“A case study in the power of active PE ownership and operational excellence,” is how judge Katja Salovaara, a senior portfolio manager at Ilmarinen, described the partnership between Faerch Plast and EQT Partners. And with the transformation the company has undergone over the three-year holding period, few could disagree.
It helped that EQT was investing in a highly regarded, long-established firm. Founded in 1969 in Denmark, Faerch Plast’s main activity is the production and sale of thermoformed plastic trays for ready meals, fast food and fresh meat. Its core focus is on recyclability, sustainability and food safety.
When EQT Partners came along in February 2014, via its EQT VI buyout fund, the company was looking to take the good work it had done in Denmark and replicate it Europe-wide. In April 2015 Faerch Plast acquired Anson, a UK-based thermoformed packaging manufacturer, followed in October by the acquisition of another Danish manufacturer Sealed Air. These transactions brought an array of new products and helped the firm push into new markets – notably Spain – but also allowed Faerch Plast to impart its knowledge. Efficiency has improved 100 percent at Anson since the acquisition, according to EQT.
The acquisitions also helped Faerch Plast’s annual revenue growth jump to more than 25 percent, having averaged around 5 percent before that, and pushed the firm’s market share into double digits in the European ready-meals sector.
It was not all inorganic growth, either. EQT introduced elements of best practice in manufacturing, bringing in conveyor systems and material handling technologies to boost production. It also introduced robots in key production sites which, by the firm’s calculations, directly led to annual savings of DKr11 million ($1.8 million; €1.5 million).
On the operational side, measures were introduced to further improve Faerch Plast’s reputation for green practice. Between 2014 and 2016 the use of recycled plastic in its production process increased by 62 percent. Smaller trays to encourage smaller portion sizes, and a colour-coding system to make recycling easier for customers, were also introduced.
None of this means much without the right people. Key new hires were made, including chief financial, sustainability and operating officers, while an experienced board, headed up by chairman Arne Vraalsen, the former CEO of packaging company Polimoon, ensured a set of steady hands on the tiller.
Top-line revenue grew by 89 percent, EBITDA by 111 percent and the workforce by more than double over EQT’s holding period, all testament to the success of the relationship. In March 2017 the company was bought by Advent International at a considerable multiple.
“We are very proud that EQT VI together with the management team succeeded in transforming Faerch Plast from a local to an international champion,” says Mads Ditlevsen, partner at EQT Partners and investment advisor to EQT VI.
“Key in this process was the ability to leverage the unique culture that has been built in Faerch Plast over decades, and the two highly value-accretive add-on acquisitions that enabled the company to expand its product offering across Europe. By adding the Faerch Plast expertise to the acquired companies, significant synergies were realised.”
WINNERS
AMERICAS
Large-cap: The Carlyle Group – Vogue International
Upper mid-market: Cerberus Capital Management – Bowlmor AMF
Lower mid-market: Francisco Partners – Paymetric
Small-cap: The Riverside Company – YourMembership
EMEA
Large-cap: Partners Group and Capvis – VAT Group
Upper mid-market: EQT – Faerch Plast
Lower mid-market: Gilde Equity Management – Banketgroep
Small-cap: YFM Equity Partners – GO Outdoors
ASIA-PACIFIC
Upper mid-market: ShawKwei & Partners – YongLe Tape
Lower mid-market: Advantage Partners – Hisense Broadband Multimedia Technologies*
Small-cap: Mekong Capital – Mobile World
*Hisense is not included in the write-ups due to confidentiality issues
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