Company at a Glance:
Probos Group is the 3rd largest world producer of thermoplastic edgebands solutions for the furniture industry accumulating c.10% global market share with a leading position in emerging markets (Latin America and Eastern Europe). The Company has two production sites in Portugal and Brazil, direct presence in UK, Germany and Mexico and sales in more than 50 countries.
Origination and Investment Rationale:
Alantra PE tracked the asset one year in advance and had direct exposure to the seller (co-investor in prior deal). The transaction was envisaged as a limited auction in which Alantra PE had a unique access to both the seller and the management team thanks to the following competitive advantages: steady execution capabilities to close the deal in a very short period of time, Alantra PE’s local experience in LatAm which represented a core market for Probos and alignment with the management team since the deal was executed as a SMBO.
The acquisition rationale was based on the following criteria:
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- Niche and structured market with 4 global players representing over 70% of worldwide sales, being Probos Group ranked 3rd
- Global player with 90% of its revenues generated outside Iberia and being the leading player in its core markets: Brazil, Mexico, Colombia, UK and Iberia
- Attractive margins and strong cash conversion
- High entry barriers in terms of proprietary technology, switchover costs for customers and distributors, time to market and need for extensive product catalogues
Alantra Contribution and Value Creation:
a) Management Build-up and Upgrade
Strong management in place with a proven track record of growth and internationalization. Additionally, Alantra PE reinforced the Board of Directors (Industry Expert of Alantra’s Executive Network), made new appointments in Brazil and hired a new country manager in Mexico.
b) Internationalization and Exports
Probos Group already had strong international presence mainly in emerging markets including Latin America and Eastern Europe, as well as direct exposure in the UK, Germany and Mexico. Alantra PE international network helped to consolidate the Company’s positioning in its core markets, as well as to facilitate expansion projects allowing the Company to stablish several new agreements with local distributors based in Colombia, Germany, Turkey or Russia.
c) Operational Improvements and Organic Growth
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- Reassessment of Probos’ business plan resulting in additional “pockets of growth”
- Industrial optimization in Portugal’s factory resulted in gross margin improvements
- Introduction of KPIs and improvement of inventory levels
- Outstanding improvement of the working capital levels while maintaining Capex requirements
- Renegotiation of purchasing conditions with key suppliers
- Margin optimization through strategic and commercial actions
d) Strategic Add-ons and Expansion
Alantra PE injected additional equity to support new investments in the Brazilian facility in order to double its production capacity. New markets, such as India, were tackled mainly through joint ventures with local players or competitors.
About the Exit:
The Company was sold to industrial buyer Surteco SE, the German world leading manufacturer of decorative surface materials and producer of technical extrusions based on plastics. The exit process was run as a competitive open auction between trade and financial buyers which allowed Probo’s multiple re-rating, being Surteco one of the natural acquirers pre-identified.