Summa taps SEK 4.5bn maiden fund to acquire Lin Education

Summa tapped its SEK 4.5bn private equity fund Summa Equity Fund I, which held a final closing on its hard-cap after less than a year on the road. Speaking to unquote" when the firm launched, co-founder Reynir Indahl said Summa's investment strategy is thematically focused, making investments in companies with growth in excess of the general economy's, and business models driven by resource scarcity, energy efficiency or changing demographic trends, with a data and digital angle.

The buyout of Lin sees founder and CEO Josef Lind reinvest a majority of his proceeds from the buyout alongside Lin's management team to retain a minority stake in the company. Summa's lead partner on the transaction, Tommi Unkuri, told unquote" it was sourced proprietarily after approaching Lind through common contacts. Unkuri said Lin had not been for sale at the time, but that founder Lind eventually decided to sell his majority stake to Summa, in part due to the firm's investment philosophy.

As a provider of hardware, digital tools, and learning, development and digitalisation training, Lin falls into the category of changing demographic trends with a strong digital aspect, the GP said in a statement. Summa expects its acquisition to benefit from the trend of increasing digitalisation in the education sector.

Unkuri said the GP was attracted to Lin's position in the market for digitalisation of learning and education, which has seen a lot of development in Sweden recently. Summa plans to grow Lin organically and through acquisitions, though Unkuri said organic growth is expected to be the most important avenue of expansion.

The company is not considered a traditional buy-and-build case for Summa, but Unkuri said geographical and product-driven add-on acquisitions would be considered. According to Summa, Lin is currently a market leader in Sweden, and domestic growth will be the initial focus. However, Unkuri said that while Sweden is ahead of many other European countries in implementing digital learning services in its education system, the trend is global and it is possible Lin will expand outside its native Sweden as well.

Summa acquired a stake of 60-70% in Lin, in a deal featuring a conservative amount of all-senior debt and a revolver provided by Nordea.

The buyout is the third penned by Summa Equity Fund I, after buying Nordic waste collection and sorting business Sortera from Norvestor, and Swedish energy monitoring and control systems maker eGain from investment company Ceder Capital, both in April 2016. Summa's fund aims to acquire stakes of 80% or more in target assets, committing equity tickets of €10-50m per transaction.

Company
Headquartered in Göteborg, Lin is a provider of IT hardware and digital services to the Swedish school system.

The company was founded in 2007 and provides tablet, laptops and computers, as well as digital content, and training and supplementary services for digital learning environments.

Employing 90 people, the company has five offices across Sweden and generated revenues of SEK 569m in 2016, according to Summa. Publicly available information shows Lin's holding company Linfre Education had revenues of SEK 511.7m in 2015 and SEK 436.5m in 2014, with EBIT of SEK 19.8m in 2015 and a loss of SEK 3.5m the year before – the only year it presented a negative EBIT since it was founded. Unkuri said the publicly available EBIT figures reflect significant non-recurring costs, compared to the company's EBITDA.

People
Summa Equity – Tommi Unkuri (lead partner).
Lin Education – Josef Lind (founder, CEO).

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