Rooms for improvement - IK Investment Partners

news
“We
UPDATE FROM INDUSTRI KAPITAL ISSUE 12 SPRING 2005
stand well-equipped to take
advantage of the high investment
activity in IK’s core markets in the
coming year.”
CEO Column, page 2
Rooms for
improvement
BUILDING ON MYRESJÖHUS’
SOLID FOUNDATION
SEA-CHANGE AT MACGREGOR
MEDIA GIANT SCOOPS UP
HITTA.SE FROM TELEFOS

CEO COLUMN
50 investments,
and more to come…
FOUR MONTHS INTO 2005 we are happy to
report that some significant events have
already taken place in our business this year.
We started off by closing our fifth fund,
the Industri Kapital 2004 Fund, with
commitments of €825 million (USD 1.1
billion), contributed by a large number of
existing as well as selected new investors.
Approximately 39 per cent of the committed
capital originates from the Nordic region,
36 per cent from the rest of Europe and the
remaining 25 per cent from North America.
IK2004 has just finalised its first investment
through the acquisition of Myresjöhus in
Sweden. This is a milestone investment as it
is not only IK2004’s first, but also IK’s 50th
investment since the start in 1989. We have
great belief in the potential of Myresjöhus.
We have also finalised three major exits
so far this year through the divestments of
Arca Systems, MacGREGOR and the final
tranche of Alfa Laval. To these final exits, we
can add two partial exits: Telefos companies
TA Teleadress and Multicom Security.
It is also very satisfying to be able to
report that some further steps have been
taken to strengthen our organisational
structure. The firm has broadened its senior
management team by adding Christopher
Masek, Partner responsible for Industri
Kapital’s French activities, and Detlef
Dinsel, Partner responsible for the firm’s
German activities to the Executive
Committee. They join Kim Wahl, Michael
Rosenlew, Gustav Öhman and myself,
bringing the total group to six senior executives.
At the same time, we have promoted
three team members to Partners. Trygve
Grindheim has become responsible for
investment activities in Denmark/Norway
while Kristiaan Nieuwenburg is now
responsible for Industri Kapital’s investment
activities in the Benelux region. In addition,
James Yates has been promoted to Partner
in his role as Head of Finance and
Administration.
These promotions reflect our firm’s
continued evolution since 1995, from a
Nordic to a Continental European private
equity firm, as well as the transition to
broader partnership governance of
the firm. This progress makes us all very
confident of IK’s long-term competitiveness,
success and future succession. We stand
well-equipped to take
advantage of the high
investment activity in
IK’s core markets and
to continue the valuecreating
work with our
portfolio.
Björn Savén,
Chief Executive,
Industri Kapital
Home
economics
Industri Kapital has staked a claim on Europe’s increasing appetite
for affordable, modular housing with its recent acquisition of
Myresjöhus, the Swedish prefabricated house manufacturer.
RECENTLY BOUGHT FROM the Swedish
construction company Skanska for just over
SEK500 million (€58 million), Myresjöhus is
one of Sweden’s leaders in the prefabricated
housing sector.
The company reported sales of SEK1.3
billion (€143 million) in 2004, has some 390
employees and – through its Myresjöhus and
Smålandsvillan brands – accounts for about
ten per cent of the €900 million Swedish
prefab housing market.
Myresjöhus had been part of Skanska for 31
years when the company took the strategic
decision to divest the business, as part of its drive
for core focus, at the end of 2003. The formal
sales process began at the end of January 2004.
“There were many potential buyers but I
quickly felt that Industri Kapital should be a
front-runner. They were very serious about the
business, highly organised and very professional,”
says Myresjöhus’ Chief Executive,
Mikael Olsson.
Just as IK was looking
closely at Myrejöhus’
management, so Olsson
and his team delved into
IK’s investment track
record and history.
“I have to say that we
could find nothing negative about the firm,
everything was entirely positive,” he says. “And
already IK has been very supportive and is full
of ideas. It is clear to us that the firm will not
be a sleeping shareholder but will have a key
role to play in our future,” Olsson continues.
IK was particularly keen to invest in
Myresjöhus due to similarities between this
opportunity and a successful previous
investment in the Swedish kitchen
manufacturer Nobia.
IK was also attracted by the company’s
strong momentum and relatively long order
sales cycle. “Because the lead time is six to nine
months this gives high visibility and comfort
with regard to the company’s projected figures,”
explains Samir Kamal who heads IK’s Swedish
investment team.
IK, with a team consisting of Samir Kamal,
Helena Stjernholm, Christina Fagerberg and
Christopher Fägerskiöld, achieved exclusivity
“The Swedish housebuilding
market is currently
at an historically low level
and is set to increase.”
on Myresjöhus in October last year and,
following exhaustive due diligence, the
transaction was signed on 21 December 2004.
The due diligence process concentrated
particularly on the commercial aspects of the
business, gauging the Nordic prefab housing
market’s strength and growth potential, as well
as the restructuring and expansion opportunities
within Myresjöhus itself.
Scope for acquisitions
The prefab housing market in Scandinavia is
not as straightforward as it might initially
appear. “Due to structural and regulatory
changes imposed by the Swedish government,
the industry declined sharply in 1992 and has
taken a long time to recover,” says Olsson.
Tightening consumer regulation in Sweden
is again raising costs, making it a difficult time,
particularly for smaller players. Says Olsson: “It
is clear that to be successful in this market you
need critical mass. It is now
time to really try to restructure
and grow this industry.”
A major strand in
Myrejöhus’ strategic plan, is
thus to add other house
manufactures to the group.
“We are certainly looking
to ‘buy-and-build’ and there is scope for
acquisitions from the consolidation of this
fragmented market alongside complementary
deals in associated activities,” says Kamal.
“There are also opportunities for significant
margin improvements at Myresjöhus through
standardising, streamlining and centralising
production and achieving synergies and
economies of scale through the company’s
growth,” he says.
A new home in two weeks
Although housing is a cyclical industry and
sensitive to interest rate rises, IK believes that
Myresjöhus also has considerable potential for
organic growth given the anticipated rising
demand for detached, high-quality, low-cost,
family homes in the Nordic region over the
next five years. “The Swedish house-building
market is currently at an historically low level
and is set to increase,” says Kamal.
2 ik news

PREFABRICATED HOMES: With a wide range of model houses, there
are good chances for Myresjöhus to capture further market shares.
NEW PARTNERSHIP: Samir Kamal and Mikael Olsson announcing the transaction.
There are also good opportunities for
Myresjöhus to capture further market shares,
particularly through its Smålandsvillan brand.
Here the company is using a building technique
with houses manufactured completely in the
factory – even down to the wallpaper, flooring
and white goods. Each house is sent to the
building site in boxes where it takes three to
five days to assemble them. After two weeks a
house is ready to live in.
With the Smålandsvillan operation growing
rapidly, Myresjöhus opened a new production
facility a year ago enabling it to produce 350
Smålandsvillan homes a year instead of 200.
“But already this is too small and we need to
find another new site,” says Olsson.
Units manufactured under the Myresjöhus
label are made with a more traditional block
system, with houses taking about four months
to build, from factory to completion.
Myresjöhus is IK’s first investment from its
new fund, IK2004, and also the first investment
for Samir Kamal who joined IK last summer.
“IK had already made its first indicative offer
for Myresjöhus when I joined the team, but
it is still very exciting to have closed my first
deal for the firm,” he says. “We are delighted
to have acquired Myresjöhus and look forward
to working with management to continue the
company’s growth and development,” he says.
Olsson says that, having been a small
part of a major organisation with multiple
interests and priorities, it is great for the
company to now be part of the IK Group.
“It means there is full focus on us, we are
not fighting for attention and we all share the
same objectives. The fact that we are also
shareholders in the business is simply a bonus,”
he concludes.
ik news 3

COMPANY FOCUS: MACGREGOR
MacGREGOR’s
new port-of-call
MacGREGOR Group is about to embark on a new phase of development after having been taken over by
Finnish engineering company Kone Corporation. Outsourcing, expansion of service offering and structural
streamlining have enabled the company to radically cut costs, boost margins and capitalise on the upturn
in the global shipping industry.
MACGREGOR GROUP (MCG), the marine cargo
handling company, has travelled a long way in
the last few years. From being a traditional,
industrial manufacturer based in northern
Europe it is now a knowledge-based, engineering
company centred in the Far East.
After six formative years in Industri Kapital’s
portfolio, MCG is now about to embark on a
new phase of development following its recent
acquisition by the Finnish engineering
company Kone Corporation for some SEK1.7
billion (€186 million).
“MCG has achieved a remarkable turnaround
over the last three years,”
says Michael Rosenlew, the IK
partner responsible for the
firm’s original investment.
“Growth has been driven by
value-enhancing measures
throughout the entire
operation, management and
organisation of the group, helped by the recent
revival in the shipping industry,” he notes.
IK acquired a 60 per cent stake in MCG –
a world leader in the provision of marine cargo
handling equipment and services to the
shipping and shipbuilding industries – from
Incentive (now Gambro) in 1998.
“A key selling point for IK was MCG’s
resemblance with one of our previous portfolio
companies, Konecranes – particularly the
growth potential on the service side of its
business,” Rosenlew says.
“We planned to reduce costs and convert
what was, essentially, an old-fashioned,
product-oriented, engineering company into
an innovative, close-to-the-customer,
service-driven business,” he says.
Outsourcing to cut costs
MCG is the largest supplier in the world for
maritime transportation parts such as hatch
covers, cranes, RoRo equipment, shipboard
elevators and escalators, galleys for cruise ships
and passenger ferries, cargo securing systems
and refrigeration systems.
However, when IK came on board the
“With extensive industrial experience and
a fresh perspective, Pettersson lost no time
in implementing a radical performance
improvement programme to reduce MCG’s
cost base and refocus the company.”
company was manufacturing from a high cost
base in Western Europe. “There was huge
potential for reducing costs by outsourcing
production to Asia,” continues Rosenlew.
Despite the opportunities, MCG’s initial
progress was slow. “The company was hit by a
downturn in the shipping industry which was
deeper and longer than expected,” Rosenlew
explains.
Gerard De Geer, the IK partner responsible
for MCG over the last three years, observes that
investing in a cyclical industry is always going
to be ‘inviting risk’.
“But calculated risk is what private equity is
all about and shipping industry cycles are
generally quite big and predictable. MCG is
also relatively late in the cycle so it knows what
is coming,” he says.
But as De Geer points out, work at a
company like MCG is booked so far ahead that
it can be difficult to ‘turn the ship’. “Long lead
times force management to plan very rigidly,
so this was not necessarily an easy business to
change,” he says.
Opinions also differed within IK regarding
MCG management’s ability to implement the
planned restructuring. Necessary management
replacements were therefore considerably
delayed and it was not until 2002 that a new
Chairman and a new Chief Executive were
appointed and MCG was able to move forward
with the restructuring plan. “By this time,
however, we had lost three valuable years,”
Rosenlew recalls.
The tide turns
Hans Pettersson (53), the incoming CEO,
had been recruited the previous year to head
MCG’s cargo division, based in northern
Sweden. He had a strong track record,
primarily within the European paper and
packaging industry.
With extensive industrial experience and
a fresh perspective, Pettersson lost no time in
implementing a radical performance
improvement programme (PIP) to reduce
MCG’s cost base and refocus the company.
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“Having already seen MCG from the inside
I knew that although it was fundamentally a
good business, certain issues needed to be
addressed urgently,” he says.
A major concern was that costs were rising
with no corresponding uplift in sales.
“The order book was low and the market
declining,” says Pettersson. MCG also had a
complex organisational structure. “Everyone
was responsible for everything or, alternatively,
no-one was responsible for anything.
There was no clear accountability. And,
with six separate divisions and six different
cultures, synergies were not being leveraged,”
he says.
After taking the helm in August 2002,
Pettersson launched the PIP in November 2002
with all major changes identified by early April
2003. “We then monitored its progress very
carefully. The key was to establish a fixed
starting point, clearly define the targets and
not go soft in between,” he says.
Pettersson also encouraged the company’s
divisions to work together as a coherent group.
“Because the PIP was a hands-on, cross-company
exercise it facilitated an ‘open view’. This
enabled people within different parts of the
group to get to know each other and has proved
very beneficial,” he says.
In simplifying MCG’s group structure
its cranes, hatch covers and RoRo division
combined to become the Dry Cargo Unit.
Meanwhile, ownership of MCG’s Kayaba joint
venture in Japan was increased from 50 per cent
CLEAR TARGETS: MCG is
the world’s largest supplier for
maritime transportation parts
such as hatch covers, cranes,
RoRo equipment, shipboard
elevators and escalators, galleys
for cruise ships and passenger
ferries, cargo securing systems
and refrigeration systems.
The performance improvement
programme, launched in
November 2002, has delivered
cost reductions ahead of
schedule.
to 75 per cent to generate more global synergies
and allow tighter management control.
As well as outsourcing its manufacturing to
partners in the Far East, MCG set about moving
its business units geographically to take them
closer to core customers. This involved relocating
the company’s head office functions from
Stockholm to Copenhagen; the management of
its Hatch Cover division from Finland to
Shanghai; and transferring its passenger ship
operations from Nantes in France to Miami in
the US where the major cruise groups are based.
Despite the difficult market conditions
which have prevailed, the PIP has so far
delivered annual cost reductions of some
SEK120 million (approx. €13 million). With
these savings ahead of target and ahead of
schedule, in early 2004 MCG embarked upon
a second programme including a supply-chain
management project designed to achieve
savings of SEK150 million in 2005.
Building the business
While stripping out cost is one thing, building
a business is entirely another. “It requires a
different mindset and different disciplines. You
can’t reduce costs and grow at the same time,”
says Pettersson.
ik news 5

ROUND-THE-CLOCK SUPPORT:
The expansion of MCG’s service
division has been very successful
and it now accounts for 25 per cent
of group turnover.
“So, it was not until we had contracted out our
manufacturing, put the cost reduction
programme in place and built a stable platform
that we could focus on growth,” he says.
Central to this has been the expansion of
MCG’s service division. This has been very
successful and now accounts for 25 per cent of
group turnover. “Service contracts are not only
relatively high-margin but also help smooth our
earnings and cash flows,” says Pettersson. MCG
operates as a global partner to its customers,
providing round-the-clock service and support
from more than 40 offices in over 25 countries.
During 2002 sales at MCG fell by 20 per
cent to SEK3.4 billion while EBITA declined to
SEK76 million from SEK114 million in 2001 on
a margin of 2.2 per cent. As the PIP progressed,
2003 sales fell to SEK3.2 billion but EBITA
increased to SEK170 million on a margin of
5.3 per cent. In 2004, MCG’s margin increased
to 6.8 per cent with EBITA of SEK216 million
and sales of SEK3.2 billion.
Further margin improvements are expected
as MCG continues to see the effects of the PIP
translate into earnings. “We implemented the
PIP swiftly and were helped by an upturn in
the market, but lead times in this industry
are still 18 months long so it takes time for
improvements to show through on the bottom
line,” Pettersson explains.
“Hans Pettersson and his team have done an
excellent job in transforming MCG. In the last
few years they have achieved what should have
been done much earlier. Ultimately it has
come good but there were three years of
uncertainty,” notes De Geer.
“Without the management delay, the
restructuring would have been completed by
2000 giving us more headroom in the lean
years of 2001–2003. By then MCG could have
reduced its debt, become slightly bigger, more
flexible and more international. The company
would have been better placed to take
advantage of the downturn in the sector
through add-on acquisitions, for example,”
maintains Rosenlew.
Even so, in 2000 MCG acquired a link span
specialist, Norent, to extend the scope of its
RoRo capabilities. That year MCG also
acquired the Miami-based cruise ship galley
“It was not until we had contracted out
our manufacturing, put the cost reduction
programme in place and built a stable
platform that we could focus on growth.”
technology specialist Atlas Marine Services to
extend its passenger ship portfolio. MCG
acquired Dubai-based hydraulic power
engineering specialist Otecnor in 2001 and, in
2002, raised its stake in MCG Kayaba.
Throughout the turnaround process
Gambro – which retained a 40 per cent stake
in MCG – was a supportive, although rather
passive, stakeholder. As to working with IK,
Pettersson says: “IK is a profit-oriented company
and it is good to work with an organisation
where the targets are clear. But we were not
only driven by IK – we pushed ourselves.”
Discussing the exit, Pettersson points out
that this is ‘always the owner’s prerogative’.
“Everyone knew the agenda and the timing is
perfect. We have completed the turnaround
and now both the market and our
order book are growing,”
he says.
Going forward, MCG will form
the marine cargo handling
division within Kone Cargotec
complementing the land-based
operations of its Kalmar and Hiab
Divisions. Ironically, MCG was part of Kone
Corporation in 1983, ahead of being acquired
by Incentive in 1994.
“Kone Cargotec will provide an environment
within which MCG can continue to develop
and grow. It is a perfect, logical fit with many
synergies and will create a strong, industrial
group. We have found a very good home,”
Pettersson concludes.
FOCUS AND CONSENSUS: “Hans Pettersson
and his team have done an excellent job in
transforming MCG. In the last few years they
have achieved what should have been done
much earlier,” says IK Partner Gerard de Geer,
far left.
Middle picture, IK Partner Michael Rosenlew.
Hans Pettersson, CEO MacGREGOR, right.
6 ik news

KNOWLEDGE DEVELOPMENT
Cross-learning and fruitful networking at first BPX seminar
The first IK Top Management Best Practice eXchange (BPX) seminar
focused on purchasing and how improved sourcing can create
significant savings and increase bottom-line results for businesses.
IN EARLY FEBRUARY, the IK Strategy, Operations
and Business Control team launched an initiative
called IK Top Management Best Practice
eXchange (BPX) seminars. The purpose with
the BPX seminars is to give top managers of IK
portfolio companies the opportunity to discuss
important topics, share experiences, get new
ideas for value creation and build useful
networks.
The first seminar focused on purchasing and
how improved sourcing can create significant
savings and increase bottom-line results for
businesses. The event, which took place at
Lejondals castle outside Stockholm, was
well-attended, with 22 portfolio company
representatives participating in the seminar.
Gerard De Geer of IK opened the seminar
by introducing the IK Strategy, Operations and
Business Control team. The team consists of IK
Partners Gerard De Geer and Christian
Salamon, Manager Tove Langlet and Portfolio
& Operations Controller Christel Retzlaff,
assisted by Angelique Källström. Gerard
thereafter continued with a short introduction
to the main topic of the day, “Strategic
Sourcing”, before handing over to Piet van den
Ban, Purchasing Manager at Continental
Bakeries, who gave the audience an insight into
Continental Bakeries’ sourcing project, “the
Dolphin program”. Some key learnings from
this project included, among other things, the
importance of creating a sense of urgency in
the project, ensuring full support for the project
among top management and the Board, as well
as involving line management and all
employees in the project.
Dynea’s Vice President Procurement, Tarje
Braaten, then continued with a presentation on
Dynea’s Category Management Project. The
EMPHASISING THE BOTTOM-LINE:
Mats Persson, Sydsvenska Kemi/Perstorp,
talked about the productivity engine.
project is a large procurement initiative
divided into several waves, with each wave
targeting a few specific cost categories. Total
cost savings are expected to be around €20
million on an annual basis. Tarje concluded
that one of the key challenges in the project is
to find the right balance between decentralised
operations and the need for global coordination
in order to achieve efficient purchasing.
Next in the line of speakers was Mats
Persson, Vice President Supply Chain,
Sydsvenska Kemi/Perstorp. Mats spoke about the
“Procurement Productivity Engine”, a successful
purchasing project run by Perstorp, with cost
savings so far of approximately €10 million.
The key challenge, going forward, is to ensure
that the improved purchasing model remains,
and is continuously enhanced, within the
organisation.
Hans Ahlinder, Chief Executive of IBX,
the leading provider of services and solutions
for efficient purchasing in Europe, was the last
speaker with a presentation on the topic
“Challenges with Purchasing Transformation
programs”.
Before rounding off the day with dinner the
attendees were divided into four groups, which
held fruitful discussions around the topics: large
procurement projects and organisational issues;
low cost sourcing; purchasing of indirect
material; and capitalise on being part of the
IK family.
According to the feedback received from
participants, the purchasing day was much
appreciated. IK’s aim is to arrange one to
two seminars per year on relevant topics
with the objective of increasing the
cross-fertilisation of experiences between its
portfolio companies.
“The idea of an IK portfolio
company network is great”
Patrick de Roey, Purchasing Manager,
CPS Color
What did you think of this Purchasing
seminar
“A great initiative!
It was beneficial to
exchange ideas
and best practices
with other
companies within
the IK Group.
Today we learnt
that, in one way or another, we all have
similar purchasing approaches and are
going through the same purchasing
processes. All companies in this group
seem to recognise the strategic
importance of the purchasing function.”
What benefits do you see
“It is good to get an understanding
of what kind of portfolio companies
constitute the IK Group and I think the
idea of an IK portfolio company network
is great. For CPS Color it is also useful
to benchmark our way of working
against models used by companies in
other industries, in order to find further
improvement areas for CPS.”
Christer Samuelsson, CEO,
Elektrokoppar
What were your thoughts on the
Purchasing day
“It was a good
and meaningful
day and it’s
helpful to get to
know companies
dealing with the
same issues as we
do within
Elekrokoppar. In the future, there may
be opportunities to team up with other
companies and do something together.
It is also positive that, in addition to the
Chief Executives, the line managers are
also invited to this type of event. They
are normally the ones who implement
change projects and who will encounter
the day-to-day problems. A day like
this is therefore a valuable source of
experience-sharing for them.”
ik news 7

FIND IT QUICKLY: Retrieval,
selection, processing, and
transfer of data on the internet
is a fast-growing business.
Publisher
Aftonbladet buys
TA Teleadress
In four years the management of TA
Teleadress and IK transformed an
anonymous part of the national telecom
carrier to the fastest growing player
on the Swedish internet scene.
IN FEBRUARY OF
THIS YEAR,
IK-controlled Telefos
sold TA Teleadress
(“TA”) to Aftonbladet
Hierta AB, the
investment arm
of Aftonbladet, a
major Swedish tabloid newspaper. Aftonbladet
paid SEK 200 million for TA.
TA’s CEO Staffan Ljungdahl, who joined in
2000, can look back on a successful four years.
TA has been transformed from an anonymous
part of the national carrier to the fastest growing
player on the Swedish internet scene.
“The cooperation with IK was great. The
TA management was given clear strategic
objectives, and the freedom to attain these
objectives,” he says.
In 2000, in preparation for its IPO, the
Swedish national telecom carrier Telia converted
its directory and catalogue business division into
Eniro – today a listed company with a market
capitalisation of SEK 12 billion.
The entities that handled directory enquiry
services (Respons 118118) and data management
services (TA Teleadress) were not included in
Eniro. Instead, together with five other Telia
service businesses, the two were bundled into
a package deal, in which IK invested in June
2001. The holding company of the seven
businesses was named Telefos.
TA’s core business is the retrieval, selection,
processing, packaging and transfer of basic data
such as addresses and phone numbers of
Swedish individuals, households, companies
and other organisations.
Ten years ago, before the deregulation of
the Swedish telecom market, there was only
one source of addresses and phone numbers
– Telia’s customer register, and only one
buyer – Telia’s catalogue business.
But things have changed since then. Today
TA retrieves data from 56 different sources, of
which 50 are telecom operators. Every year,
some 20 million pieces of data are retrieved and
“Hitta.se is a great addition to
Aftonbladet’s on-line portfolio.”
stored. The accuracy of the data is maintained
on a level above 99 percent at all times.
In 2004 TA’s operating profit amounted to
SEK 32 million on sales of SEK 148 million.
Over the last few years, TA has expanded its
business into new areas and the company
today delivers data not only to directory enquiry
service providers, but also to telemarketing and
direct mail companies.
“We are only just starting to explore the
opportunities of these markets. The potential is
significant,” says Ljungdahl.
In August last year TA took yet a step in its
business development, when the company
launched its web-based search engine Hitta.se.
On this site users can look up almost any
Swedish person, household or company, and
get correct data within seconds.
The site was an immediate success. It went
from nothing to number 16 in the ranking of
Sweden’s most popular internet sites, with over
1 million unique visitors per day in December
2004. The trend continues.
In its new context TA will be able to
leverage its success with Hitta.se. Aftonbladet.se
is Sweden’s most frequently visited site,
excluding search engines like Google and
MSN. Aftonbladet Hierta also owns and
operates the used-car site bytbil.se and the
auction site Blocket.se – both leaders in their
respective segment.
“Hitta.se is a great addition to this portfolio.
All four sites will help attract traffic to each
other. I am so happy that we are now in a
context where we can fulfil our true potential –
much more fun than being sold back to Eniro,”
says Staffan Ljungdahl.
“Management was
given clear strategic
objectives and the
freedom to attain
them,” says Staffan
Ljungdahl, CEO of TA
Teleadress.
8 ik news

Arca + Schoeller = a perfect package
Industri Kapital has sold Arca Systems, the European market leader
in products and systems for materials handling, to the Dutch group
Schoeller Wavin Systems for approximately €190 million.
THE COMBINED GROUP, Schoeller Arca Systems,
will be the global market leader in plastic
returnable packaging for material handling,
with aggregate annual sales of approximately
€520 million and 1,750 employees.
“The combination of Arca and Schoeller
Wavin is a perfect fit, the companies are very
complementary both in terms of products and
geography. Together we will be able to provide
our customers with a broad product offering
and we will increase our overall global
presence,” says Wiking Henricsson, CEO of
Arca Systems, who will now become Vice
Chairman of the Board of the new company.
Since Industri Kapital’s acquisition of Arca
in 1998, the company has successfully
established a platform for growth by developing
new and innovative products and systems in
close cooperation with its customers. The
company has increased its efficiency and
reduced costs through significant production
restructuring and operational reengineering
whilst non-core businesses have been divested.
“For Industri Kapital’s investors the Arca
investment has been highly successful with a
return of over 3 times the original investment.
The company has turned losses into good
profitability since our acquisition whilst a
number of exciting products have been
launched by Arca during this time.
Wiking Henricsson and his team have done an
extraordinary job in firmly positioning Arca as
the leading materials handling company in
Europe and North America,” says Christian
Salamon, Partner of Industri Kapital.
Arca’s sales have grown from approximately
€145 million (like for like) in 1997 to
approximately €220 million in 2004. During
the same period the operating margin (EBITA)
has turned from negative to approximately
7 per cent.
PERFECT FIT:
The companies are
complementary both in
terms of products and
geography.
Healthy slice of Alfa Laval returned to the Stockholm Exchange
In early March, IK2000 sold its
remaining 8.5 per cent stake in
Alfa Laval. The shares were sold
at the price of SEK 116.5 per
share, bringing proceeds of
approximately €121 million to
the fund.
INDUSTRI KAPITAL acquired a 62.2 per cent stake
in Alfa Laval in August 2000, with the previous
owner, Tetra Laval, retaining a minority stake.
Since then Alfa Laval has carried out a significant
change process which focused on improving
operational and financial performance. This has
resulted in substantial cost reduction and
margin improvement, while supporting sales
growth. Alfa Laval has also made selected
strategic add-on acquisitions. Alfa Laval was
listed on the Stockholm Exchange in May 2002
at the listing price of SEK 91 per share. At the
time of listing, the Industri Kapital 2000 Fund
retained a 26.9 per cent stake in Alfa Laval,
FRESH SOLUTIONS: Alfa Laval offers gentle and careful processing for all industrially produced beverages.
which was reduced during 2003 and 2004.
In a comment to the final exit of Alfa Laval
Christian Salamon, Partner of Industri Kapital,
said: “It has been exciting to work with Alfa
Laval and its management over the last few
years, having been part of re-establishing the
company not only as a world-class company but
also as a world-class performer. We are also
happy to have returned this “classic” Swedish
company to the Stockholm Exchange.”
ik news 9

PORTFOLIO COMPANY NEWS
CEVA acquires the leader on the Turkish veterinary market
Management changes
CEVA SANTE ANIMALE (CEVA)
has acquired DOGU ILAÇ
VETERINER ÜNRÜNLERI (DIF),
the leader on the veterinary
market in Turkey.
With turnover of over €15 million,
mainly in the ruminants market
segment, DIF gives CEVA a
strong position on a strategic
market. The merger will allow the
VSM Group acquires Cactus Punch Inc.
VSM Group has acquired
US-based Cactus Punch,
the premier supplier of
machine embroidery designs
to consumers and industry.
The acquisition is strategically
important for VSM in its
endeavours to increase the
development of the embroidery
segment.
VSM Group has marketed high
end embroidery sewing-machines
since 1994. These machines
allow the users to create their
own embroidery pattern on
garments or textiles. The target
group consists of dedicated
Turkish laboratory to extend its
product range and technical
expertise by giving it access to
the CEVA Group’s innovation
and development capacities.
The two companies have been
partners since the creation of
CEVA SANTE ANIMALE, and DIF
is the N°1 distributor of CEVA’s
products in Turkey.
CEVA develops, manufactures
sewers who demand the most
advanced sewing-machines. The
acquisition of Cactus Punch
increases VSM’s possibilities to
fulfil its clients’ demands in terms
of advanced embroidery designs.
VSM Group develops,
produces, markets and sells
home sewing-machines and
accessories. With its global
brands, Husqvarna Viking and
Pfaff, the company is one of the
world's leading players in the
industry. It sells some 500,000
sewing-machines annually,
corresponding to a turnover
of SEK 2.4 billion. VSM Group
is owned by IK1994.
and distributes animal health
products to a variety of clients,
e.g. veterinaries, pharmacists/
wholesalers, industrial breeding
farmers. In addition, CEVA
has a small animal nutrition
business. The company, which
is controlled by IK2000, had an
approximate turnover of €240
million in 2004.
The Board of Consolis has
appointed Mr Arto Metsänen
(48), Executive Vice President
of Consolis Oy Ab from 1 April
2005. In May 2005, after an
introductory period, Mr
Metsänen will take over as
President and CEO of Consolis.
Mr Bengt Jansson, current CEO
of Consolis, will take care of
special duties assigned by the
Board until his retirement in
May 2006.
Mr Arto Metsänen has worked
for Tamrock since 1982. For the
last one and a half years Mr
Metsänen has been President
of Sandvik Tamrock.
The Board of Directors of
Oriflame Cosmetics has
appointed Magnus Brännström
new Managing Director and CEO
of the company, succeeding
Sven Mattsson. Magnus
Brännström, 38, has been
employed by Oriflame Cosmetics
since 1997. Since 2001 he has
served as Regional Director for
CIS and Asia, prior to which he
was Managing Director for
Russia and Regional Director
for CIS.
Perstorp strengthens position within feed additives
and builds new propionic acid plant
Elektrokoppar makes strategic add-on
Perstorp AB has signed an
agreement to acquire Franklin
Holding BV with subsidiaries.
Franklin, which is based in the
Netherlands, is active within
feed additives based on
organic acids. Franklin is a
mid-sized company with
a wide distribution network.
“The acquisition will give Perstorp
a comprehensive product portfolio
and strengthen our position in the
fast growing organic-acid feed
additives segment. The fast
growth is driven by the ban on the
use of non-prescribed antibiotics
in the EU that will be enforced
from January 2006,” says Paul
Österberg, Business Unit Manager
Feed and Food, Perstorp. Take
over is expected to take place
during first quarter of 2005.
The parent company of
Perstorp, Sydsvenska Kemi AB,
has furthermore decided to build
a new propionic acid plant at the
Perstorp Group’s oxo site in
Stenungsund, Sweden. The new
plant is expected to be operational
from the second quarter of 2006.
Sydsvenska Kemi is the parent
company of Perstorp, the leading
company within its niches of the
specialty chemicals market and
materials technology. Perstorp
has annual sales of approximately
SEK 6 billion, and employs
around 2,000 people. Sydsvenska
Kemi is controlled by IK2000.
Elektrokoppar has signed an
agreement to acquire a Polish
subsidiary of NKT Cables.
The business, NKT Cables
Sp.z.o.o, is located in
Czechowice-Dziedzice, Poland.
NKT Cables Sp.z.o.o. is a manufacturer
of enameled winding
and bare copper wire. The
business employs approximately
123 people and had a turnover of
approximately €55 million in 2004.
The acquisition strengthens
Elektrokoppar’s position as one
of the leading winding wire
companies in Europe and also
permits the company to better
support its customers in the
growing markets of Eastern
Europe. The acquired business is
expected to benefit from the
transfer of best practices and an
increased focus on the winding
wire business.
Elektrokoppar is one of the
leading winding wire and wire
rod manufactures in Europe. The
company supplies its products
mainly to the electric industry.
Elektrokoppar employs 450
people and had an approximate
turnover of SEK 3.5 billion (€390
million) in 2004. Elektrokoppar is
controlled by IK1997.
10 ik news

PORTFOLIO COMPANY NEWS
PERSONNEL
Dynea invests in formaldehyde production in Vietnam
and expands capacity in Kazinbarcika
The Board of Directors of
Dynea has approved a plan to
build a formaldehyde plant at
the site of Dynea Vietnam in
Dong Nai Province.
Dynea’s operations in Vietnam
were established in 1996.
Today Dynea is the market and
technology leader in the local
panel-board resin business. The
existing resin plant is running at
close to maximum capacity and
with the new formaldehyde
production capacity, Dynea
Vietnam will become the most
competitive supplier in the local
market. The panel-board resin
market in Vietnam has developed
rapidly during the recent years.
Future growth is expected through
the developing furniture industry,
which serves both the domestic
as well as export markets.
Dynea is also expanding its
capacity in Europe, for example
in Hungary where Dynea and
BorsodChem are investing in
increased production capacity at
their jointly-owned company
BCKC Formalin Kft in
Kazinbarcika. The plant,
based on Dynea’s world-class
formaldehyde process
technology, will double its
capacity to 120,000 tonnes per
year by the end of 2005.
“This new investment in
Hungary is an indicator of our
commitment to our customers in
the rapidly growing regions of
Europe – we can now meet their
needs even faster and more
efficiently than before,” says
Roger Carlstedt, President and
CEO of Dynea International Oy.
Dynea is a global provider of
superior adhesion and surfacing
solutions. Dynea has combined
revenues of approximately €1.0
billion and some 3,200 employees.
Dynea is controlled by the IK1997
and IK2000 funds.
NEW RECRUITS:
Alice Bayliss
British. Investor Relations
Coordinator.
Based in London
PROMOTIONS:
IK has broadened its senior
management group by adding
Christopher Masek, Partner
responsible for IK’s French
activities and Detlef Dinsel,
Partner responsible for the
firm’s German activities to IK’s
Executive Committee.
Promoted to Partner:
Kristiaan Nieuwenburg
(responsible for Benelux)
Trygve Grindheim
(responsible for Denmark/Norway)
James Yates
(responsible for
Administration & Finance)
Eltel Networks strengthens its position in Northern Europe
TRANSACTIONS
Just before Christmas, Eltel
Networks expanded its
operations to a new region
as it acquired KE Partner, a
subsidiary of Copenhagen
Energy in Denmark.
KE Partner has a turnover of €60
million and 430 employees. Eltel
Networks will be the utility
contractor and service provider
in electricity, district heating, gas,
water and sewerage as well as
telecommunication networks in
the Copenhagen region.
“We are excited about entering
this new region and being able to
offer our unique services and
Multicom Security sold to GMT Communications Partners
Telefos has sold one of its
two remaining businesses,
Multicom Security, to GMT
Communications Partners
Limited for €60 million.
Multicom Security supports
companies in high-tech
industries by producing and
developing their information,
documentation, marketing
material and test processes in
such a manner that products,
services and systems are used
optimally in a wide range of
target groups. Following the sale
of Multicom and TA Teleadress,
only Eltel Networks remains
within the Telefos Group. Eltel
Networks consists of Eltel
Networks and Swedia Networks.
In a comment to the sale of
products to a new clientele.
The acquisition, as well as the
partnership with Copenhagen
Energy, is in line with our
business strategy of entering
new markets and operating close
to our customers, offering local
solutions to them,” says Tuomo
Rönkkö, CEO of Eltel Networks.
Eltel Networks is specialised
in design, construction and
maintenance of electrical and
telecommunications networks.
The group has annual sales of
approximately €600 million and
employs some 5,200 people.
Eltel Networks is majority
owned by IK2000.
Multicom Security, Christian
Salamon, Partner of IK said:
“We are pleased with
Multicom’s development during
our time as owners. The
company has shown steady
profit improvement and has
increased its product offering
and customer base for example
through the strategic acquisition
of the Mobitex network.”
Promoted to Deputy Director:
Dan Soudry
Helena Stjernholm
Promoted to Associate Director:
Remi Buttiaux
Klaus de Vibe
Kristian Kemppinen
Anders Petersson
Caspar von Meibom
CALENDAR
End of May
31 March 2005 Reports
distributed to investors
14 June
Investor Advisory Committee
Meeting, Stockholm
15 June
Industrial Advisory Board
Meeting, Stockholm
Mid July
Next issue of IK News
ik news 11

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IK News is published three times a year by Industri Kapital Limited, Brettenham House, 5 Lancaster Place, London WC2E 7EN, England. © 2005 Industri Kapital Limited.
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