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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