OpEx Awards winner EMEA: IK Investment Partners – Transnorm

Warehouse automation business Transnorm was transformed under IK Investment Partners’ ownership, doubling revenues and tripling profits.

Founded in 1957, Transnorm is a global warehouse automation business providing engineered conveyor systems that quickly and efficiently transport products and packages for parcel and e-commerce customers including DHL, FedEx, UPS, Amazon and Alibaba.

IK acquired Transnorm, which is headquartered in Germany, from family office HQ Equita in December 2014. Under IK’s stewardship, the business went on to double revenues and nearly triple operating profits, while investing significantly in R&D, product development and production capacity extension.

IK’s value creation philosophy for Transnorm was based around five core initiatives. First, the firm focused on strategic repositioning, by increasing the emphasis on the high growth e-commerce and parcel verticals, instead of airport baggage handling systems. At exit, 90 percent of sales were aligned to these high growth segments.

IK invested in new product development to meet the demands of the parcel and e-commerce industries, including singulation and sorting solutions. The firm also completed a transformative acquisition, buying UK-based Sovex Systems, a company that designs and manufactures vehicle loader and transport conveyor solutions. The deal increased product technology and encouraged collaboration across the two businesses, particularly in engineering and after-sales support.

Internationalisation was another key pillar of Transnorm’s growth strategy. Leveraging mega-trends including intra-logistics and e-commerce, IK worked with the company to develop its global footprint in North America and Asia. In 2018, 64 percent of sales were generated in EMEA, 28 percent Americas and 8 percent APAC.

This expansion was supported by the development of a new, centralised production site in Bangkok. The establishment of a Chinese entity with a dedicated sales team and local warehouse further helped establish Transnorm’s presence in Asia.

Finally, IK also focused heavily on Transnorm’s financial performance. EBITDA margins increased from 20 percent to 25 percent, driven by improved sourcing, production efficiency and strong growth of the aftermarket business. Revenues during the firm’s holding period, meanwhile, grew from €62 million to €130 million, with market share climbing from 40 to 50 percent.

“The value creation plan included significant investments into R&D, product development and production capacity expansion, with a particular focus on strengthening the e-commerce-driven parcel segment and the aftermarket business which is highly profitable,” says IK partner Anders Petersson.

“When IK acquired Transnorm, the company was mainly focused on airport baggage handling systems. During the ownership we repositioned the company, playing into favourable macro trends such as growing e-commerce and package handling. It allowed us to attract a wider set of potential buyers when it was time for exit.”

Indeed, exactly four years after it first invested, in December 2018 IK sold Transnorm to Fortune 100 technology company Honeywell for around €425 million. The sale generated an internal rate of return of 64 percent and a six times money multiple for the firm.

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