ARX Equity Partners (“ARX”) has exited its 2010 investment in Czech construction materials manufacturer, KVK Holding a.s. (“KVK”), while generating an overall 3.7x cash-on-cash return multiple and an IRR exceeding 20%. KVK operates six production sites in the Czech Republic – three for the manufacture of mortar products, two for bituminous membranes and one for expanded polystyrene insulation. KVK generated revenues of € 40 million in 2016.
The ARX exit was executed via a sale to Sika CZ, s.r.o., a subsidiary of Sika AG (“Sika”). Sika is a Swiss-headquartered specialty chemicals company with a leading position in the development and production of systems and products for bonding, sealing, damping, reinforcing and protecting in the building sector and automotive industry. Sika has subsidiaries in 99 countries and manufactures in over 190 factories.
The KVK investment is consistent with the ARX focus on Central European growth buy-outs. ARX acquired a majority shareholding in KVK from retiring owners in 2010, in a proprietary succession-driven deal, with the intention of completing complementary add-on acquisitions from the strong KVK platform. In 2011 KVK executed its first add-on – the acquisition of KRPA Dehtochema, which augmented the company’s leading position in the Czech and Slovak bituminous membranes market. An additional Czech add-on (the acquisition of Penopol later in 2011) facilitated KVK’s entry into the adjacent expanded polystyrene market segment. Under ARX ownership both companies were fully integrated and significant synergies were realized. Additional value creation initiatives included enhancing the KVK management team and institutionalizing internal processes.