Private Equity Spotlight: Pamica 2 looks for targets of up to SEK 200m EV, about to seal two deals in Sweden | Mergermarket
07 JUN 2018
- Will spend 80%-85% of its new SEK 495m fund in around three years
- Likely to make add-on acquisitions for Pamica 2 and Pamica 1
- Pamica 1 exits unlikely in next two years
Private equity fund Pamica Group is close to sealing the first two acquisitions of its SEK 495m (EUR 49m) second fund, Pamica 2, which aims to invest in up to 12 companies, CEO Jan-Olof Svensson said. The two investments will use around 25% of the fund’s dry powder, he added.
The imminent buys fit well into the fund’s aim to invest in Swedish entrepreneur-led companies generally valued between SEK 100m – SEK 200m, Svensson said, declining to provide further details on the two targets.
Pamica 2 will be looking to acquire companies where the founders and management will want to remain involved with a minority stake of around 40%. This keeps prices down, and competent and driven entrepreneurs involved, Svensson said. A typical target should have been around for approximately 15 years, and the owners will typically be around 45-55 years old, he added.
Targets should be well established, with a proven cash flow, room for growth and the ability to improve or create new internal structures, he said.
It will consider investments in sectors where some of the 148 investors it has attracted to Pamica 2 have experience on, Svensson said, only specifying that it will not invest in finance or property, areas where its co-owner, investment company Catella, already operates.
Pamica 2 retains 60% of its investors from Pamica 1. Among the main investors in Pamica 2 are Lindeblad Technology; the family behind Ryds Bilglas, a Swedish vehicle glass repair and replacement company; and Catella. The Ryd family were the largest investors in Pamica 1.
The firm’s first fund, Pamica 1, has invested in sectors including consumer, industrials and manufacturing.
Pamica 2 aims to spend up to 85% of the fund in around three years and own a portfolio of companies with a total value of SEK 1.6bn – SEK 1.8bn for between four and seven years, Svensson said. The remaining 15% – 20% of the fund will be used as dry powder for add-on acquisitions, including abroad, and other support for the portfolio companies, he added.
Pamica 1 add-ons and exits
The Pamica 1 fund raised SEK 244m from 72 investors in a round closing in April 2016. In six months it had made five investments: moisture protection technology company Absortech; office coffee supplier Beans in Cup; fire protection company Cupola; security cameras provider Safe Solutions; and cognitive devices producer Somna.
Pamica 1 has so far made several add-on acquisitions to its Pamica 1 portfolio companies, Svensson said. Some of these, Bon Hagen (SEK 5m turnover), Kaffe og Vann AS Norge (SEK 15m), and In Cup Norr (SEK 8m), were add-ons to Beans in Cup in 2017. Beans in Cup has already signed letters of intent to acquire two more targets, which it expects to close in August, he added. It is also looking for add-ons in Norway through its local holding company Beans in Cup AS Norge.
In 2018, it acquired SEK 22m-turnover SBA Leverantören as an add-on to Cupola, and has signed letters of intent to acquire three more assets, to be completed this autumn, Svensson said. In an interview with this news service in September 2017, Svensson said Pamica 1 was in talks with targets for its company Cupola. Targets with around SEK 5m – SEK 20m in turnover across Sweden were its sweet spot, he said.
Pamica has already received offers for some of its portfolio companies in Pamica 1, Svensson said without elaborating. However, it is unlikely to consider any exits within the next two years. It wants to create better returns for its investors and have time to improve its companies before selling, he added.
Secondary buyouts or trade sales are more likely exit options than IPOs, Svensson said without completely ruling them out.
Svensson established Pamica when, over more than a decade working for IMAP, he saw that many of the company’s clients, with between SEK 100m – SEK 200m in revenues, were struggling to find buyers as they were too small for many private equity funds.
Svensson started cooperating with Catella and co-founded Pamica. The name is a portmanteau of
‘Pami’, which is IMAP backwards and ‘ca’ from Catella, Svensson said.
Pamica’s board includes Svensson, Catella’s Jan Klippvik as chairman, Lars-Åke Bylander, another major investor, and Magnus Ryd.
The company aims to gather investment from entrepreneurs and family offces who can help develop the portfolio companies, rather than institutional investors, Svensson said.
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