Deal in Focus: Riverside acquires panel-door maker Epco

Riverside's acquisition of Epco, which was sourced by the GP's vice-president Jeroen Lenssen, follows a competitive auction process. The transaction was leveraged at 40% – with senior debt provided by Belgian banks CBC Banque and Belfius – and saw Riverside take over two thirds of the company's equity, while the founders retained a minority interest.

"The reason why the founders decided to hand over the business was because they thought an external player could help them realise the growth potential that they see for the group over the next few years," says Riverside vice-president Damien Gaudin.

The acquisition was made through buyout fund Riverside Europe Fund V (REF V), for which the GP had raised at least €125m as of January this year.

Currently generating around €35m in sales, Epco is one of the only companies in Europe focusing purely on the production of door panels. For Riverside, this was one of the key parameters driving their decision to invest in the group.

According to information published on Belgian financial news website Trends.be last year, Epco was classified as the first Belgian "gazelle" in the small businesses category in 2015: a high-growth company starting from a revenue base of $1m or higher and increasing its revenues by at least 20% annually for four years or more.

We have a very clear plan regarding organic growth and, on the acquisition side, it will take time to develop the appropriate strategy. But we are certainly considering it" – Karsten Langer, The Riverside Company

"The group appeared to us as a leader in its sector in several ways," says Gaudin. "It operates within a very niche market in Europe – that of insulated panels used for flexible sectional doors – services both residential and non-residential customers, and achieved fast growth since inception in 2008."

Partner Karsten Langer, who also worked on the deal for Riverside, says rival companies producing a similar product in Europe are usually part of a larger parent group. Examples include Irish group Kingspan, which aside from making sandwich panels, also offers insulation and environmental protection services.

"It's the only thing [Epco does] and they do it very well," says Gaudin, who adds that "while the company might be considered as mono-product, it offers several hundred versions of this one product to its customers – with varying designs, colours, and aesthetics – where competitors would have less than a hundred".

While the GP is not directly planning to expand Epco's product range, it will keep driving innovation within its core segment of panels. Says Langer: "We have a very clear plan regarding organic growth and, on the acquisition side, it will take time to develop the appropriate strategy. But we are certainly considering it."

Eastbound
Epco, which currently focuses mainly on the Benelux region and its neighbouring countries, will now try and strengthen its presence in central and eastern Europe. It is planning on opening a new factory to bolster the group's production capacity in the region, which will also complement the existing automated manufacturing plant in the Wallonian town of Tournai.

"Riverside has made a lot of investments in that part of Europe, and its experience there will benefit the group," says Gaudin. "Epco is already providing for customers in that region, but we believe that, if we have the right resources over there, we can expand its market share in that part of Europe."

Riverside describes a long affiliation with CEE and several portfolio companies located in the region. In 2013, for instance, the GP invested in Bohemia Interactive Simulations, a US-based company providing training simulations for western military forces with offices in the Czech Republic. Another example is Budapest-based Diatron, a company producing haematology analysers acquired by the GP back in 2005 via Riverside Europe Fund III, and exited through a trade sale to Stratec Biomedical earlier this year.

People
The Riverside Company – Karsten Langer (partner); Damien Gaudin, Jeroen Lenssen (vice-presidents).

Advisers
Equity – Advocatenkantoor Parmentier (legal); Deloitte (financial due diligence); Allen & Overy (legal); Munich Strategy Group (commercial due diligence).
Vendor – NautaDutilh (legal); Abundanza Corporate Finance (corporate finance).

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