Quilvest Private Equity has become a cornerstone shareholder in Group Acrotec, a Swiss company which manufactures specialist parts for Swiss watches, in a CHF 30 million ($31 million; €25 million) deal. Quilvest hopes Acrotec can take a bigger slice of the Swiss watch market, which is already worth about €11 billion a year and is enjoying double-digit growth.Acrotec manufactures small specialist components for the internal workings of Swiss watches, including shock absorbers and oscillating weights. The group consists of four specialist divisions and currently has an annual turnover of CHF 70 million.
Maurizio Arrigo, Quilvest's lead partner on the deal, said the company was benefiting from two key trends.
The first is the growth of the Swiss watch market generally, which has bounced back strongly after a relatively difficult 2009 and is now growing fast, driven by strong demand from the Far East and Latin America.
The second is the structural changes currently underway in the Swiss watch market. According to Arrigo, the Swatch group used to be obliged by the Swiss competition regulator to supply most of its rival manufacturers with an entire mechanism to power their watches – but has now reached an agreement to stop doing so over time. This presents smaller manufacturers with an opportunity to step into the breach.
Arrigo said Quilvest hopes to grow Acrotec both organically and through acquisitions. In terms of targets, Quilvest will focus on companies that can help Acrotec play a bigger role in the supply chain of the Swiss watch industry as it grows and professionalises. Specifically, this might involve sub-assembly of some components before they get to watch-makers, thus allowing the latter to assemble fewer parts.
Quilvest is buying out EPF Partners, a French private equity group which has been a minority shareholder since 2006, and a group of private investors. The Acrotec management team are not selling any shares as part of the deal and will remain in situ, although Arrigo said Quilvest hopes to supplement the team with a new chief financial officer to support its growth strategy.
Quilvest itself, which will be the largest single shareholder, will play an 'active management role' in the company, he added.
Quilvest, which began life as the family office tasked with managing the money of the Argentinian Bemberg family, has been investing in private equity since 1972. It now has about $4 billion under management (about $2.8 billion of which is from third parties), and raises about $500 million of fresh capital each year for fund and direct investments.
Private Equity International recently caught up with Quilvest CEO Michel Abouchalache for a rare interview, in which we talked in detail about the firm's history, strategy and track record. Premium subscribers can read the article online HERE.