Deal in Focus: Ufenau reaps 6x on NRW sale

Swiss lower-mid-cap buyout house Ufenau Capital Partners sold NRW Building Technology to Bregal Unternehmerkapital in June.

Financial details were not disclosed but a source close to the deal told unquote" the deal values the business at around €120m based on projected EBITDA of €20m from €155m in sales.

This represents a 6x money multiple for Ufenau, which acquired the company for an enterprise value of €20m based on €4m EBITDA from €50m in revenues in 2014.

Bregal is currently investing via its €550m DACH fund, Bregal Unternehmerkapital, which makes investments of between €30-150m for majority and minority stakes in German companies with EBITDA of €5-30m.

We originally planned on a five-year holding period but ended up achieving all of our goals much quicker than we thought" – Ralf Flore, Ufenau Capital Partners

The sale marks the end of a rapid buy-and-build strategy for Ufenau, which the GP sees as its speciality. "We do purely buy-and-build," explains Ufenau managing partner Ralf Flore. "We look for decent-sized profitable platforms with €10-150m sales and good potential for growth by acquisitions."

NRW completed five bolt-on acquisitions under Ufenau's leadership and the pace of the dealflow surprised even the GP. "We originally planned on a five-year holding period but ended up achieving all of our goals much quicker than we thought," says Flore. The bolt-ons were all companies within a 300km radius of NRW's headquarters including HSV Kälte-Klima-Lüftungstechnik, Wölpper, Issler, DL-Technik and Eberl.

Bregal plans to continue and accelerate this strategy as well as recognising the potential for good organic growth in the sector, according to a press release. The company's organic growth so far has been partly due to the favourable building environment in Germany as well as the growing complexity involved in smart energy systems and green building.

However, Ufenau also oversaw the modernisation and digitalisation of the company. "We set up a new reporting system, addressed issues of corporate governance and made sure all parts of the business were interconnected," says Flore. This involved the soft integration of the bolt-on acquisitions and the introduction of online tools for NRW's servicemen to increase capacity and transparency.

Keeping it in the family
Ufenau was originally introduced to the company to solve the succession issue with its 72-year-old owner Hans Rehms. Rehms sold his stake at this stage but his nephew Heinz-Josef Rehms became CEO and took a 10% stake in the new company.

The GP (then known as Constellation Capital) acquired the company (then known as Rehms) for an EV of €20m in November 2014. Ufenau used capital from its fourth fund, which is now fully invested. The company employed 250 employees at the time and reported €4m in EBITDA from €50m in sales.

The management team has reinvested in Bregal's buyout. Flore explains that a sale to a strategic investor was not really an option for them: "The management team has a strong track record and wants to continue with the growth it has overseen under our ownership. For this reason we decided quite early on that another financial investor made the most sense." He adds that Bregal approached Ufenau early in Q4 of 2016 and strategy meetings between the potential acquirer and management were facilitated at an early stage.

Ufenau still held a small auction process as a backup, but Bregal ended up fulfilling all of the conditions laid out and acquiring the company.

Headquartered in Borken, Germany, NRW has seven production plants across the DACH region. The business focuses on buildings refurbishment and provides installation services for heating, ventilation, cooling, sanitation, measurement and control systems for commercial clients, including hotels, offices and residential buildings. The company employs 600 people and projects EBITDA of €20m from €155m in sales in 2017.

People
Ufenau Capital Partners – Dieter Scheiff, Ralf Flore (managing partners).
NRW Building Technology Holding – Heinz-Josef Rehms (CEO).

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About the author

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• Oscar Geen

Oscar Geen joined Unquote in 2017 as a reporter, focusing on the private equity market in the DACH region. He was later promoted to senior reporter and is now news editor, overseeing the news content on unquote.com. He previously worked for Unquote sister publication Creditflux as a researcher, focusing on the CLO market.

Oscar graduated from the University of Kent with a Master's degree in political theory in 2015 and spent a year at the Freie Universität in Berlin as part of his undergraduate programme.

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