EQT first identified warehouse automation as an exciting investment proposition in 2016, based on industry tailwinds from megatrends such as e-commerce, advances in automation technology, growth in global urbanisation and increased demand for speedy and accurate delivery.
The firm carried out a comprehensive assessment of the sector, hired industry experts and mapped out potential targets. AutoStore, which the firm already knew as a supplier to former portfolio company XXL, quickly appeared on the radar.
When it was rumoured that the owner of AutoStore was selling, EQT submitted a pre-emptive offer. At the end of the sales process, the firm succeeded in entering into exclusive negotiations, despite other offers being substantially higher.
During EQT’s holding period, AutoStore broadened the company’s partner network, increasing market coverage by 150 percent. It increased partner collaboration, set up a new business development organisation and stepped up digital marketing, supported by EQT’s in-house digital team.
EQT also increased its focus on key high-potential geographies – the US, France, UK, Germany and Japan – as well as expanding into eight new countries. R&D efforts were stepped-up to sustain competitive advantage and AutoStore came to market with several new innovations, including the launch of ‘Black Line’, a family of retrieval robots which expanded the addressable market by 40 percent.
To sustain technology protection, intellectual property efforts were increased and AutoStore has been the most frequent filing company in Norway over the past two years, with the number of patent filings increasing by 250 percent. Meanwhile, a comprehensive procurement programme resulted in a 160bps gross margin improvement and 30 percent increase in payable days.
In addition, sustainable product improvements including a shift from lead-acid to high-power lithium-ion batteries, which leave a significantly lower carbon footprint over their lifecycle, took place during EQT’s tenure.
The plethora of operational improvements at AutoStore culminated in a sale to a consortium led by THL Partners in June 2018. The deal generated an 88 percent internal rate of return and 8.3x money multiple (or 9.3x in local currency) for EQT.
Over the course of the investment, the company’s global installations grew by 2.5x, from approximately 140 to 350, while the number of robots installed tripled.
Revenues quadrupled and EBITDA increased to 4.5x the level at acquisition. EQT has reinvested 10 percent of its total proceeds to maintain exposure to the company’s future growth.
“EQT supported AutoStore in accelerating its growth and penetrating new geographies, enabled by a broadened partner network, the establishment of a new business development function and more systematic work with partners to increase sales conversion,” says EQT partner Anders Misund.
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