Industri Kapital sells sewing machine business

The Nordic mid-market buyout house has sold VSM Group to US private equity firm Kohlberg & Company.

Stockholm-headquartered private equity firm Industri Kapital has sold Swedish sewing machine maker VSM Group to Kohlberg Management IV, a vehicle managed by US-based private equity firm Kohlberg & Company. The acquisition was made through a holding company called SVP Holdings.

No price was disclosed but Ann Holm Rannaleet, partner and information director at Industri Kapital, told PEO that the firm had made in excess of 2x its original investment.

Industri Kapital acquired VSM from domestic appliance firm Electrolux in April 1997 for an undisclosed sum. Rannaleet said that the acquisition had been made through the Industri Kapital 1994 Fund, which closed on €250 million ($298 million) in November 1995. She added that the fund is now fully invested, with only one portfolio company yet to be exited, and “has returned its capital to investors several times over, even before this transaction”.

According to the firm, VSM has improved its product range, focused on the high-end embroidery segment and developed after-market sales of accessories and software during Industri Kapital’s ownership. Sales have also more than doubled and profits trebled in the same period.

Rannaleet said that it was a good time to sell, as evidenced by strong interest at the auction stage from both financial and trade buyers. “It’s generally a good exit climate currently and we have done what we set out to do with VSM over the years,” she said. “It is a nice solution as the two companies are highly complementary.”

Based in Sweden, VSM markets and sells advanced sewing machines, overlocks and accessories for sewing under the Husqvarna Viking and Pfaff brand names. Industri Kapital backed the acquisition of the household sewing machines division of German manufacturer Pfaff in May 2000.

VSM has 2,000 employees, manufacturing facilities in Sweden and the Czech Republic, 16 sales companies and distributors in 57 countries and a dealer network of around 4,100 sales points. The group has annual sales of €240 million, according to an Industri Kapital statement.

Kohlberg & Company already has a presence in the household sewing machine sector, having acquired Singer in September 2004 for $125 million (€105 million). The SVP Holdings name was created to reflect the ownership of Singer, Viking and Pfaff.

Don Fletcher, who joined Singer following Kohlberg’s investment, will become CEO and president of SVP Holdings.

Established in 1989, Industri Kapital manages approximately €4 billion in fund commitments and has offices in London, Stockholm, Hamburg and Oslo. According to its website, the firm currently has 23 companies in its portfolio with a combined total turnover of approximately €8.8 billion.