An extremely busy past year, building value for our investors
In April 2019, I was thrilled to be appointed as Silverfleet’s fifth Managing Partner and equally delighted that my predecessor, Neil MacDougall, is remaining with the firm in the position of Chairman. Neil and I have worked together for 22 years, the last 15 as Managing Partner. I would like to thank Neil for his outstanding contribution to our Firm.
Silverfleet has had an extremely busy past year, building value for our investors, and building a Pan-European, mid-market firm for the future. As the new Managing Partner, I wanted to share our highlights.
Gareth Whiley, Managing Partner
Building... a firm for the future
Local presence across each of our local markets:
In 2017, we were delighted to announce that Karl Eidem had joined us as Head of the Nordic Region, establishing our first local office in that market. In September 2018, we followed this-up with the appointment of Erik Fuchs as Co-Head of the Benelux Region, based in Amsterdam. Erik joined Silverfleet from Alpha Private Equity and previously worked in M&A with Rabobank, Lazard and ABN AMRO. With Erik and Karl's appointment we now have a local presence in each of the geographies in which we invest.
Silverfleet European Development Fund ("EDF"):
Building on this local presence in our local markets, we were very pleased to expand our team focussed on the lower mid-market, with Ricardo Sommer joining this team in our Munich office in February 2019. Ricardo was previously at Quadriga Capital where he was a Director with responsibility for buyout investments in the DACH region in the industrials and business services sectors.
Shortly before Ricardo joined the team, we were delighted to announce the EDF's first investment, with the acquisition of a majority stake in STAXS, the Benelux leader in the distribution of consumable products for cleanrooms in the Life Sciences and other industries. Founded in 1995 and based in Heerenveen, The Netherlands, STAXS also operates from two Belgian locations in Niel and Aartselaar. As a market leading contamination control expert, it has built an excellent reputation for quality and reliability and has a strong and loyal customer base in the Netherlands and Belgium and selectively sells into other geographies.
“Silverfleet has a significant and longstanding reputation for helping European businesses grow internationally. I am convinced that with their support and substantial experience in the Healthcare sector, we can successfully achieve our goals and develop the company further.”
Johan-Detlef Dubbelboer, CEO STAXS
Building... portfolios diversified by sector and geography
Silverfleet is dedicated to building a mid-market private equity platform with a local presence in each of our local markets, which is central to the Firm’s investment strategy of building portfolios diversified by both sector and geography.
In addition to STAXS, in the past year we have added two new companies to the Fund 2 portfolio, which included that fund’s first healthcare investment.
Silverfleet Capital invests in leading European resin manufacturer Prefere Resins
In June 2018, we acquired a majority stake in Prefere Resins, a European market leader in the development, production and sale of phenolic and amino resins which are used as a binding agent across the construction, insulation and industrial sectors. Prefere operates seven production facilities across six European countries (Germany, France, UK, Finland, Poland and Romania), has three R&D sites (Germany, Austria and Finland) and four regional sales offices (Germany, UK, Finland and Austria). Producing over 320 kilotonnes in volume and employing over 320 people, the Company has a diversified product portfolio of more than 900 individual formulations, serving over 300 customers, including several large, blue chip multi-national corporations which are global suppliers of engineered wood products and insulation materials.
“We are delighted to have found in Silverfleet a pan-European partner for our next growth phase. Silverfleet has made a number of successful investments across the European chemical sector and has an impressive track record in assisting companies achieve their international growth potential.”
Arno Knebelkamp, CEO Prefere Resins
Silverfleet Capital invests in leading UK fertility group CARE Fertility
In April 2019, we entered into a binding contract to acquire a majority stake in CARE Fertility, the UK’s leading fertility services provider with market-leading success rates underpinned by a strong scientific and clinical backbone. Founded in 1997, the Company operates nine CARE branded clinics and 13 satellite facilities, providing extensive coverage across the UK and the Republic of Ireland. Since its formation CARE has aided the conception of over 30,000 babies, with the Company’s success rates amongst the UK’s highest across all key metrics. With extensive R&D operations, CARE has become an industry innovator, using data analysis and clinical expertise to bring pioneering treatments and procedures to market.
“Silverfleet’s impressive track record in assisting companies to achieve their development plans and their extensive investment experience in the Healthcare sector will be invaluable as we look to execute on our growth objectives. I have known the Silverfleet team for a long time and I am very keen to start executing on our business plan together.”
David Burford, CEO CARE
Building... internationalised businesses
For more than thirty years, Silverfleet has been helping its portfolio companies internationalise; transforming local heroes into international market leaders. Most often this is achieved through backing the management team’s ambitions for organic growth, however, we also welcome the opportunity to back their ambition for acquisitive growth. The last year has seen four of our portfolio companies make substantial add-ons to both expand their international presence and/or product offering; details for each of them are set out below.
Acquisition of Praxis sees Silverfleet Capital’s workwear specialist 7days enter the Nordic market:
In December 2018, 7days announced that it had entered into an agreement to acquire the Danish company Praxis Herning A/S, which supplies the same end markets in the Nordic region.
“Their very similar specialism, strategy and corporate philosophy make 7days and Praxis ideal partners... this acquisition is the first step in our growth strategy for 7days, in particular through increasing its market penetration in other regions of Europe.”
Joachim Braun, Partner
Coventya completes third add-on acquisition with Silverfleet Capital support
Coventya, the international specialty chemicals business headquarted in France, announced in July 2018 that it had made its third add-on acquisition with the purchase of a majority stake in microGLEIT GmbH, a high end specialty lubricants company, headquartered in Germany. By bringing together world-class solutions for corrosion protection from Coventya and high end specialty lubrication, Coventya further enhanced its high performance coating systems, allowing the company to exceed even the toughest demands for most industries and applications – worldwide.
Acquisition of INEOS Melamines & Paraform sees Silverfleet Capital’s portfolio company Prefere Resins take a key step to becoming a leading global resin producer
In April 2019, we were pleased to announce that Prefere had entered into an agreement for the acquisition of INEOS Melamines & Paraform, covering operations in the USA, Germany and a tolling operation in Indonesia; significantly increasing the company’s global operations.
“The acquisition of the Melamines & Paraform businesses from INEOS Enterprise with their leading positions in melamine resins and formaldehyde, as well as formaldehyde derivatives, represents a key step towards our strategic plans to grow our business to become a global resin producer”
Arno Knebelkamp, CEO Prefere Resins
Silverfleet Capital supports Pumpenfabrik Wangen's acquisition of Knoll’s business unit for Progressing Cavity Pumps
In January 2019, Pumpenfabrik Wangen, a leading designer and producer of progressing cavity and twin screw pumps, took over the business unit for Progressing Cavity Pumps (MX line) from Knoll Maschinenbau GmbH, a global leader in the production of conveyors, filter systems and pumps for machine tools, based in Bad Saulgau, Germany.
“Knoll’s Progressing Cavity Pumps complement Wangen’s portfolio of pumps excellently, particularly in the field of hygienic and industrial applications and will not only help us to further penetrate our key markets, but will also support our continued international growth”
Markus Hofheinz, CEO Pumpenfabrik Wangen
Building... responsible investing capabilities
Silverfleet Capital has always championed the promotion of ESG best practice and in 2018 we decided to further elevate this work by establishing an ESG Steering Committee and implementing a new, rigorous ESG process that stretches from due diligence through ownership and, ultimately, exit. We renewed our commitment to promoting gender diversity by becoming a supporter of Level 20, a network dedicated to increase the number of women in the private equity industry. We also retained an external ESG specialist to review our entire portfolio and establish a benchmark and a metric for the ESG work. Finally, in April 2019, we published our inaugural ESG Review.
Our commitment to ESG is perhaps best encapsulated in a case study of the progress made to date in our portfolio company 7days.
7days is a European market leader in medical workwear. Whilst the company was compliant with all applicable environmental and other regulatory matters, we recognised that 7days, as a small business, had put no particular emphasis on ESG matters in the past.
Before we acquired 7days in January 2018, we visited the production site in Morocco, as well as sites of Moroccan subcontractors, and judged the facilities to be in good shape but noted that no form of CSR standard was implemented at any of the locations. We discussed with management before completing the transaction that this would be an important matter for us, and that we would implement a structured approach towards improving on ESG/CSR matters throughout our holding period. Management agreed with us.
With a mutual commitment towards focusing on ESG matters from the first of our monthly management meetings, ESG/CSR has been included as a separate agenda point, and to date, we have:
- Implemented a compliance policy that addresses topics such as anti-bribery and corruption, anti-money laundering, internal business practices as well as business practices with suppliers and distributors.
- Agreed with management that the BSCI (Business Social Compliance Initiative1) standard shall be adopted at our own production facility in Morocco as a top priority.
- Invested substantially into the refurbishment in the Moroccan site and changed the processes in order to be in full compliance with BSCI standards. In March this year, we completed the first external BSCI audit, receiving the top ‘A’ rating. We now plan to take the recommendations in the report as the basis for a continuous improvement process going forward.
- Agreed with management that the amfori BSCI standard shall be brought to the attention of our suppliers in Morocco, Turkey and Macedonia, and that they should undergo a process of self-reporting as a first step, with the ultimate goal to be BSCI-compliant.
- Expanded the production capacity in our own facility in Morocco by renting additional space and adding additional lines, with the goal of further strengthening the flexibility of our supply chain to prepare for further growth in the business, whilst allowing us to discontinue business relationships with suppliers that might not be able to meet our CSR requirements.
1BSCI is an internationally recognised supply chain management system that supports companies to drive social compliance and improvements within factories of their global supply chain.
Building... a football team to beat all comers
Fortunately, through all of the hard work highlighted above, we also find the time to have fun, and once again we were delighted to retain the trophy in the Eversheds annual private equity football tournament, supporting the Whitechapel Mission, a charity which has been helping the homeless and marginalised for 140 years.
Silverfleet Capital Partners LLP is a limited liability partnership registered in England number OC321508; authorised and regulated by the Financial Conduct Authority. A list of the members of Silverfleet Capital Partners LLP is open to inspection at One Carter Lane, London EC4V 5ER, its principal place of business and registered office.