Finnish Chemicals

Finnish Chemicals, now renamed Kemira Chemicals, is one of our landmark deals, executed in a then rare destination for UK-based private equity houses.

The company is the largest producer of sodium chlorate in the Nordic region and today forms part of the pulp and paper chemicals segment of Kemira.

Sodium chlorate is the main bleaching agent used in the production of the chemical pulp used in papermaking. The business also produces chlorine dioxide, chloralkali products and sodium borohydride, and has the largest caustic soda distribution business in Finland.

The company also became the fourth-largest sodium chlorate producer in North America through the $96m acquisition of Huron Tech in 2000.

Our investment

Finnish Chemicals was based in Finland, close to its customers’ pulp mills. It had a strong domestic market position, proprietary technology and high profitability. We collaborated with an experienced chemical industry executive, who invested alongside us, to develop the company through greater production capacity and buy and build deals in the pulp and paper chemicals sector.

Value creation

The first step was to refocus the business towards its customer industries and away from functional lines thereby bringing a greater focus on providing services as well as products.

This was followed by a significant investment into a new sodium borohydride manufacturing plant.

In 2000, the company bought Huron Tech Corp. based in the South East US for $96m, making it the fourth largest supplier of sodium chlorate in the North American market. In addition, the businesses built sodium chlorate storage capacity in Sweden, allowing it to win long-term supply contracts domestically.

This was a landmark deal - one of the largest buyouts completed in the Nordic region at the time. It required our UK deal-doing experience to complete an investment in a market where very few such transactions had ever taken place.

Outcome

We sold the company to Kemira, Finland’s largest chemical company, in April 2005 in a transaction that generated a return of more than four times our investment.

Sector

Manufacturing

Location

Finland

Investment date

1996

Exit date

2005

Deal size (exit)

€345m

Fund

Mid-market fund

Status

Realised

Website

kemira.com

Strategy

Key facts

One of the biggest Nordic buyouts at the time

Over 4x

return

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