SHS sells Puracon to IK-backed Klingel

The deal is intended to expand Klingel's offering for medical technology customers, building on the synergies shared by both companies.

The deal is Klingel's third add-on during IK's investment period. The company now employs 600 staff, compared with 300 employees in 2018.

IK acquired Klingel in 2018 via an SBO from Halder, investing via IK VIII, which held a final close in 2016 on €1.85bn and deploys equity tickets of €50-150m. Debt was provided by a consortium of LBBW, SEB and Siemens.

SHS acquired a majority stake in Puracon in 2015. The GP invested via SHS IV Fonds, which held a final close on €125m in May 2015, exceeding its €100m target. The fund makes both minority and majority investments, focusing exclusively on life sciences and medical technology.

Asked about the investment in Puracon, Sascha Alilovic, managing partner at SHS, told Unquote: "We knew Puracon for a while before we invested, we liked the positioning of the company, including the fact that it was part of the process chain for sterile implants, although we were not yet convinced about the financial profile at the time.

"Puracon filed for insolvency in 2015, and we were able to invest within around four weeks, acquiring it from the administrator. We were able to keep the company's validations business and to convince the customers to stick with us."

SHS took steps to ensure the company's growth, Alilovic said: "We brought in a new management team, who did a good job in turning around the company, stabilising it and amending the culture, reducing the dependency on single customers. The company has seen growth of 25-30% per year, as well as double-digit EBITDA."

Asked about the timing of the exit, Alilovic said: "We had some inbound interest, mostly from strategics with PE sponsors, who saw the company as being ideally positioned to add innovation and profitable growth. We also had inbound interest from PE." The business saw interest from companies in the US, France and Germany.

SHS expects to announce more exits in the coming months, Alilovic said, having seen significant interest. "This is our third exit of the year – we have signed our fourth one and are waiting for the closing conditions. We also have some ongoing exit discussions, some of which are quite far advanced. A lot of PE-backed companies are looking at our portfolio for add-on opportunities. So we could have another exit in 2020, and more to come in H1 2021."

"We have done five platform investments in 2020, and we are now looking to invest in three to four Mittelstand growth companies," Alilovic added. "We are looking to raise the next fund and might start this at the end of 2021." The GP is currently deploying equity via SHS V Fonds, which held a final close in July 2019 on €130m.

Previous funding
In August 2013, BayBG acquired a minority stake in Puracon, with the intention to act as a silent partner for the business.

Company
Founded in 2003 and based in Rosenheim, Puracon cleans, packages and sterilises medical products, focusing on implants and instruments. The company reports revenues of less than €10m and has 70 employees.

People
SHS – Sascha Alilovic (managing partner).
IK Investment Partners – Anders Petersson (partner).
Puracon – Ruth Gessner (managing director).
Klingel Medical Metal – Ralf Petrawitz (CEO).

Advisers
Vendor – Orrick (legal); Carlsquare (corporate finance).
Equity – Renzenbrink & Partner (legal, tax); Ebner Stolz (corporate finance).

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