Litorina, Bragnum back Nordic Surface Group

The deal comes less than a year after Capillar invested in the six companies, acquiring a stake of just over 50% alongside the companies' management, and creating a new entity called NSG.

Litorina and Bragnum will own a majority stake in the company, though the former will have a controlling stake, and the latter on-boarded for its expertise in the building service industry. 

The management and local entrepreneurs will retain a large minority stake.

Litorina deployed equity from its fifth fund Litorina V, which held a final close in August 2018 on SEK 3bn, and has so far made seven platform investments. The GP said the vehicle still has room for a few more platform investments.

Litorina partner Mattias Letmark told Unquote that the GP had followed the painting and decorating industry for quite some time and described the process – which launched in Q4 2020 – as swift.

He said that, while the companies under NSG had initially seen a short-term negative impact from the pandemic, they had been helped by their strong market positions and relationships with customers. 

The deal was partly financed with bank debt. Letmark said the leverage was low because the team wanted "some flexibility and room for further expansion, and will work with the bank to increase leverage overtime".

The GP's focus will be on accelerating growth and will pursue an active buy-and-build strategy. Letmark said: "The value creation is very much in supporting the team and management to continue the consolidation in the fragmented market in Sweden, and, at the same time, drive operational excellence."

The GP's initial focus for add-ons will be in Sweden, and it expects to sign a new add-on in a few weeks' time, with a second deal at the due diligence stage, and a few more at very early stages. Letmark said: "The strategy is to only buy the best, the local market leaders."

The transaction is subject to competition authority approval and is expected to close in Q1 2021.

Company
Founded in 2020, NSG consists of six companies offering painting and other surface products such as flooring, tiling, astroturf and facade finishing. The group has sales of SEK 1bn (€98.8m) and employs more than 800 people in central and southern Sweden.

The companies that make up NSG are Stoby Måleri, Ekbladhs Måleri, Bruske Måleri, Målerimetoder, Vaksala Måleri and B Krafft Måleri. 

People
Nordic Surface Group – Jonas Danielsson (CEO).
Litorina – Mattias Letmark, Paul Steene (partners).
Bragnum Invest – Lars Österberg (partner).

Advisers
Vendor – Vinge (legal).  

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