IK Investment Partners’ four-year investment in Belgian engineering firm Magotteaux is a shining example of the breadth of private equity’s added value. IK brought capital for R&D and investments;strategic analysis and advice; consultation on expansion channels – in both new geographies and market segments; improved governance; stronger financial performance; and much more besides.
In addition to providing a great return to investors in IK’s sixth fund, the investment built Magotteaux into a global leader in its field, created jobs and took the business into high-growth emerging markets. In 2011, Magotteaux moved on to the next stage of its development under the stewardship of Sigdo Koppers, a Chilean mining business.
In partnership with IK, we have been able to transform the business and are now firmly established as a worldwide leader.
Bernard Goblet CEO, Magotteaux
What did the business need?
- Requirement to add business performance orientation to engineering culture
- Investment in R&D and maintenance projects
- Support for expansion into new geographies
- Strategic guidance on where technology could be applied in other markets
How did private equity backing create lasting value?
- Lowered sourcing costs, reduced working capital and improved on-time delivery through operational excellence plan
- Major investment programme in both core Belgian business and overseas
- More than 120m euro spent on R&D and expansion into emerging markets such as Thailand and India
- Identified mining as a crucial new sector to target
- Overhauled approach to health & safety, halving man hours lost
- Introduced several new products
What outcomes did private equity investment achieve?
- 15% increase in headcount
- One third increase in sales to ¤500m and two thirds increase in Ebitda to 66m euro
- More than 50% of production capacity now in high-growth countries
- In 2011, mining accounted for more than 50% of revenues and profits – significantly from 2007