Author: Josef

Following an approval by regulatory authorities, ARX Equity Partners (ARX) has completed the exit of its investment in Czech producer of specialized electrical motors VUES Brno s.r.o. (VUES) via a sale to Moog Inc. (NYSE:MOG.A) (NYSE:MOG.B) for a purchase price of € 53 million. The ARX investment into VUES generated an overall 11.8x cash-on-cash return multiple and an IRR of over 30%.

ARX acquired a majority shareholding in VUES from retiring managers in 2006, with the intention to leverage the company’s inherent technical strengths and capabilities in order to grow and further internationalize the business. Over the past eight years VUES expanded its profit margins considerably, while simultaneously doubling sales and increasing headcount by over 30%.

ARX Equity Partners and Moog Inc. (NYSE:MOG.A) (NYSE:MOG.B) have entered into a binding agreement for the sale of VUES Brno s.r.o. (“VUES”) to Moog. The transaction is subject to approval by competition protection authorities and its finalization is expected in approximately two months.

VUES is a producer of custom designed specialized electrical motors.

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.

ARX Equity Partners has entered into an agreement to exit portfolio company KVK via a sale to Sika AG. 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.

 

Sika is a 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 98 countries and manufactures in over 190 factories.

 

No financial details have been disclosed and completion of the transaction is subject to clearance by anti-trust authorities.

On 21 August 2017, ARX Equity Partners exits its investment in the Czech based electrical engineering services company, Manag a.s. (“Manag”) via a sale to a Czech industrial holding Multicraft Group.

ARX Equity Partners (“ARX”) together with experienced food industry entrepreneur Keith Dilworth entered into a binding agreement relating to the acquisition of Nutricia Deva a.s. (“Deva”) from Danone Group.

Deva is a Czech Republic based producer of baby fruit desserts and fruit drinks, with total annual capacity of 24,000 tons, and also holds bio and organic certifications.

ARX together with Keith Dilworth committed to acquire Deva with the aim to expand the existing business via further organic growth and to use the company as a platform to acquire complementary add-on acquisitions. As part of the transaction, Deva will enter into a manufacturing contract and will continue to manufacture baby food desserts under the Danone brands.

“I am excited to team up with ARX and acquire such a high-quality company and we look forward to continuing a production partnership with the Danone Group.  We are convinced that Deva is well-positioned to leverage its strong asset base, technical know-how and skilled employees, in order to acquire new customers in the future.” says Keith Dilworth, who has been named CEO of Deva.

The acquisition of Deva will be the first investment made from the fourth ARX Equity Partners managed private equity fund.

ARX Equity Partners controlled diagnostic healthcare operator DC Bled has completed its first acquisition of the diagnostics center Medi Cons in July 2016. Medi Cons is based in Novo Mesto, Slovenia. The acquisition will allow DC Bled to strengthen its presence in the South East part of the country and to expand its diagnostic capabilities into the field of cardiology. Medi Cons performs more than 3,000 procedures a year. The acquisition of Medi Cons marks an important milestone for DC Bled, as it is the first step in the execution of a broader market consolidation buy-and-build strategy. Further acquisitions and organic expansion of cardiology services is expected in the near future. DC Bled is on-track to organically grow by 10% in 2016. ARX Equity Partners acquired DC Bled in 2015 together with the experienced healthcare investor and founder of Euromedic Joseph Priel.

ARX Equity Partners (“ARX”), a leading lower mid-cap focused private equity firm operating in Central Europe, is pleased to announce the first closing of its fourth fund, ARX CEE IV (the “Fund”), at € 54 million, with total subscribed commitments of € 66 million.

The Fund, which has a target of € 100 million including commitments from the European Investment Fund (EIF), will continue to execute the ARX value-creation strategy of investing in lower mid-cap businesses and SMEs in select Central European countries. ARX has completed 22 platform investments and numerous add-on acquisitions over its two-decade operating history in the region. The EIF investment benefits from EU support under the COSME programme funded by the European Commission.

ARX anticipates that the majority of the Fund will be invested in the Czech Republic, where the firm has established itself as a market leader in succession-driven transactions. The Czech economy expanded by an impressive 4.3% in 2015, propelled by strong exports, which grew by 7.2% over 2014. Czech GDP growth levels are expected to remain strong in 2016 and 2017, primarily driven by the country’s highly competitive export-oriented precision manufacturing industry.

The Fund will complement its strong Czech presence with investments in certain additional Central European countries with attractive investment environments, such as Slovenia, where ARX recently generated a 4.1x cash-on-cash return from its Tomplast investment.

Brian Wardrop, ARX Managing Partner, commented: “We look forward to capitalising on several uniquely distinctive features that are generating succession-driven deal flow momentum in our target market. We are also especially pleased that several well-respected local investors have chosen to endorse the ARX strategy and its differentiated geographic positioning and would like to thank all our investors for their support.”

First close investors in the Fund include institutions such as the European Investment Fund, leading Czech retail bank Ceska Sporitelna and RSJ Private Equity, in addition to several family offices.

The ARX IV Fund benefits from the support of the European Union under the Equity Facility for Growth (EFG) established under Regulation (EU) No. 1287/2013 of the European Parliament and the Council establishing a Programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) (2014-2020).

ARX Equity Partners (“ARX”) has exited its 2007 investment in Slovenian producer of plastic components, Tomplast d.o.o. (“Tomplast”), and will generate an overall 4.1x cash-on-cash return multiple and an IRR exceeding 20%. The ARX exit was executed via a sale to funds managed by financial investor KJK Capital.

The Tomplast investment is consistent with the ARX focus on Central European succession-driven majority buy-outs, with a bias toward export-oriented precision manufacturing companies. ARX acquired a majority shareholding in Tomplast from its retiring founders in 2007. In 2008 Tomplast executed the add-on acquisition of Unitplast d.o.o. (“Unitplast”), which was also a succession-driven situation. Under ARX’s ownership both companies were fully integrated, while the enlarged business was repositioned to focus increasingly on automotive components. The company currently supplies larger and increasingly complex products from its modern Slovenian production facilities, utilizing technologies such as 2K and gas injection. Tomplast revenues grew from € 13 million in 2007 to over € 40 million in 2015, while employee headcount expanded from 77 to 300 during the ARX holding period.

ARX Managing Partner Brian Wardrop commented: „Our investment in Tomplast is a representative example of the types of opportunities available in the Central European lower mid-market. We succeeded in acquiring two smaller companies, which were both facing acute shareholder and managerial succession issues, in order to create an internationally competitive niche plastic components supplier.”

Advising on the sale were Arkas Corporate Finance (M&A), Ulcar & Partners (legal) and White & Case (legal).

On November 5, 2015, the Czech Private Equity and Venture Capital Association (CVCA) celebrated the 20th Anniversary of its foundation with a gala evening in Prague. We are pleased to announce that on this event Brian Wardrop, Managing Partner of ARX, was named as Private Equity Professional of the Last 20 years in the Czech Republic. This award resulted from a poll conducted by the CVCA where all members of the association participated. We are especially proud of the fact that our peers in the Czech private equity community have chosen to recognize the contributions of Brian, which we view as a positive reflection of the ARX market position and the firm’s dedication to Czech private equity.