CHRISTOPHER MASEK AND DETLEF DINSEL: - IK Investment ...

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NEW INVESTMENT DOEDIJNS INTERNATIONAL New investment: DOEDIJNS INTERNATIONAL’S eastern horizons DOEDIJNS INTERNATIONAL has add-on acquisitions at the top of its agenda as it seeks to strengthen its global product and service offering, positioning itself as a preferred supplier to major clients seeking local support worldwide. The Dutch engineering company Doedijns International has barely paused for breath since IK Investment Partners (IK) acquired a majority stake in September this year, with active plans to extend its operations overseas – notably in Asia and the Middle East – organically and through an add-on acquisitions programme. “We are less concerned about the impact of the recession in the West and more by the speed at which our client base is becoming focused on emerging economies in the East,” says Doedijns’ Chief Executive, Juul IJzermans. “With the axis shifting, we need to increase our international offering, particularly in Asia and the Middle East, to meet this growing global requirement,” he says. “Emerging markets present a great opportunity for Deodijns and there is an element of necessity, nothing acute or pressing, but if you have leading products in global sectors then you do need to have worldwide support for clients,” comments IK Deputy Director Remko Hilhorst. With IK’s international experience and expertise, IJzermans is delighted with the new partnership. “We have technology leadership in our core sectors and are on the verge of expanding in a serious manner internationally. However, to develop these strategies successfully, we do need IK’s help and support,” he says. From IK’s perspective, Doedijns is a highly attractive investment with its leading position in a number of core markets, proprietary technologies and strong fundamental growth outlook. Likewise, however, a key element is the opportunity for the firm to use its strategic skills to work with management to transform Doedijns into a globally-diversified niche engineer in selected growth markets. “Doedijns is a relatively small company but it is modern, innovative, has huge growth potential and will become an IK ‘sweet-spot’ investment “We are less concerned about the impact of the recession in the West and more by the speed at which our client base is becoming focused on emerging economies in the East.” quite quickly,” remarks Remko Hilhorst. “The company is already well-positioned through its product portfolio in attractive markets with real demand from customers to expand internationally,” he says. “Doedijns also has a strong, dynamic management team with vision, ambition and a proven track record. Beyond overall market growth, the company also benefits from a diversified competitive landscape with exposure to certain key market trends which play to its product range and system engineering strengths,” he continues. Doedijns has existing operations in the netherlands, the UK, Belgium, France, Malaysia and Dubai where it opened a full service office in June this year. The intention is to establish a strong presence in key global end-market ‘hubs’ - such as Asia, the Middle East & Africa and North America - offering clients local production and assembly possibilities and access to its products and services portfolio. Juul IJzermans, CEO Close relationship with key customers Founded in 1879, Doedijns has some 280 employees and is a leader in hydraulics, instrumentation, pneumatics and controls. It serves a variety of industries including oil and gas, maritime and dredging and high-end machine building. The company is already recognised for systems knowledge, customisation and repair capabilities and has a very close relationship with key customers, including continuous co-development of customised solutions. Further tightening of these relationships is anticipated through increasing maintenance agreements. “The key to success is continuous technological development, quality control and customer interaction,” notes IJzermans. “Here, we particularly add value by being a true systems integrator - combining in-house customer specific engineering and manufacturing with knowledge and distribution of related components,” he says. 12 – IK NEWS 2/11
Doedijns has four proprietary technologies - oil filtration systems, temperature sensors, compact actuators and sampling systems – and these will continue to be important drivers for organic growth with Doedijns set to develop additional differentiated products through an increased commitment to R & D. Optimal ownership outcome Doedijns was put up for sale earlier this year by its previous majority shareholder, Friesland Bank Investments (FBI), which had held the stake since 2005. The management team, as minority shareholders who would be staying with the business and reinvesting, wanted not only a sensible price for their equity but also, more importantly, to secure the partner best able to support their growth plans. “I really believe in this company and its potential. Retaining our independence and yet still having the financial and operational support to fulfill our ambitions made private equity the optimal outcome for us,” says Juuls IJzermans. With turnover expected to exceed €65 million in 2011 with EBITDA of around €8 million, the aim is to double the size of Doedijns and build a leading, global niche engineering solutions provider. Under FBI’s ownership, Doedijns continued its evolution from general components distributor to value-added engineering solutions provider and completed three small add-on acquisitions. IJzermans is expecting IK to be more actively involved than its previous partner. “We need IK to give us good advice and support, particularly in the Far East,” he continues. Of particular benefit will be the know-how IK gained through the strategic merger of its portfolio company Vistra Group with Offshore Incorporations Group – an Asian corporate and fiduciary services business – earlier this year. “We learnt a great deal during that transaction - really practical things – gained a much better understanding of the Asian market and established a valuable network of contacts,” says Hilhorst. IK also has extensive investment experience in the industrial sector with transactions including the Swedish engineering company Alfa Laval; the Polish railway buffer business Axtone; Flabeg, the German automotive business; Magotteaux, the Belgian industrial supplier; the German fire protection company Minimax; Schenck process, the Germany industrial solutions company; and Sport Group, the German artificial sports surfaces business. “Doedijns also has a strong, dynamic management team with vision, ambition and a proven track record. Beyond overall market growth, the company also benefits from a diversified competitive landscape with exposure to certain key market trends which play to its product range and system engineering strengths.” Remko Hilhorst, Deputy Director, IK Moving from ‘wholesale’ to ‘project’ engineering Doedijns is already a well-managed company with a strong finance function, systems and operations, but IK will always identify scope for further financial and operational improvements. Specifically, it is now looking to support Doedijns in updating its organisational model from ‘wholesale’ to ‘project’ engineering - in terms of sales, purchasing, pricing, cost allocation and working capital - and realigning the business by key end-user segments with the centralisation of group procurement set to achieve greater purchasing efficiency. IK also intends to help Doedijns acquire niche engineering businesses to compliment its current product offering and to use the scale of its global sales network to crystallise organic growth potential, increasing the effectiveness of the company’s sales force and developing sales from new products. On the recession-front, Doedijns’ end-markets are unavoidably cyclical with its shipbuilding markets hit particularly hard by the downturn last year. However, its end-market cycles are phased differently which supported its 2009-2010 earnings, mitigated further by regional diversification. In addition, Doedijns still makes a significant proportion of its revenues from distribution and, because it is driven by repairs and maintenance, this has proved to be more resilient during the downturn. Although IJzermans is keen to escape the economic cloud dogging West markets, as eastern horizons beckon he acknowledges that the world remains a big place and that it is important to make the right choices. “There is so much to do and we are very excited about the opportunities, but we must be very clear about which markets to prioritise,” he says. “With our unique technologies we recognise the need to operate on a global scale and are actively taking the business to other parts of the world. But above all, our job is to ensure that our route to market is maintained,” IJzermans concludes. IK NEWS 2/11 – 13
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Page 17 and 18: INTERVIEW XXXX XXXX WHAT THE FUTURE
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Page 23 and 24: Interview with MIKAEL STERNBERG AS
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CHRISTOPHER MASEK AND DETLEF DINSEL: - IK Investment ...

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