
international automotive OEMs and suppliers.
From 2003, utilising its automotive expertise, Trigo began to transfer
its know-how into other sectors and, two years later, began to move into
China, India, Turkey, Russia and Romania. Following the acquisition
of the Imagement Group in 2008, Trigo’s
international network was extended to Hungary,
Slovakia, Czech Republic, Slovenia and Austria.
Today Trigo, run by a highly motivated and
experienced management team led by Stéphan
Pham, who has been CEO since 2003, employs more
than 3,500 people (including 1,700 own permanent
staff) across 15 countries and is located in 140
sites of which close to 60 are at car manufacturing
plants. It services some 6,000 clients and completes
more than 55,000 testing missions each year.
Trigo has delivered a 35% average annual growth
rate since 2001 with sales reaching €100 million
in the current financial year. Thanks to its pure
asset-light, high margin service business model, the
company generates consistently strong cash flows.
Trigo’s markets enjoy favourable development
drivers such as the increasing demand from
consumers for ‘quality’ and the rising technological
content of products. With components conformity
being a critical factor in more and more complex,
global and just-in-time manufacturing processes,
Trigo offers a strong value proposition to clients,
which are increasingly prone to outsourcing
inspection services to a professional third party with
a strong reputation. In addition, the fact that Trigo’s
teams are most of the time embedded in the clients’
own assembly sites, provides barriers to entry.
“Trigo’s ability to deploy skilled and experienced teams quickly,
as well as its acknowledged know-how, has enabled the company to
maintain its high growth rate and to be an active partner with its
customers in the quality control sector,” says Stéphan Pham.
Stéphan Pham, CEO, Trigo
Rebalancing the business
A key driver behind Trigo’s strategy to broaden its industrial base is its experience
during the credit crunch three years ago. This led to a shutdown
of automotive OEM production facilities resulting in a severe decline in
Trigo’s turnover within three months. Activity then remained at a low ebb
for a further three months before rapidly recovering over the next quarter.
“This was a difficult time for us, hence our concerted efforts to rebalance
the business with less reliance on the automotive market,” says Pham.
“While the speed of the downturn took everyone by surprise,
fortunately Trigo’s management anticipated the automotive market’s
sharp rebound and retained permanent staff despite OEM plant
closures,” observes Soudry.
With regard to the current economic outlook, Pham says: “We
have no reason to be unduly concerned. Our clients have shown no
sign of activity slow down besides their usual end-of-year inventory
management measures.”
Above all, Trigo is today a much more geographically diversified
business than it was in 2009 and is exposed to sharp growth in Asia,
where the manufacturing output boom is combined with a sharp
increase in quality inspection outsourcing. The group also has a clear
industrial diversification roadmap and concrete acquisition targets to
accelerate such move.
With its new strategy gaining momentum, Trigo is now well placed
to grow even through a recession. “Trigo is working hard to strengthen
its European lead, increase its exposure to emerging market growth,
enhance its mix of service offering and achieve a broader, less cyclical
business profile,” Benoît Leblanc concludes.
IK NEWS 2/11 – 7

EXIT MAGOTTEAUX
‘Grinding’ generates
a GOLDEN return
at Magotteaux
IK’S SUCCESSFUL EXIT from Magotteaux, a world leading
supplier of grinding media and wear resistant parts, illustrates how a
company’s potential can be realised with a proven formula of strategic
insight, operational support and strong corporate governance practices.
8 – IK NEWS 2/11

IK Investment Partners’ recent €550 million sale of
magotteaux, the Belgian industrial supplier to the mining
and cement industries, provides a good illustration of how
an underperforming market leader with strong technology, a
recognised - but underlevered – brand name, loose federation
of manufacturing plants, limited financial transparency and a focus
on mature markets can, through a variety of operational, strategic and
financial initiatives, emerge as a sought-after global specialist supplier
and produce a successful exit outcome for all concerned.
Following a competitive sales process, Magotteaux is now an
important division within Sigdo Koppers, the major Chilean mining
supply and construction group, complementing Sigdo’s mining product
range and providing an international footprint.
IK recognised Magotteaux’s strong potential for growth from the
outset, not least because of its crucial role in the production chain –
grinding media are critical to many manufacturing processes and there
are no known substitutes with similar qualities. In addition, magotteaux
had patented products, using superior high chrome and ceramic
materials, was already a pan-regional leader in Europe and North
america and had the desire to reinforce its global position.
“Our vision was to grow Magotteaux significantly – particularly by
increasing its activities in the mining sector, and to expand in Asia, Latin
American and the Middle East,” says IK deputy director Bart Borms. The
mining industry now accounts for more than 50 per cent of the company’s
activities with Magotteaux enjoying market leading positions in both the
mining and cement industries. Magotteaux is also more focused on the
emerging economies of India, Thailand, Brazil and Chile and recently
expanded into China. Now over 50 per cent of its production
capacity is in high-growth economies.
Essential step in the value chain
Founded in Liège in Belgium in 1920, magotteaux is the
leading global provider of differentiated, high performance,
metallurgically advanced grinding media and wear resistant
parts. Its principal end-markets are cement and mining but
it also serves the aggregates, recycling and dredging
industries where crushing, grinding, and other
material-size-reduction processes are an essential
step in the value chain.
The group pioneered the use of specialised
alloys and composite materials in the
“Our vision was to grow Magotteaux
significantly - particularly by increasing
its activities in the mining sector, and to
expand in Asia, Latin American and the
Middle East.”
Bart Borms, Deputy Director, IK
manufacturing of wear-resistant products and has developed significant
proprietary know-how in heat treatment. Its products include grinding
balls and wear tables, diaphragms and linings for mills, with continuous
initiatives aimed at developing new materials and designs to propose new
applications to customers.
Today Magotteaux has plants in 12 countries and commercial offices
in 38, with its main sales distributed between South America, North
America, South Africa, Asia and Australia. It employs about 2,400
people and generates over 450,000 tons of grinding media and castings
each year.
‘Family business’ management style
Prior to IK’s acquisition of a majority stake in Magoteaux in 2006,
the company was owned by its employees, backed by the Walloon
government investment vehicle, and essentially run in the style of
a family-owned business. IK immediately set about reinforcing the
management team with the appointment of a CEO and Sebastian
Dossagne as CFO. Bernard Goblet added independent directors to
the board and introduced a much stronger ‘business performance
orientation’ to complement the company’s engineering culture.
“We ‘institutionalised’ the company by introducing a robust
governance model with greater financial transparency and much closer
business monitoring. We complemented Magotteaux’s engineering
excellence with business management excellence by putting in new
people, procedures and systems to drive business performance. By
overhauling Magotteaux’s approach to health and safety succeeded in
halving ‘man hours’ lost,” explains Bart Borms.
IK saw the prime value creation levers to be strengthening
Magotteaux’s financial and commercial organisation, tightening
its pricing policies, introducing ‘lean’ manufacturing techniques
to reduce waste, increase flexibility and improve service levels;
improving working capital management and employing ‘strategic
sourcing’ by establishing coordinated purchasing within the
group. IK also encouraged stricter management of ‘accounts
receivable’ and ‘accounts payable’. Through measures such as
these, IK was able to reduce the company’s working capital
requirements by €70 million. “Not one area of the
business was left untouched,” says Bart Borms.
These initiatives are reflected in Magotteaux’s
financial results with sales this year up by one-third
to €500 million since 2006 and EBITDA by
two-thirds to €66 million. In addition, over 300
new jobs have been created following a €120
million investment programme.
Recession-beating strategy
All this has been achieved even with a deep
recession hitting the business in the middle of the
investment period which led to a disappointing
year for Magotteaux in 2009 as mining and cement
IK NEWS 2/11 – 9

EXIT MAGOTTEAUX
“Most of our business
improvement measures were
implemented during the
recession which helped us to be
more competitive and efficient.
We had no problems with the
banks and were helped by our
geographic spread, particularly
Latin America and the Middle
East which were relatively
unaffected by the downturn.
Work on building a new plant in Thailand had to be halted but
has been restarted and will be online by beginning of 2012.”
Bernard Goblet, CEO, Magotteaux
activities slowed. “The recession was significant but magotteaux benefited
from its global presence, particularly emerging markets where the
fall back in the cement sector was less and the pick-up in mining much
faster than in the West,” Borms comments. “Our pace of execution
changed during the downturn but the underlying drive remained the
same,” he adds.
“We could have been hit quite heavily by the recession and
initially we were quite concerned - a foundry business has high fixed
expenses. But, actually, we managed well,” observes Magotteaux’s
CEO Bernard Goblet. “Most of our business improvement measures
were implemented during the recession which helped us to be more
competitive and efficient. We had no problems with the banks and
were helped by our geographic spread, particularly Latin america and
the Middle East which were relatively unaffected by the downturn.
Work on building a new plant in Thailand had to be halted but has been
restarted and will be online by beginning of 2012,” he says.
“In addition, the mining sector moved into the recession earlier than
the cement industry but was faster to come out of it. This different cycle
helped smooth our revenue profile, confirmed our strategy to be the
right one and allowed Magotteaux to emerge from the downturn as a
growth story,” he says.
Organic growth is the priority
Magotteaux completed no add-on acquisitions during IK’s ownership
and although this was a little disappointing, as Bernard Goblet notes:
“Ultimately we were so busy improving the existing business and
pursuing organic growth that integrating an acquisition would have
been very challenging.”
“Several acquisitions were considered and, for various reasons,
were not executed. But there was enough happening with the existing
activities. If you try to push all the buttons at once something will fail.
We made clear decisions, had clear priorities and are very happy with
that,” comments Bart Borms.
IK did buy out minority shareholdings in Magotteaux taking,
for example, full control of a 50/50 joint venture in China. IK also
expanded or improved existing sites with new plants in Thailand
and Belgium as part of its €65 million capex investment programme.
Magotteaux’s technological know-how and patents provide a strong
barrier to entry and so IK also made a €45 million commitment
to R & D in Belgium which has led to the introduction of ten
new products.
Consolidation drives exit agenda
With the growth strategy outlined at the time of IK’s original
investment successfully implemented and believing that consolidation
trends in the industry would require significant further investment,
IK decided to seek an exit from Magotteaux earlier this year.
“This was the right time to sell Magotteaux. The industry is
consolidating with possible deals on the cards of a size beyond IK’s
capabilities. We could have continued a very attractive growth path
10 – IK NEWS 2/11

“There was always pressure on us in terms of speed of execution
but we found this to be entirely positive - IK set demanding
but realistic targets which fostered much greater discipline and
this was exactly what was required.”
Bernard Goblet, CEO, Magotteaux
“This was the right time to sell Magotteaux.
The industry is consolidating with possible
deals on the cards of a size beyond IK’s
capabilities. We could have continued a very
attractive growth path for another four or five
years but, from a strategic perspective, this
would not have done the business justice.”
Bart Borms, Deputy Director, IK
for another four or five years but, from a strategic perspective, this
would not have done the business justice,” asserts Borms.
Magotteaux was therefore sold to Sigdo Koppers via a competitive
auction this summer. With its increased profitability and improved
corporate governance Magotteaux attracted interest from trade
buyers and financial buyers alike.
Bernard Goblet believes that IK not only achieved a very good
price for Magotteaux but Magotteaux also found the best trade
partner in Sigdo Koppers. “The businesses are very complementary
– Sigdo Koppers is based in latin America and we give it worldwide
coverage. An area of overlap is mining but our offerings are
complementary and by combining the businesses we can offer the
full range of products and services our mining customers require
so, for us, this is an extremely good outcome. We feel very positive
about the future direction and prospects for the business,” he says.
Magotteaux’s management team is staying with the business which
Sigdo koppers plans to retain as a stand-alone unit, leveraging its
strong market position to pursue consolidation opportunities.
Demanding but realistic targets
Regarding the private equity experience overall, Goblet says that
once the strategy had been defined and an action plan created, the
relationship went smoothly. “There was always pressure on us in
terms of speed of execution but we found this to be entirely positive
- IK set demanding but realistic targets which fostered much greater
discipline and this was exactly what was required,” says Goblet. “Over
the last four years their professional guidance, support and investment
have been invaluable. The business has been transformed and we are
now firmly established as a world leader and ready for the next stage
of development,” he says.
“We are delighted with the financial returns we achieved,
but are also proud of the successful reshaping of the group and
its positioning for future growth,” says Bart Borms. “We always
believed in magotteaux and it is now a much better company with
strong fundamentals, a clear strategic direction and execution plan.
It is now able to grasp opportunities as they arise and will achieve
the long-term vision,” he concludes.
IK NEWS 2/11 – 11

NEW INVESTMENT DOEDIJNS INTERNATIONAL
New investment:
DOEDIJNS
INTERNATIONAL’S
eastern horizons
DOEDIJNS INTERNATIONAL has add-on acquisitions at
the top of its agenda as it seeks to strengthen its global product and
service offering, positioning itself as a preferred supplier to major
clients seeking local support worldwide.
The Dutch engineering company Doedijns International has
barely paused for breath since IK Investment
Partners (IK) acquired a majority stake in September this
year, with active plans to extend its operations overseas
– notably in Asia and the Middle East – organically and
through an add-on acquisitions programme.
“We are less concerned about the impact of the recession in the West
and more by the speed at which our client base is becoming focused on
emerging economies in the East,” says Doedijns’ Chief
Executive, Juul IJzermans. “With the axis shifting,
we need to increase our international offering,
particularly in Asia and the Middle East, to meet this
growing global requirement,” he says.
“Emerging markets present a great opportunity for
Deodijns and there is an element of necessity, nothing
acute or pressing, but if you have leading products in
global sectors then you do need to have worldwide
support for clients,” comments IK Deputy Director
Remko Hilhorst.
With IK’s international experience and expertise,
IJzermans is delighted with the new partnership.
“We have technology leadership in our core sectors
and are on the verge of expanding in a serious manner
internationally. However, to develop these strategies
successfully, we do need IK’s help and support,” he says.
From IK’s perspective, Doedijns is a highly
attractive investment with its leading position in a
number of core markets, proprietary technologies
and strong fundamental growth outlook. Likewise,
however, a key element is the opportunity for the firm
to use its strategic skills to work with management to
transform Doedijns into a globally-diversified niche
engineer in selected growth markets.
“Doedijns is a relatively small company but it
is modern, innovative, has huge growth potential
and will become an IK ‘sweet-spot’ investment
“We are less concerned about
the impact of the recession in
the West and more by the speed
at which our client base is
becoming focused on emerging
economies in the East.”
quite quickly,” remarks Remko Hilhorst. “The company is already
well-positioned through its product portfolio in attractive markets with
real demand from customers to expand internationally,” he says.
“Doedijns also has a strong, dynamic management team with vision,
ambition and a proven track record. Beyond overall market growth, the
company also benefits from a diversified competitive landscape with
exposure to certain key market trends which play to its product range
and system engineering strengths,” he continues.
Doedijns has existing operations in the
netherlands, the UK, Belgium, France, Malaysia and
Dubai where it opened a full service office in June this
year. The intention is to establish a strong presence
in key global end-market ‘hubs’ - such as Asia, the
Middle East & Africa and North America - offering
clients local production and assembly possibilities
and access to its products and services portfolio.
Juul IJzermans, CEO
Close relationship with key customers
Founded in 1879, Doedijns has some 280 employees
and is a leader in hydraulics, instrumentation,
pneumatics and controls. It serves a variety of industries
including oil and gas, maritime and dredging
and high-end machine building.
The company is already recognised for systems
knowledge, customisation and repair capabilities
and has a very close relationship with key customers,
including continuous co-development of customised
solutions. Further tightening of these relationships
is anticipated through increasing maintenance
agreements. “The key to success is continuous
technological development, quality control and
customer interaction,” notes IJzermans. “Here,
we particularly add value by being a true systems
integrator - combining in-house customer specific
engineering and manufacturing with knowledge and
distribution of related components,” he says.
12 – IK NEWS 2/11

Doedijns has four proprietary technologies - oil filtration systems,
temperature sensors, compact actuators and sampling systems – and
these will continue to be important drivers for organic growth with
Doedijns set to develop additional differentiated products through an
increased commitment to R & D.
Optimal ownership outcome
Doedijns was put up for sale earlier this year by its previous majority
shareholder, Friesland Bank Investments (FBI), which had held the
stake since 2005. The management team, as minority shareholders who
would be staying with the business and reinvesting, wanted not only a
sensible price for their equity but also, more importantly, to secure the
partner best able to support their growth plans.
“I really believe in this company and its potential. Retaining our
independence and yet still having the financial and operational support
to fulfill our ambitions made private equity the optimal outcome for us,”
says Juuls IJzermans.
With turnover expected to exceed €65 million in 2011 with EBITDA
of around €8 million, the aim is to double the size of Doedijns and build
a leading, global niche engineering solutions provider.
Under FBI’s ownership, Doedijns continued its evolution from
general components distributor to value-added engineering solutions
provider and completed three small add-on acquisitions. IJzermans
is expecting IK to be more actively involved than its previous partner.
“We need IK to give us good advice and support, particularly in the
Far East,” he continues. Of particular benefit will be the know-how IK
gained through the strategic merger of its portfolio company Vistra
Group with Offshore Incorporations Group – an Asian corporate and
fiduciary services business – earlier this year.
“We learnt a great deal during that transaction - really practical
things – gained a much better understanding of the Asian market and
established a valuable network of contacts,” says Hilhorst.
IK also has extensive investment experience in the industrial sector
with transactions including the Swedish engineering company Alfa
Laval; the Polish railway buffer business Axtone; Flabeg, the German
automotive business; Magotteaux, the Belgian industrial supplier;
the German fire protection company Minimax; Schenck process, the
Germany industrial solutions company; and Sport Group, the German
artificial sports surfaces business.
“Doedijns also has a strong, dynamic
management team with vision, ambition
and a proven track record. Beyond overall
market growth, the company
also benefits from a diversified
competitive landscape with
exposure to certain key
market trends which play to
its product range and system
engineering strengths.”
Remko Hilhorst, Deputy Director, IK
Moving from ‘wholesale’ to ‘project’ engineering
Doedijns is already a well-managed company with a strong finance
function, systems and operations, but IK will always identify scope for
further financial and operational improvements. Specifically, it is now
looking to support Doedijns in updating its organisational model from
‘wholesale’ to ‘project’ engineering - in terms of sales, purchasing, pricing,
cost allocation and working capital - and realigning the business by key
end-user segments with the centralisation of group procurement set to
achieve greater purchasing efficiency. IK also intends to help Doedijns
acquire niche engineering businesses to compliment its current product
offering and to use the scale of its global sales network to crystallise
organic growth potential, increasing the effectiveness of the company’s
sales force and developing sales from new products.
On the recession-front, Doedijns’ end-markets are unavoidably cyclical
with its shipbuilding markets hit particularly hard by the downturn
last year. However, its end-market cycles are phased differently which
supported its 2009-2010 earnings, mitigated further by regional
diversification. In addition, Doedijns still makes a significant proportion
of its revenues from distribution and, because it is driven by repairs and
maintenance, this has proved to be more resilient during the downturn.
Although IJzermans is keen to escape the economic cloud dogging
West markets, as eastern horizons beckon he acknowledges that the
world remains a big place and that it is important to make the right
choices. “There is so much to do and we are very excited about the
opportunities, but we must be very clear about which markets to
prioritise,” he says. “With our unique technologies we recognise the
need to operate on a global scale and are actively taking the business
to other parts of the world. But above all, our job is to ensure that our
route to market is maintained,” IJzermans concludes.
IK NEWS 2/11 – 13

EXIT ETANCO
BU LDING
VALUE
IK HAS COMPLETED its first exit from the IK2007 fund, selling
the French building materials company Etanco. The transaction
generated a gross IRR of more than 20 per cent, exemplifying
IK’s ability to create value during even the most difficult
market conditions.
14 – IK NEWS 2/11

The financial crisis of 2008 left almost no industry
unscathed. But few were as badly affected as the
construction sector. Banks stopped lending, building
projects were postponed, cut back or abandoned
altogether and numerous firms collapsed. The slump sent
shockwaves across the industry, hitting developers, contractors and
building suppliers. Nonetheless, some companies managed not just to
survive but to flourish.
Etanco is one such business. The firm is a key supplier to the
construction industry, making 80,000 products and focused on the nuts
and bolts – known as fasteners - used for building facades and roofs.
Family-run since the 1950s, Etanco underwent a step-change in 2003,
when Ronan Lebraut, grandson of the founder, took the helm. Fresh
out of business school and only 25, Lebraut inherited the business from
his father. Lebraut worked hard, moving Etanco from a generalist to a
specialist, investing in product quality and innovation and focusing on
the value-added end of the fastener market.
Etanco’s particular speciality centres on the design, manufacture and
distribution of fasteners which provide greater insulation than traditional
nuts and bolts, making them a key component in the construction of
energy-efficient buildings. This focus helped the business to comfortably
outperform its peers during the boom years of the mid-noughties. In
March 2008, IK acquired a 67 per cent stake in the company for €250
million while the Lebraut family retained a minority stake.
Even at that time, markets were beginning to show signs of strain.
“The investment decision was made in the challenging market of
2008 but our strong understanding of the company’s dynamics, as
well as the extremely high potential and quality of the management
team enabled us to take Etanco to the next level despite the tough
environment,” says Christopher Masek, Managing Partner at IK.
The numbers tell a compelling story. Etanco’s principal business
is France but it has a strong presence in Italy, Belgium and Eastern
europe. Between 2008 and 2011, the French building supplies market
contracted by around 6 per cent a year but Etanco’s revenues grew 9 per
cent annually. In other words, the company o utperformed the market
by 15 points. performance was strong o utside France as well, with
compound annual growth of 6 per cent between 2008 and 2011, despite
the adverse environment. Group sales rose from €129 million to more
than €150 million b etween 2008 and 2011, while eBI tDA climbed from
€26 million to €39 million.
Etanco’s outperformance was no accident. It resulted from
a careful plan, combining IK’s business acumen and financial
expertise with Etanco’s knowledge of its market place.
“When we bought into the business we had factored in the
reality that the market was difficult. But it was a primary LBO,
we were buying directly from the Lebraut family and we felt
there was lots of potential for value creation,” says IK Deputy
Director Rémi Buttiaux.
IK identified four specific areas where value could be
derived or created: procurement, working capital,
business operations and real estate.
“We knew we could make purchasing
improvements, enhance working capital and
deliver operational gains. We also knew we
could benefit from the fact that Etanco had
€40 million of owned real estate,” Buttiaux
explains.
IK was further drawn to Etanco because it
had consistently outperformed the market,
had robust profit margins and was operating
in a sector with sound fundamentals. Regulatory
developments have created an environment
where construction and real estate firms are under pressure to ensure
buildings are energy-efficient. Etanco’s products help them on that journey,
enhancing thermal efficiency by a wide margin. As such, the company was
somewhat protected from the worst effects of the economic downturn.
“When other areas were underperforming, safety-related sectors
continued to do well, so even during the worst part of the crisis we
increased the EBITDA of the company,” Etanco Chief Executive, Ronan
Lebraut, reveals.
The inherent nature of Etanco’s products also contributed to growth.
“Etanco’s fasteners are more complex and more value-added than most
traditional products. They offer far more insulation so even though they are
more expensive initially, they deliver long-term cost-savings,” says Masek.
The company’s decision to position itself at the higher end of the value
chain provides a genuine point of difference and Etanco is a leader in its
field – occupying the number one position in France and number three
position in Italy. Occupying such a position reaps many benefits but it can
also make a company more susceptible, as competitors jockey to knock the
leader off its perch. Such vulnerability is exacerbated during a downturn
but in Etanco’s case, the company worked with IK to make the business
even stronger as economic conditions deteriorated.
“In a market where everyone else was cutting costs, Etanco increased its
sales force from 40 to 50 people, hiring from competitors and taking on new
staff. This helped the business to increase market share substantially. We also
continued to invest in new products, broadening our range so we not only
acquired new customers but sold more to existing clients too,” says Lebraut.
The product mix improved as well so Etanco was able to sell more
highly-priced items and even push through price increases. During IK’s
ownership of the business, it diversified into products such as solar panels,
tools and safety equipment.
“We kept investing in people and we kept investing in products. We had
the biggest range in the market so we had more to sell. IK was incredibly
helpful in this respect. They sat with us and listened to our views and our
strategy to keep growing and once they understood what we wanted to
do, they facilitated our investment needs. This was my first experience
with private equity and it was extremely good. We had a very special
relationship with Christopher Masek and his team. We trusted them and
that paid off,” explains Lebraut.
“When we bought into the business, we had factored in the reality that the market was difficult.
But it was a primary LBO, we were buying directly from the Lebraut family and we felt there was
lots of potential for value creation.”
Rémi Buttiaux, Deputy Director, IK
IK NEWS 2/11 – 15

EXIT ETANCO
“Etanco increased its sales force from 40 to 50 people, hiring from competitors and
taking on new staff. This helped the business to increase market share substantially.
We also continued to invest in new products, broadening our range so we not only
acquired new customers but sold more to existing clients too.”
However, even as Etanco invested in people and products, cost-savings
were made and the business became more efficient. Under IK’s guidance,
the company rationalised distribution, closing two sub-scale sites and
focusing on two main factories, one in France and the other in Italy.
Centralising production reduced costs, enhanced efficiency and helped the
business improve service levels.
IK also overhauled Etanco’s internal and external reporting systems,
putting the business on a more professional footing and providing greater
transparency around working capital, inventory levels and sourcing.
“We gained a much better grip of Etanco’s overall financials, e specially
its working capital. We were then able to control inventory levels, r educing
them significantly while at the same time getting a strong grasp on
receivables. As a result, we cut working capital by €10 million, taking it
from 126 days of sales to 110. This was particularly challenging in a difficult
environment when everyone else was trying to do the same,” says Buttiaux.
IK encouraged Etanco to improve procurement too, increasing the
amount of goods sourced from Asia and taking advantage of the company’s
strong pricing power.
At the same time the group focused on quality and service,
distinguishing itself from its peer group by offering a greater breadth of
products and exceptional speed of distribution. The company promises to
deliver within 24 hours, particularly beneficial in an industry where more
than 50 per cent of overall costs come from labour, while fasteners account
for less than 5 per cent of budget.
“The building trade is peopled with entrepreneurs who tend to make
decisions at the last-minute. But the last thing they want is to hold up work
while they wait for materials to arrive. That wastes valuable manpower
time so they are often prepared to pay a little bit more for goods provided
they arrive quickly,” Buttiaux explains.
By March 2011 Etanco was making tangible progress. EBITDA margins
had improved from 20.5 per cent to 23.8 per cent, the market had begun to
recover and prospects were good. It seemed a propitious time to consider
an exit. After an exceptionally tough few years however, IK decided to
adopt a particularly prudent approach to the exit process, creating a
comprehensive vendor due diligence plan for interested parties.
The firm commissioned independent consultancy LEK Consulting to
prepare a commercial and strategic vendor due
diligence report. Running to 500 pages, the
document analysed market trends, Etanco’s
position within the market, its past performance
and prospects for the future. Once completed, it
provided a detailed picture of the company, showing
its achievements to date and its potential.
A detailed financial due diligence report was
also produced, analysing Etanco’s figures and
business plan under private equity ownership;
a legal and tax report was commissioned and
insurance and environmental reports were
completed too.
“We spent a lot of time on the vendor due
diligence plan. We analysed Etanco as if we
ourselves were buying it and by mid-June, we
had a complete package, with all the information
that any prospective buyer would need,” says
Buttiaux.
Initially IK planned to pre-market Etanco
from late June, officially launching the sales
process in September. But there was immediate
interest in the business, from three potential
buyers, two of whom had competed with IK for
Etanco back in 2008. These firms already knew
the business relatively well so they were given
a pre-emption window until the end of July. By
30th of that month, a fully-financed deal had
been struck with investment firm 3i, valuing
Etanco at €370 million.
“The exit would not have been nearly as
smooth without the comprehensive preparation
we undertook. Not only did it provide
prospective purchasers with all the information they could possibly want,
but it also gave comfort to the banks,” Buttiaux points out.
Rigorously managed, the entire process was fast, effective and efficient.
Despite a difficult financing environment, the capital was raised and three
banks committed to funding, two of whom had been the original lenders
to IK in 2008. IK also made a small but high-interest loan to 3i, which will
deliver further value to investors.
The speed with which the exit was achieved was serendipitous. By
September, when the official launch was scheduled to begin, markets
had lurched down again and the environment was far more challenging.
But the way in which the exit process was managed reflected the entire
period of IK’s investment in Etanco. Buying a supplier to the construction
industry just months before the most dramatic financial crisis in living
memory; investing in the business during an intense economic downturn;
improving operating efficiencies and working capital and delivering strong,
consistent sales and margin growth – all these factors are testament to IK’s
commitment to fundamental, sustainable value creation. The Etanco story
also demonstrates IK’s ethos for listening and working in partnership with
portfolio companies.
Etanco was the first exit from IK’s 2007 fund. Generating robust
returns for investors, it highlights the firm’s ability to deliver and perform
whatever the external environment.
Ronan Lebraut, Chief Executive, Etanco
16 – IK NEWS 2/11

INTERVIEW
XXXX XXXX
WHAT
THE FUTURE
HOLDS
This year has been one of the most challenging in recent
times and prospects for 2012 are highly uncertain. But there are
opportunities for those who know where to look. IK News asks
the firm’s managing partners Detlef Dinsel and Christopher
Masek for their vision of the future. Do they believe the
outlook is really bleak or do they feel the current climate
presents IK with scope for growth
Detlef: “There is no denying that the
environment is tough. Markets are highly
volatile and there is little financial stability.
This creates challenges for our existing
portfolio companies, for the companies we
would like to buy and for those we are thinking of selling.
But we are not completely downhearted. We have made
some good investments, we have achieved some highly
successful exits and we hope there will be more of the
same in 2012. Over the past two decades, we have been
through difficult times before. They were very hard but we
think we have learnt some valuable lessons. We are also
well prepared for this downturn. We started talking about
it in 2007, when there were few signs of what was to come
and this vigilance has helped us over the past few years.
We have a depth of experience in our chosen markets
but, in response to current conditions, our due diligence
processes have become even more thorough and we learnt
to become more agile so we can move quickly when we
need to.”
chris: “Detlef is right. The climate is difficult but this
is not the first time that IK has had to cope with a dverse
conditions. In times like these, you need to really work
hard to achieve your goals but we are not afraid of hard
work. In fact, it is embedded in the IK culture and has
been ever since we were founded. there are other points
“IK has always
focused on
adding value
by delivering
transformational
change,
however long
that takes to
achieve. We
have shown
in the past
that we will
hold onto
companies
for several
years if need
be and we will
maintain that
discipline in
the future.”
Detlef Dinsel,
Managing Partner, IK
in our favour too. operating in the Nordic region, Benelux,
France, Germany and CEE, our teams have developed
an intimate knowledge of their local markets but benefit
from a pan-regional reach. Yet we tend to compete with
local or sub-regional firms, which do not have the same
experience, geographic scope or breadth of talent that we
do. This gives us a real edge when we are investing in new
businesses and it means that we are not overly dependent
on any one market. We are, of course, extremely
risk-averse but we do not and cannot lose sight of the
essential need to grow and develop our business.”
Q: Where do you see specific opportunities for growth
and development
detlef: “IK has always focused on adding value by
delivering transformational change, even if it takes a while
to achieve. We have shown in the past that we will hold
onto companies for several years if need be and we will
maintain that discipline in the future. That is what we have
always done and we are now spending even more time
working on each investment case upfront. This is private
equity in the raw and it requires a real understanding of
business fundamentals. Given our focus on active ownership,
we do believe this environment plays to our strengths.
It is not clear when the economic climate will improve
but we will continue to do whatever it takes to ensure our
portfolio companies move in the right direction.”
Illustrations by Lina Ekstrand /Agent Molly
IK NEWS 2/11 – 17

XXXX XXXX
INTERVIEW
chris: “We are also seeing elements of consolidation
within the private equity industry. It remains highly
competitive but marginally less so than it was before
the crisis. This gives IK specific opportunities when
we are seeking out new investments. We are also just
beginning to see prices coming down. People who
were not prepared to sell below a certain level are
now accepting the new reality and this should prove
helpful in the future. We have always focused on adding
genuine, sustainable value to the businesses we invest
in, creating stronger better companies in the process.
We believe that this model works even when conditions
are grim. We want to invest in companies with leading
positions in niche sectors and we aim to raise their
game through transformational development either
geographically, operationally or both. We also offer real
support to our management teams and we are prepared
to devote considerable resources to acquisitions, capital
expenditure, R&D and job creation and this sets us apart
from many of our peers.”
Q: What are the key issues for private equity firms in
the mid-market
chris: “There are three key issues for mid-market firms.
First, even though there has been a degree of consolidation,
competition remains intense so we need to be able to
explain to investors and portfolio companies why we are
different and why we make a difference. Second, we need
to be able to manage and cope with financial instability
and unpredictability. And third, we need to respond to the
“Our new
investments
are really
exciting and our
exits generated
substantial
returns for
our investors,
proving that
successful
divestments can
be achieved for
good businesses
with wellprepared
exit
strategies. Trade
buyers remain
interested in
acquisition
opportunities
and other
private equity
players are also
looking for new
investments.”
Detlef Dinsel,
Managing Partner, IK
changing regulatory environment. We need to improve the way
we communicate with the outside world so policymakers and
the general public understand that we are genuinely helping
society and improving the economic landscape. There is so
much independent research showing that we create value in
the economy: we just need to get it out there.”
Q: What are your priorities for IK
detlef: “Our key challenge is to continue to develop and
expand the business despite the financial turmoil and
regulatory pressure. The exit environment is somewhat
daunting, because the IPO market is effectively closed and
bank finance is in short supply. But that has not stopped us
this year and it will not stop us in the future. mid-market
transactions are getting done and we completed three
investments and three exits between July and October.
We bought Doedijns, Savena and Trigo and we exited from
magotteaux, Idex and Etanco. Our new investments are
really exciting and our exits generated substantial returns
for our investors, proving that successful divestments can
be achieved for good businesses with well-prepared exit
strategies. Trade buyers remain interested in acquisition
opportunities and other private equity players are also
looking for new investments.”
chris: “Banks are willing to back investments too, provided
you are able to present them with a strong business case
which we can. More often than not, banks are clubbing
together to finance deals but they are still in the market in
our transaction size. So the exit environment is challenging
but deals are getting done and will continue to get done.
We are not complacent, of course. But we are absolutely
clear and focused on what we want to do. Our number
one priority is to consistently provide top level returns
to our investors by focusing on mid-market investments
in our chosen areas of Northern Continental Europe; by
continuously professionalising our organisation, promoting,
developing and retaining quality staff and by growing in size
and reputation in our given space. You never know what is
round the corner and you can only deliver to investors if you
remain acutely focused and alive to the opportunities and
pitfalls that are out there.”
Q: You are now leading IK and Björn Saven is stepping
back after more than 20 years at the helm. How did you
manage to make the succession process run so smoothly
chris: “We had the benefit of time and we planned the
succession very thoroughly. We started thinking about it
way back in 2004 so it was a very gradual process involving
Detlef Dinsel
Latest movie:
Elisabeth
Last read book:
Herta Müller: Atemschaukel
Favourite sport to play:
Jogging
Favourite sport to watch:
Soccer
Favourite food:
Wiener Schnitzel
Favourite vacation
destination:
Maldives
My dream deal:
DSI

XXXX XXXX
all our partners both internal and external. Björn founded
IK and was very involved in the firm strategically and
financially. But because we started thinking about the
succession so early, the handover was done very responsibly
and in incremental stages. Of course, successions are never
easy but we used our collective experience to try and make
this one as effective as we could. The firm is now on a secure
footing for the future and that is particularly important when
external conditions are so unstable.”
detlef: “We also made sure that, as the succession process
evolved, we maintained a regular dialogue with all the
relevant parties – not just Björn and ourselves but the other
partners in the firm and, of course, our investors. This
made a big difference. Overall therefore, we would say the
succession ran smoothly because we had time on our side, we
planned it carefully and we put it into effect incrementally.
Times are very different now from the first two decades of
IK’s existence but we still believe in the model that Björn
developed and the added value it creates for our portfolio
companies and our investors.”
Q: Why did you choose to have two co-regional heads
rather than one
chris: “We chose to have two co-heads because that way
we can both manage the firm and remain really involved in
investment-related activities. We felt this was very important
for IK and our investors. As joint co-heads, we can fulfil our
leadership responsibilities but also continue to do what IK
is all about – investing in new businesses, developing our
portfolio companies and realising exits. This is a crucial part
of our role as managing partners because we are involved
in the very heart of the business. Then, because there
are a number of management issues in a firm of our size,
we allocated responsibilities according to our respective
skill-sets. I’m the sociable one so I head the executive
committee which covers HR, IR, CSR, communications,
finance, administration and compliance. Detlef is extremely
analytical so he chairs the investment committee, managing
new and existing investments.”
detlef: “But we also overlap because we each sit on each
other’s committees so it is very fair, very equal and very
effective. And it works particularly well because we are both
focused on our strategy and that has not changed since we
took over the running of the firm. If anything, the succession
process has confirmed and clarified our strategic direction.
We know exactly what we want to do, where we want to
do it and how we want to deliver to our investors. We are a
“As joint
co-heads,
we can fulfil
our leadership
responsibilities
but also
continue to
do what IK
is all about
- investing
in new
businesses,
developing
our portfolio
companies
and realising
exits. This is
a crucial part
of our role
as managing
partners
because we are
involved in the
very heart of
the business.”
Christopher Masek,
Managing Partner, IK
European mid-market firm with Nordic roots; we believe
in active ownership and we focus on producing very good
returns on a consistent basis.”
Q: You both have quite different skill-sets. Does this
work to IK’s advantage
detlef: “To many people we come across as very
different but there are points of similarity between us.
We are both very driven, we are both intensely
competitive and we both want to win. In fact, we both
run a lot and compare our times! As a Frenchman and
a German, we communicate in different ways and
we can have different views on investments but this
provides valuable grounds for debate and discussion.
Our respective strengths also sit well with our positions
within the firm – as chairmen of the executive committee
and investment committee.”
chris: “In some respects, we are a bit of an odd couple
but our relationship works almost because of our
differences. We like to think that we complement each
other and this works for the firm and our investors.
Ultimately, we both want the same thing: to develop and
grow IK and to continue to deliver outstanding returns.
To that end, we are determined to lead IK into the future
with a shared vision, a joint strategy and a united desire to
grow the business.”
Q: If you had to sum up IK in three words, what would
they be
detlef: “Focus, driven and entrepreneurial.”
chris: “Entrepreneurial, successful and consistent.”
Christopher Masek
Latest movie:
The Ides of March (George
Clooney's political drama)
Last read book:
IQ84 by Haruki Murakami
Favourite sport to play:
Squash
Favourite sport to watch:
NFL
Favourite food:
Italian
Favourite vacation
destination:
Corsica
My dream deal:
A low priced Gillette!

EXIT IDEX
IDEX EXITS
WITH
RENEWED
ENERGY
TO MAXIMISE IDEX’S growth and
development potential, IK and the
company’s management refocused Idex
on its core energy solutions business,
introduced a variety of operational
improvements and most recently,
helped the business embrace the
renewable ‘green’ energy market.
T
he recent successful exit by IK Investment Partners
from Idex, France’s largest independent energy and
environmental services company, demonstrates how core
focus and operational improvements can drive business
performance.
At the time of IK’s investment in 2004, Idex employed about 2,800
people and generated net sales of €380 million. At IK’s exit point this
summer, Idex had some 3,500 employees, net sales of €525 million
and had become the number three player in the French energy
services market. Idex’s new owner is Cube Infrastructure,
the French infrastructure and public services investment
fund manager.
“At the time of investment we wanted to strengthen
Idex’s position as France’s largest independent energy and
environmental services company. We therefore refocused
Idex on its core activities and pursued dynamic organic
growth, while making selective acquisitions to enhance its
geographic footprint,” says IK Partner Dan Soudry.
“In parallel, we saw a number of opportunities to improve
the business’ operational performance such as simplifying
Idex’s administrative structure, optimising the
rotation of its service teams and centralising its
procurement activities. This strategy will
continue to help Idex reach its full potential
in the coming years, with the company now
ideally positioned to take advantage of the
growing demand for energy services in
France,” he says.
“I am really proud of the success
Idex has achieved in response to the
objectives defined by the management
team under the direction of myself
and IK,” says Alain Planchot, Idex’s
outgoing CEO. “Idex’s development, in terms of its size and professional
quality, has also helped reinforce its ability to satisfy future demand for
environmentally-friendly energy solutions,” he says.
Comprehensive energy solutions
Based just outside Paris in Boulogne-Bilancourt, Idex was founded by
Alain Planchot’s father, Georges Planchot, in 1963. Originally named
Industrial Heating, the company took advantage of the sudden rise
in housing development projects across France, supplying heating
and cooling systems. Over the following four decades it integrated
advances in technology and spotted the increasing need to use
efficient types of energy which required specialist management
teams.
Today, Idex offers comprehensive energy solutions including
the management of collective heating and cooling networks,
the technical maintenance of central heating installations
and third party management of utilities. Idex’s clients include
local authorities, residential and commercial complexes and
industrial corporations.
Alain Planchot, who was CEO throughout IK’s investment
“At the time of investment we wanted to
strengthen Idex’s position as France’s
largest independent energy and environmental
services company. We therefore
refocused Idex on its core activities and
pursued dynamic organic growth, while
making selective acquisitions to enhance its
geographic footprint.”
Dan Soudry, Partner, IK
20 – IK NEWS 2/11

period, joined Idex in 1977 and succeeded his father as
CEO in 1992. Idex first sought external funding in early
1992, successfully raising FFr 50 million by way of a private
placement with a 17 per cent equity stake going to a financial
consortium. Prior to this Idex had been wholly-owned by the
Planchot family and Idex management.
By 2004, with some minority shareholders wishing to realise
their investment, Alain Planchot, as the company’s main
individual shareholder and CEO, was keen to find a way of
allowing them to do this while still enabling Idex to pursue its
business plan as an independent operator. It was therefore decided
that the company would seek further external investment. A sales
process began in May 2004 with interest received from around
five PE houses and five industrial companies.
Within six months IK had managed to secure the deal.
“I chose IK, and in fact exercised my pre-emption rights with
them, because of their understanding of the business, of the
context of the deal and because their ‘fit’ with me and the
management team was significantly better than any other
contender,” Planchot recalls.
Business improvement strategy
IK’s business improvement strategy included the purchase in
2008 of several strategic targets including ISS Energie – bought
from ISS france with €100 million of sales, and Stepnor –
acquired from its founders with €7 million of sales, to expand
Idex’s geographic reach. “When potential acquisition targets
were identified, IK helped to negotiate the deals and provided the
necessary funds,” notes Alain Planchot.
Meanwhile, as part of the streamlining process, Idex sold-off
the Belgium-based air conditioning installation services
business Limpen, and L’Industrielle de Chauffage entreprise,
a climatic and electrical engineering firm, both in 2005.
At the start of 2006 Idex sold the refrigeration equipment
manufacturer, France Energie et Cie and, the following year,
disposed of its water purification arm, Idex aquaservices, to GE
Energy Financial Services.
By 2008, nearing the end of its original development strategy,
IK began to look towards an exit. Unfortunately, the financial
crisis then hit and, fearing a poor valuation and lack of buyer
interest as corporates and financial institutions ran for cover, IK
and Idex agreed to delay marketing the company.
This was clearly the right decision and, with the improving
financial and economic outlook earlier this year, IK was able
to begin exit preparations once more with a view to reaching
final offers by autumn 2011. Before the process reached a
public phase however, an attractive pre-emptive offer was
received from Cube, a leading French infrastructure and
public services fund.
“I am really proud of the
success Idex has achieved
in response to the objectives
defined by the management
team under the direction of
myself and IK.”
Alain Planchot, CEO, Idex
Focus on renewable energy sources
The Cube transaction marked the end of Planchot’s role as CEO
of Idex. While remaining as a minority shareholder, he stepped
down in May 2011 to concentrate on the exit process and was
succeeded by Frederic Viet. Planchot is now a member of the
Idex supervisory board and positive about the company’s future
with Cube and its commitment to renewable energy sources.
“I am very happy to have been an integral part of the handover
from IK to Cube. Idex has now joined forces with another
determined and efficient partner and will continue to invest,
particularly in imaginative and sustainable ‘green’ energy
solutions,” says Planchot.
Idex’s new CEO, Frederic Viet, notes that Idex is now the only
independent operator in France with sufficient critical mass
and a presence in all segments of the energy services market
throughout france. “Following its success with IK, Idex has now
begun a promising partnership with Cube and is ideally positioned
to make excellent use of the many opportunities available to it in
this promising and sustainable market,” he concludes.
IK NEWS 2/11 – 21

IN FOCUS MIKAEL STENBERG
“We have taken the company and,
essentially, turned it upside down.
The reorganisation has allowed
us to halve the number of physical
locations producing cost savings
as well as a much more relevant
customer interface.”
22 – IK NEWS 2/11

Interview with
MIKAEL STERNBERG
AS AN EXPERT in change management,
Mikael Sternberg has transformed Kwintet, the professional
wear company, into a pan-European leader.
When Mikael Sternberg was approached by IK for
the position of CEO at the European professional
wear company Kwintet, he saw a perfect fit with
his competencies. Based in Sweden, the company
presented a new, but familiar challenge for
sternberg whose résumé is full of experience from helping companies
make the most of their potential. At the time, Sternberg was based in
Copenhagen, Denmark and working at Danisco, the world leader in food
ingredients, enzymes and bio-based solutions, which was subsequently
acquired by the US science-based products and services company, DuPont.
“Although I felt I had a very good job at Danisco, there was
something missing. The times when I had
been most successful professionally had been
when it was possible to make fast change,
and as divisional head at Danisco, I did not
feel I had that freedom. Earlier in my career
I had managed profound structural change,
quickly implementing new measures and
seeing the effects. I did that as CEO of Arla
Foods International and as CEO of Danapak. My strongest suit is
the operational aspects of management. IK presented me with an
opportunity to use this experience as CEO reporting to a board, being
operational and influencing strategy,” says Sternberg.
Mikael Sternberg’s background is in management consulting with
Andersen Consulting, Arthur D. Little, and the Danish firm Aarsø
Nielsen & Partners. It was a good starting-point for a career in the
fast-changing food industry, where he took up his first directorship
with MD Foods in the UK, aged 29. He subsequently became CEO of
Danapak, the Danish packaging solutions company, four years later.
Although packaging has a clear link to the food industry, the logic is
completely different. These experiences prepared him well for his role
at Kwintet which, again, is a different type of company with a different
ownership structure.
“For a number of years I have been attracted by the private equity
ownership model, and felt this was the right time for me to make the
“There is clear potential for Kwintet
to make more of its position as the
leading provider of professional wear
in Europe.”
move. When I stepped into Kwintet’s head office in July last year IK
had prepared me well. I knew what I was getting myself into, that
Kwintet had been with IK since 2005, that it had made a series of
rapid acquisitions and that there was huge potential from integrating
them even more closely,” Sternberg says.
He also set about refreshing Kwintet’s strategy which, following
a review, was newly launched in January this year. It comprises
a three year, three-step plan, guided by the vision of maximising
Kwintet’s european leadership. “There is clear potential for Kwintet
to make more of its position as the leading provider of professional
wear in europe. The Kwintet Group is already (more than three
times) bigger than the number two player
in the market and this provides an excellent
base to build upon. It is my job to implement
and realise the strategy and, so far, we are
right on target,” Sternberg explains.
Sternberg talks warmly about the many
enthusiastic people he has met at kwintet,
who share the ‘vision’ and understand
the need for change. The new strategy involves restructuring
the business into five geographical regions, supported by central
functions for finance, IT, supply chain and marketing. This
re-engineering combines stability, scale and best practice with local
knowledge and the flexibility to respond to market needs.
“We have taken the company and, essentially, turned it upside
down. The reorganisation has allowed us to halve the number of
physical locations producing cost savings as well as a much more
relevant customer interface. This is still only the first year of the new
3 year strategy, so even though we are on track there is still a lot left
to do,” Sternberg notes.
A key part of the change has been to make the integration more
visible by increasing the use of the Kwintet branding across all market
segments with a new visual design; to provide customers with easy
access to the company’s full range of products and services; and to
really confirm Kwintet’s position as European market leader.
KWINTET
Kwintet, Europe’s leading professional wear
supplier, has an annual turnover of more than €600
million from a diverse international portfolio of brands
and products. With its expertise in the development and
distribution of professional clothing across a huge customer
base, it has built a sustainable foundation for continued
long-term success. The portfolio consists of well-known
international workwear brands such as Fristads, Kansas,
Wenaas, Lafont, Bragard, Clinic Dress, Simon Jersey,
Acode and B&C. Kwintet also offers bespoke solutions, with
local service on a global scale, developing and producing
tailor-made corporate wear collections.
MIKAEL STERNBERG
Who: CEO of Kwintet
Where: Malmö, Sweden
Why in focus: The manager behind
Kwintet’s transformation into the clear
leader within the European professional
wear market.
IK NEWS 2/11 – 23

XXXX XXXX
TEAM PRESENTATION:
FINANCE AND
ADMINISTRATION
LONDON OFFICE. From left: Bruce Costick, Andrew Townend, James Yates, Beáta Szentesi, Anna Linder Lycett, Susanna Eriksson, Paul Gooday, Lisa Thompson, Paula Savage and Jeff Westcott
Firm foundations – first-class support
underpins IK and its funds
IK’S FINANCE AND administration team provides a ‘best-in-class’ service,
ensuring the smooth running of IK and its funds within a culture of openness
and financial transparency.
As one of Europe’s oldest private
equity firms, it is no surprise
that IK has a first-class finance
and administration (F & A)
department at its core. Headed
by partner James Yates in London, with
dedicated offices in Jersey and luxembourg,
the team is responsible for supporting and
controlling IK’s operations and activities.
“We provide an efficient, responsive and
coordinated service which ensures the smooth
day to day running of the firm and its funds.
Our culture is one of openness and financial
transparency and this underpins everything
that we do,” James Yates says.
IK’s corporate administration function
includes the IK group’s management
accounting and tax, corporate governance,
company secretarial, compliance, treasury
management, payroll and information
technology. F & A is also r esponsible for all
accounting and a dministration for IK’s funds
and holding companies, through which the
funds’ investments are made including the
co- ordination and follow-up of the portfolio
co mpany (PC) reporting and valuation.
James Yates
London’s dual function
IK’s corporate team in London comprises
treasury and compliance officer Anna Linder
Lycett, group financial controller Bruce Costick
and two accountants Susanna Eriksson and
Beáta Szentesi, supported by accountants
Åsa Uppegård in Stockholm, Anna Simon in
Hamburg and team assistant Lisa Thompson.
“As a pan-regional firm with advisory
operations in the UK, Sweden, Germany and
France, IK needs a high level of accounting
support. We are an audited group with several
group companies within the structure,
principally regulated by the Financial Services
authority in London, and it is essential that we
do everything absolutely correctly,” says Yates.
IK’s three-strong fund administration team
in London comprises investment manager
andrew Townend, fund accountant Paul
“We provide an efficient, responsive and coordinated service which ensures the
smooth running of the firm and its funds. Our culture is one of openness and
financial transparency and this underpins everything that we do.”
James Yates, Partner, IK
24 – IK NEWS 2/11

XXXX XXXX
Gooday and senior portfolio analyst Paula
Savage. “This team bridges IK’s front and back
office, controlling the flow of funds, exit and
return proceeds, the administration of any
changes necessary to our management incentive
programmes, and so on,” Yates explains.
A key activity is the collation of PC
management accounts and performance
monitoring. This is done in coordination with
the Strategy, Operations and Business Control
team, to support the investment advisors, the
GP Boards and the investor reporting function.
“These figures are collected, assessed on various
key metrics and c irculated internally with the
Paula Savage and
Andrew Townend
flow of information
controlled and
reconciled through
a ‘traffic light’
system – green,
amber, red. We also
have twice-yearly
fund valuations
independently
verified by our
auditors who visit
all our portfolio
Åsa Uppegård
companies to
consolidate the inputs,” Andrew Townend says.
This periodic reporting is set to increase to
quarterly valuations in 12 months time as IK
continues to improve the delivery of timely
information to its investors.
IK reports to its fund investors in accordance
with European Private Equity & Venture Capital
Association (EVCA) guidelines. These incorporate
the International Private Equity Valuation
(IPEV) guidelines which have been adopted by
all of the major national industry associations.
Jersey – standard private
equity structure
In addition to IK’s fund administration unit in
London, the firm has had an integrated office
in Jersey since 1998. Jersey was selected as the
most suitable offshore jurisdiction for fund
“As a pan-regional firm with advisory operations in the UK, Sweden, Germany
and France, IK needs a high level of accounting support. We are an audited
group with several group companies within the structure, principally regulated
by the Financial Services Authority in London, and it is essential that we do
everything absolutely correctly.”
James Yates, Partner, IK
Anna Simon
management due to its established position as
an international finance centre and flourishing
financial services industry.
IK’s funds are constituted as English
limited Partnerships which are administered
and managed by their respective General
partners (GP) which are Jersey limited
companies. Each GP enters into an advisory
agreement with IK Investment Partners
Ltd (IK Ltd) in London under which IK
Ltd provides advisory services in relation
to potential transactions. The IK group
companies in Sweden, Germany and France
are all sub-advisers to IK Investment Partners
Ltd, sourcing potential transactions in their
respective markets.
JERSEY OFFICE. From left: Suzanne Grant, David Anderson and Shaun Johnston
IK NEWS 2/11 – 25

XXXX XXXX
TEAM PRESENTATION:
FINANCE AND
ADMINISTRATION
The Jersey office is managed by Shaun
Johnston, a founding member of the Channel
Islands Private Equity Venture Capital
association. The other team members are
David Anderson, a member of the Chartered
Institute for Securities and Investments
and office assistant Suzanne Grant. The
experience, commitment and stability of IK’s
Jersey team is seen to play a major part in
Suzanne Grant
records. He is also in daily
contact with fund investors on
a range of issues including the
transfer of interests, including
transaction recording, fund
cash flow forecasts, AML issues
and the occasional transfer of
fund interests.
The Jersey office is in
constant contact with IK in
London and luxembourg.
Fully-fledged office
in Luxembourg
Luxembourg like Jersey
is recognised as a major financial centre,
particularly for a variety of funds. “Because
Luxembourg is a member of the EU with
harmonisation between EU countries, it
benefits from the full scope of EU commercial
and trade laws between member states but
also with external countries through an
extensive network of treaties and co- operation
agreements,” says Yates.
in connection with the acquisition and
exit process as well as, book keeping and
preparation of HoldCo group financial
statements and tax returns.
“We work in close collaboration with the
London and Jersey offices and IK’s regional deal
teams throughout the life of the investments
– from new investment to exit, ensuring the
highest standards of corporate governance and
compliance with local laws and regulations,”
Anton continues.
Before IK opened this office, its
administrative functions were outsourced to
a professional services supplier. “However,
due to the strong increase in activity, it was
decided to set up an IK office with a team
dedicated to the daily management of the
luxembourg entities and all transactions
involving the holding companies,” Anton says.
Due to the IK funds being structured
as english Limited Partnerships to which
investors commit and which then invest directly
into the LuxCos, the link between Jersey and
Luxembourg is critical.
“Because Luxembourg is a member of the EU with harmonisation between
EU countries, it benefits from the full scope of EU commercial and trade laws
between member states but also with external countries through an extensive
network of treaties and co- operation agreements.”
James Yates, Partner, IK
the success of the firm’s F & A operation as
a whole. “Between us we have more than 30
years experience of administering private
equity structures,” Shaun Johnston says.
Although Johnston has an accountancy
background, his duties relate as much to
compliance and legal work. “I operate as a key
contact with various third parties, including
our investors, auditors, Jersey regulator,
custodian and lawyers to ensure the business
is managed with the highest level of corporate
governance,” he says.
IK’s GPs which make all the investment
and divestment decisions, are regulated by the
Jersey financial Services Commission for the
purpose of carrying out fund services business
and subject to fund codes of practice and
robust and complete anti-money laundering
(AML) laws and regulations.
In respect of the custodian role, Johnston
liaises on procedures to ensure controls are
in place, with proper segregation of cash and
timely reconciliations of their respective
The Luxembourg office opened in 2009
and reports directly to IK’s investment
administration team in London. It handles IK’s
PC administration, acting as the management
company for approximately 30 Luxembourg
holding companies (LuxCos). These are the top
holding companies for IK’s PCs, each owned
by one of the firm’s three active funds: IK2000,
IK2004 and IK2007.
The office is managed by Sandrine anton,
alongside Sandrine Cuvelier, corporate and
investment controller, Vanessa Clausse,
accountant and corporate administration officer,
and Anne Claude, assistant.
“With most of IK’s portfolio companies
directly held and capitalised through the
Luxembourg entities, our prime function is
to implement and manage the appropriate
structures and environment that will support
from a financial, legal and fiscal point of
view the commercial success of the deals,”
Sandrine Anton explains.
This involves facilitating administration
Maintaining governance integrity
IK prides itself on running its F & A activities
inhouse. “Peoples’ loyalties tend to be with
the firms they work for and, if we used a third
party provider, our relationship would be with
an account manager who would not be totally
dedicated to us. An inhouse operation gives us
much more control, far more accountability and,
consequently, we can provide a much better,
more cost-effective service,” Yates says.
“Our F & A team has depth which is essential,
given the size of the firm and its funds, if we are
to have sufficiently robust governance systems.
We must also support our investor base and
ensure we can meet their data requirements,”
he continues.
With the recent difficult financial and
economic environment, investors have been
requiring increasing amounts of information.
“We strive to be transparent, providing
information on a timely basis and are always
happy to engage in a dialogue with investors.
At the same time, however, we must ensure
that everyone remains on a level playing field,”
Yates says.
One of the F & A team’s greatest internal
challenges is ensuring that IK’s front office
staff remain aware of what they can, and
cannot, do within the relevant statutes. “The
ExCo, together with IK’s compliance officer
FINANCE AND ADMINISTRATION TEAM
26 – IK NEWS 2/11
James Yates
(London)
Partner, Finance
& Administration
Joined IK in 2002 having spent several
years with Arthur Andersen and
Moores Rowland International. He
qualified as a Chartered Accountant in
1997 and is a member of the Institute
of Chartered Accountants in England
and Wales and of the Chartered
Institute of Securities & Investment.
Andrew Townend
(London)
Manager, Investment
Administration
Has been with IK since 2004.
From 1999 to 2004, he worked
in the finance department at
ABN AMRO Bank, prior to
which he was with chartered
accountants Baker Tilly where
he qualified in 1998.
Bruce Costick
(London)
Group Financial Controller
Joined IK in 2002, having
worked previously as a
Controller in Global Corporate
Finance for Arthur Andersen.

XXXX XXXX
LUXEMBOURG OFFICE. From left: Vanessa Clausse, Sandrine Anton and Anne Claude
Anna Linder Lycett, are essentially, ‘Keeper
of the Chronicles’ – ensuring that everyone
understands what can and cannot be achieved
within the rules for each fund,” Yates notes.
Increasingly stringent
regulatory regime
With the private equity industry in the midst
of major regulatory change, the F & A team
is having to
adapt to an
increasingly
onerous
regulatory
regime such as
The US Foreign
account Tax
Compliance
Act (FACTA)
and new
developments
requirements
from investors
such as those
published by the
Institutional
limited
partners Association
(ILPA).
meanwhile,
the forthcoming
Dodd-Frank
Act will require IK to be registered with the
securities & Exchange Commission in the
US. “The AIFMD is also looming and looks
set to create more regulation, reporting and
control throughout the chain from investors
to managers to portfolio companies,”
Yates observes. “The credit crunch and
destabilisation of the financial markets has
had a significant impact on what we do,
driving more, and different, reporting.”
Acknowledged by its investors to be a
‘best-in-class’ service provider, IK has always
been ahead of the general PE industry curve
in terms of achieving greater transparency
and clarity. “We revised our level of
information provision some years ago and
really raised our game in terms of format and
level of detail which we continue to try and
improve,” Yates says.
“This is a highly competitive industry,
we are happy to be benchmarked against
competitors and have a genuinely open culture
and willingness to share information,” he
says. “Now, however, while it should always be
possible to go further and do better, we need
to be aware as to what more we can do without
commercially disadvantaging ourselves.”
Anna Linder Lycett
(London)
Compliance Officer/Group
Treasurer
Joined IK in 1993 having worked
as an administrations manager
for Servisen (UK), a market
maker in Swedish derivatives.
Shaun Johnston
(Jersey)
Senior Fund Associate
Is a chartered certified
accountant who joined IK in
1999 to open its General Partner/
Investment Management office
in St. Helier, having previously
headed the fund accounting
department of Barclays
International Funds in Jersey.
Sandrine Anton
(Luxembourg)
Manager
Joined IK in 2009, having
previously worked for Alter Domus
as a manager in the corporate and
management services department.
Prior to this she worked for PricewaterhouseCoopers
successively
as an audit assistant, a senior a
senior auditor and a manager in
Luxembourg.
IK NEWS 2/11 – 27

REGULATIONS UPDATE
REGULATORY/AIFMD
AIFMD – implementation process continues
A
s the leaves start
falling off the
trees and autumn
slowly moves into
winter so the AIFMD moves
slowly through the legislative
process, currently in Level
2 (out of four). The AIFMD
was finally published in the
EU’s official Journal in July
2011, implying that it comes
into force on July 22, 2013. At
such date all private equity
fund managers will have
twelve months during which
to comply and apply, either for
AIFMD authorisation, or, if
managing below 500 MEUR,
for national registration or
authorisation, in order to be
able to continue managing
existing funds or market
new ones.
The EU Commission
has asked ESMA (the new
european securities and
Markets Authority) for its
advice on the 99 implementing
measures left outstanding.
ESMA, having worked
together with the 27 national
regulators, published its draft
advice for consultation in July 2011. More than 100 responses were
submitted from various parties, including our industry, which
is an indication of the level of concern that remains over e.g. the
lack of tailoring for smaller and closed- ended funds as well as
“ESMA will during
October finalise its
advice which needs
to be submitted to the
Commission no later than
on November 16th, 2011.”
treatment of third country funds
and managers. During October
ESMA will finalise its advice
and submit it to the Commission
no later than november 16th,
2011. The Commission then
needs to produce its detailed
implementing measures no later
than next summer as Member
States should have at least 12
months to implement these into
national law before the Directive
comes into full force. So while
we as an industry know that
we will be facing a different
operating and reporting reality
from July 2013 and that this will
amongst other things imply
having additional regulatory
capital, appointing an external
Depositary to monitor cash
movements and investments and
making sure the internal investment and operating processes satisfy
the organizational requirements for separation of investment and
risk management, the finer detail, like whether the Depositary will
operate on an ex-ante or ex-post basis is yet to be set in stone.
REGULATORY/ESMA
Anne Holm Rannaleet member of the ESMA Stakeholder Group
“ESMA (The European Securities AND Market Authority), which
came into operation on January 1, 2011, is an independent EU Authority
set up to contribute to safeguarding the stability of the European Union’s
financial system by ensuring the integrity, transparency, efficiency and orderly
functioning of securities markets, as well as enhancing investor protection.
In particular, ESMA works to foster supervisory convergence both amongst
securities regulators, and across financial sectors by working closely
with the other European Supervisory Authorities competent in the field of
banking (EBA), and insurance and occupational pensions (EIOPA). ESMA
also contributes to the financial stability of the European Union, in the short,
medium and long-term, through its contribution to the work of the European
Systemic Risk Board, which identifies potential risks to the financial system
and provides advice to diminish possible threats to the financial stability of the
Union. Additionally ESMA is responsible for coordinating actions of securities
supervisors or adopting emergency measures when a crisis situation arises.
Whilst ESMA is independent, there is full accountability towards the
European Parliament where it will appear before the relevant Committee
known as ECON, at their request for formal hearings. Full accountability
towards the Council of the European Union and European Commission also
exists. The Authority will therefore report on its activities regularly at meetings
but also through an Annual Report.
The Securities and Markets Stakeholder Group
has been set up to help facilitate consultation with
stakeholders in areas relevant to the tasks of
ESMA. The Group will be consulted on actions
concerning regulatory technical standards and
implementing technical standards. The Group is
made up of 30 stakeholders from various areas,
including representatives of retail investors and
academics. The Group will meet at least four
times per year, and its formal opinions will be
published on the relevant section of the
ESMA website, www.esma.europa.eu.”
28 – IK NEWS 2/11

SOCIAL RETURNS
CHARITY/THE KAJOLI SCHOOL PROJECT
Making people and the
planet a priority
IK ACTIVELY ENCOURAGES its portfolio companies to
be good corporate citizens with enlightened environmental,
social and governance (ESG) strategies and a commitment
to corporate and social responsibility (CSR).
K
wintet, IK’s portfolio company
and European market leader
in workwear, is leading by
example. Alongside a CSR
programme that ensures good working
conditions in its factories, the company
is also giving something back to local
communities. In Bangladesh, one of
Kwintet’s larger production countries, it
supports The Kajoli School Project. This
helps children from the most impoverished
areas learn how to read and write.
Through this literacy project, more
than 4,000 children have access to early
childhood education. The project also
promotes pre-school learning centres in
rural communities with as many as 180
centres now established in the local area.
The idea to support this project emerged
in June this year when a 24-strong team
from Kwintet, including IK’s Christopher
Masek and Gerard De Geer, climbed the
UK’s three highest mountains within 24
hours to raise money for a good cause. The
Kajoli School Project was a natural choice
since the children who will benefit belong to
the generation which will move Bangladesh
forward in terms of economic growth and
prosperity through better education and health.
Kajoli is based on a self-help model, where
external funds provide for learning materials
such as blackboards, crayons and teachers’
training, while the community itself takes
ownership for other operations by raising
funds through whatever means they can. For
instance, mothers take turns making lunches so
that the young children attending the centres
will get a nutritious meal at least once a day.
This self-help approach makes the project
sustainable in the sense that the feeling of
ownership lies within the community, making
its members proud and committed to
keep the activities running even when
funds are short. Project evaluations have
shown that the learning centre children
often have better reading skills than other
children when they eventually join public
primary school.
The success is as much a result of a
‘fun and play’ teaching approach, with
images and letter board cards used in the
centres. The project is also an important
way to increase literacy rates among
girls, a population segment which is
often neglected in the patriarchal and
traditional society of rural Bangladesh.
ESG and CSR are important
topics which we will be returning
to. IK News would be very pleased
to hear from other portfolio
companies about their initiatives
in these areas.
IK NEWS 2/11 – 29

INSIDE IK
IKARE/SOS PROJECT UPDATE
MENTORING HELPS YOUNG VETS
STAY ‘ON THE JOB’ IN SPITE
OF CHALLENGING CONDITIONS
AS WE APPROACH the first anniversary for the most recent veterinary
shops and practices established late 2010/early 2011 in the Soroti and Serere
districts the feed-back from the field is very encouraging.
All six vets are determined to
reach their ‘make or break’
targets for February. For
those who make it, and some
clearly will, they will join the first group
of young veterinarians who are today
independent and profitable business
owners and entrepreneurs catering for the
animal health needs of their respective
Field visits, like the one undertaken in May
when IKARE and High Heights visited the
young vets in their territories and together
with them met with ‘their’ farmers and
in-field assistants providing spraying
services, are also hugely appreciated and a
good morale booster. A more recent sales
training and marketing work-shop
held during August has boosted
Dr. Waiswa recently spoke on the
‘Community Vet’ model at a sleeping
sickness control stakeholder meeting in
Lira in september. Discussions will also be
held with the ministry of Health on how to
target schools with educational materials
on tick and tsetse protection.
“Business is good and it will be even better if we can get some more
promotional materials and protective wear for our in-field assistants.”
farmers and cattle keepers, thereby
helping to create healthier and wealthier
communities. In order to support and
encourage them IKARE/CEVA and local
partner High Heights have, in addition to
start-up funding for establishing the shops,
provided tailored training and support in
order to enable them to deliver on:
Helping to establish a veterinary supply
chain in rural areas
Servicing previously un-served
communities in the area of animal health
Product knowledge and marketing skills
Training on value of trust for customer
and business partners and proper ways of
handling cash and debts
Support with radio messages and other
marketing materials
sales. As reported by Dr. Edward
Omaido, whose monthly cash returns
almost doubled since the work-shop.
“Business is good and it will be even
better if we can get
some more promotional
materials and
protective wear for our
in-field assistants.”
Time to re-engage
with the policy
makers
With these encouraging
results IKARE and
High Heights will also
re-engage with the local
policy makers.
30 – IK NEWS 2/11

IK PEOPLE
FINNISH AMERICAN SCHOLAR/UPDATE
Gaining experience
at Stanford
SINCE 2001 the IK Finnish American scholarship
has enabled young Finnish business and engineering
students to broaden their education in the United States.
This year’s recipient is Iiro Kulvik, who will continue his
engineering studies with a Masters’ degree program at
Stanford University.
Despite his young age, Iiro
kulvik, 24, already has
varied experience from work
placements and clear targets
in studying. He graduated in 2010 with a
Bachelor of Science from Aalto University.
Majoring in industrial engineering and
management gave Kulvik a focused career
path to pursue.
While studying, Kulvik has also invested
his time in work placements, which have
given him highly valuable experience and
motivation for studying. After spending a
year working in management consultancy,
Kulvik is now ready to broaden his horizons
at stanford. “This scholarship provides a
unique opportunity and is a great example
of how Finnish businesses provide practical
support to young people wishing to study
abroad,” Kulvik says.
Kulvik is the ninth recipient of the IK
scholarship, established to assist Finnish
“Providing young people with the opportunity to study abroad at top
universities is definitely a worthwhile investment in the future of business
and academia in Finland.”
graduates aged 23–30, who have attended
a Finnish Business School or university
of Technology and wish to pursue a
post- graduate degree in the United States.
Kulvik will become one of the first
finnish Masters’ students to take up a
place at stanford. This shows that studying
a degree abroad is still a relatively small
phenomenon in Finland. “Providing young
people with the opportunity to study
abroad at top universities is definitely
a worthwhile investment in the future
of business and academia in Finland,
considering how much valuable knowledge
the students are likely to apply upon their
return,” Kulvik comments.
Choosing Stanford was intuitive
for kulvik, as he was drawn to their
award-winning teaching methods. Kulvik
believes that the more interactive teaching
methods that are common at top U.S.
universities will provide him with the kind
of challenges he longed for when studying
in finland. “ finnish universities are very
research-oriented, but perhaps focusing too
much on books and top-down teaching, it doesn’t
allow students to develop the kind of perspective
they need in their working lives,” Kulvik
ponders. Kulvik will complete his masters’
degree in Management science & engineering,
which is a well-suited continuation from his
studies in Finland. Kulvik is especially interested
in entrepreneurship, strategy, innovations and
supply chain management.
After the year at Stanford he plans to return
to Finland and sees the private equity industry
as a possible option for his future career
development. “Working in the private equity
industry would provide the opportunity to
develop the companies you work with on a
totally different level compared to working in
consultancy,” Kulvik said.
So here I am
sitting in the centre of the huge
Stanford campus. Upon my arrival on
12 September, the campus was relatively
empty and after office hours it was hard to
find anyone walking around. Now, the place
has turned into a bustling city of its own, with
approximately 15.000 students and 2.000
faculty members. The atmosphere is relaxed
and people enjoy being outdoors, but the
bike traffic is hectic and very fast-paced.
Green living and environmental awareness
are promoted everywhere, and the main
transportation method is a bike. The weather
is beautiful, I have only seen clouds once!
This probably contributes to the relaxed
atmosphere as well.
The classes over here are smaller and
based much more on discussion and
pre-reading than what I am used to from
Finland. And I enjoy it! The students have
very different backgrounds, which makes
them look at problems from very different
angles and, ultimately, makes us understand
the issues more broadly than we would have
done just by reading the article. The course
topics are also very interesting, ranging from
social networks to dynamic strategy.
Entrepreneurship is very well represented
and promoted all around the university. There
are many different entrepreneurship clubs
and communities that have their own areas
of expertise and interest. Venture capitalists
regularly visit courses and some even act
as consultant professors. New start-ups are
created all the time, and every week I get an
e-mail or two from a Stanford alumnus who
has a start-up and needs more employees.
Even group projects in courses are often
entrepreneurship-oriented. For example, one
course asks us to make a viable business
plan for a new product or service that utilises
social networks. The plan is then presented
to, and analysed by, venture capitalists.
All in all, I very much look forward to
spending a year in this dynamic, multi-cultural
environment that will definitely help me
understand both cultural and business
matters more broadly than I did before.
IK NEWS 2/11 – 31

TRYGVE GRINDHEIM: “IK’s disciplined operational focus has
produced strong returns over the past 22 years and will continue
to do so in the years ahead.”
With ‘focus’ being as fundamental
to IK’s own success
as it is to that of its portfolio
companies, we continue to be
focused firmly on Europe’s
middle-market. It is here that IK has built its
reputation as a leading private equity firm and
where we continue to find the best opportunities
to build strong, focussed companies that deliver
solid returns to our investors through value
creation and profit growth.
Working in close cooperation with portfolio
company management, this earnings uplift
is primarily achieved through significant
strategic and operational improvements in the
companies we invest in, typically featuring add-on
acquisitions, organic growth, efficiency gains and
improved margins.
IK has successfully pursued this disciplined
investment approach to the mid-market for more
than 20 years with, on average, its investments at
least doubling their operating profits during the
ownership period.
The extent to which mid market private equity
firms add-value to their portfolio companies
post-acquisition is analysed in a recent report
by Dr Christopher Kaserer from the Center for
Entrepreneurial and Fiscal Studies, which was
presented at the EVCA Mid Market Forum in
Budapest in mid-October this year. It supports
the view that returns in mid-market investments
do, for the most part, originate from strategic
and operational improvements. The study found
that overall transaction returns are driven by
fundamental improvements in the portfolio
company’s operations and finances with sales
growth having a particularly strong impact.
Interestingly, the report shows that leverage does
not have a significant impact on returns. Rather,
between two-thirds and three-quarters of an
overall investment IRR comes from earnings
enhancement activities whereas only one-third
could be attributed to the ‘leverage effect’.
A good illustration of the benefits that a
committed private equity firm can bring
to a mid-market investment is Colosseum,
Scandinavia’s leading provider of private dental
services, which IK acquired in 2010. Here both
add-on acquisitions and internal operational
improvements as well as organic growth are high
on the agenda as, with IK’s support, the company
seeks to capture an even greater share of the
expanding, yet still fragmented, Scandinavian
dental care market.
Meanwhile Kwintet, the European professional
wear company acquired by IK in 2005 is now
far leaner and more agile having been through
a complete operational restructuring and
consolidation phase following its initial and
very active add-on investment strategy in a
very fragmented European work wear industry.
kwintet is now organised into five geographic
regions, has optimised its sourcing footprint with
more than 75 per cent of its products now coming
from non-European suppliers, and has completed
a string of strategic acquisitions.
When it comes to securing the best investments
IK has some unique selling points, notably its
extensive track record with the completion of
over 80 European mid-market investments since
the firm’s foundation in 1989. Of these, 60 full
or partial exits have so far been achieved. Even
during the recent challenging financial and
economic conditions, exit proceeds for this year
alone have so far reached over €1 billion with
more anticipated over the next 12 months.
In addition to its distinguished value creation
track record and strong realisation results, IK is
also differentiated by the calibre of its regional
investment teams and its focus on Northern
Continental Europe. Also, having worked
cross-border and invested in international
companies for more that 20 years now, it has
documented international experience and a
solid global network of financial and industrial
contacts. This heritage can be hugely helpful
with geographic diversification becoming
increasingly important and with the growing
emphasis on emerging markets in Central and
Eastern Europe, Asia etc.
Essentially, IK has all the strengths of a private
equity firm investing in larger companies and,
yet, is firmly positioned in the mid-market.
typically, we will be competing for deals with
smaller, local firms, less able to deliver what IK
can offer in terms of experience, know-how and
value-creation skills, all significantly enhanced
by the global dimension we can bring to the table.
This differentiated value proposition provides
us with a real advantage which translates into
a higher acquisition conversion rate, the best
investments and, ultimately, superior returns.
trygve grindheim, partner, ik
VIEWPOINT
“Essentially, IK has
all the strengths of a
private equity firm
investing in larger
companies and, yet,
is firmly positioned
in the mid-market.”
32 – IK NEWS 2/11