Falck

Investment summary

Fund: Fund V
Investment theme: Buy-and-build, operational improvement and growth acceleration
Investment date: December 2004
Exit date: July 2011


Business description

Falck was established in 1906, and its operations have been involved in prevention, rescue and assistance for more than 100 years. Falck is a Nordic-based organisation which has achieved rapid international growth in recent years. Today, the company is the Nordic market leader in Assistance, the Danish market leader in Health, the Europe market leader in Emergency and the global leader in Training. Falck has activities in 31 countries on five continents and has more than 23,000 employees (2011). 


Background

In the spring of 2004, it was announced that Group4 intended to list Falck separately on the Copenhagen Stock Exchange.

On the back of the announcement, Nordic Capital initiated discussions with the CEO of Group4 regarding a potential acquisition of Falck but eventually Group4 decided to separately list Falck. 

Group4 had managed the business that post-listing constituted Falck as separate national businesses with no Managing Director responsible for its combined activities. Consequently, once listed, Falck and its management lacked a recognisable track record and investors had difficulty understanding Falck. In light of this, Nordic Capital reassumed discussions with the Chairman of the Board of Falck and in response he initiated a focused auction process with a few select bidders.

Nordic Capital delisted Falck from the Copenhagen Stock Exchange on December 23 2004, less than six months after its separate listing.

 


Investment rationale

Falck had a number of attractive investment characteristics; a unique business model built on a strong brand, a unique asset network supporting the various service offerings as well as very professional employees. 

It enjoyed a strong regional market position within automotive assistance, the provision of ambulance and fire fighting services and, rescue and safety training to maritime and offshore sectors.

Falck also had a strong platform for add-on acquisitions and a unique business model that could be adopted in other markets.

The investment thesis was a combination of (i) identification of an undermanaged company; and (ii) a view that a changed strategic focus can accelerate growth and expand profit margins. Since Group4 had managed Falck as separate national businesses, the potential for capturing organic growth and add-on acquisition opportunities in a structured and efficient manner had been neglected. At the time of acquisition, Falck had a lot of untapped potential.

 


Value added

By applying a buy-and-build strategy coupled with a focus on a strong organic growth, Nordic Capital supported Falck in implementing its own strategy for international expansion and product offering expansion.

Nordic Capital actively drove the strategic agenda throughout the six-and-a-half year ownership period. During this time, significant value was created, including an accelerated growth platform, both organically and through strategic acquisitions, and a significant margin improvement. Also, Nordic Capital supported specific initiatives within each of the four business areas - assistance, emergency, training and healthcare.

 


Exit

The formal decision to initiate the exit process on Falck was taken in the autumn of 2009. A "one track" IPO process initiated in the beginning of 2010 with targeted launch in Q2 2010. Process was put on hold due to a sudden sharp rise in equity market volatility in May 2010 caused by the economic issues surfaced in Greece, Portugal and Spain.

The owners were approached by the Lundbeck Foundation stating an interest in acquiring a "strategic stake" in advance of IPO on the basis of limited due diligence, and an agreement to sell of 36% of the shares in Falck was reached in December 2010.

On April 28 2011, Nordic Capital entered into an agreement with an owner consortium led by the Lundbeck Foundation to sell its remaining shares in Falck. On July 13 2011, the transaction was completed and proceeds received.

 

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