Triton sells Ovako to trade for 2.2x money

The sale ends a seven-and-a-half-year holding period for Triton, which turned the business around after acquiring it with equity from its third fund in September 2010 following a financial restructuring.

Triton appointed Deutsche Bank, Nordea and Carnegie to explore exit options last year, according to Swedish press reports. The GP was said to be favouring an IPO, and financial newspaper Dagens Industri reported that the preliminary IPO date had been set for 15 March.

Under Triton's ownership, Ovako implemented increased production efficiency and operational improvements by reorganising the business around four core business units. This led to total cost savings of €50m over the course of the investment, Unquote understands.

Ovako reported a €100m EBITDA from €921m in revenues for 2017, excluding restructuring costs. Adjusted EBITDA is expected to rise to €120m in 2018.

Based on these figures, the company was expected to achieve an enterprise value between €800-850m, according to press reports.

The sale of Ovako is the third divestment from Triton Fund III in the last five months. The GP made 3.7x money and generated an IRR of 35% on its sale of Infratek to French trade buyer Vinci Group in November. It also made a final exit from Orion Engineered Carbons in December, after listing the business on the New York stock exchange in 2014. Triton generated a 3.4x multiple and 37% IRR on Orion over the entire holding period.

As a result of strong exit activity, Triton's Fund III returns have increased from a net IRR of 8.66% in June 2017 to 13.5% in December 2017 and are expected to continue to rise, Unquote understands.

Previous funding
Triton acquired Ovako in August 2010, with debt for the transaction provided by Nordea. The company employed 3,000 people and generated a turnover of €850m but had undergone a financial restructuring following the global economic crisis.

The GP refinanced Ovako's debt in 2013 to increase financial flexibility and refinanced again in 2017, securing a €310m senior secured package to secure lower interest rates and a longer maturity.

Company
Ovako develops steel products for its customers in the bearing, transport and manufacturing industries. The company's production is based on recycled scrap and includes steel in the form of bar, tube, ring and pre-components. It has operations in 30 countries, and has sales offices in Europe, North America and Asia. Ovako's sales in 2017 amounted to €921m, and the company had 3,040 employees at year-end.

People
Triton Partners – Peder Prahl (director); Johan Pernvi (investment advisory professional).
Nippon Steel & Suimoto Metal Corporation – Kosei Shindo (president).
Ovako Group – Marcus Hedblom (CEO).

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• Topics
• Exits
• Nordics
• Industrials
• Triton Partners
• Trade sale
• Sweden