REACH International - IK Investment Partners

 
REACH International - IK Investment Partners
A NEWSLETTER FROM IK INVESTMENT PARTNERS

                                                                       o
                                                                 N 45/2019
  04. IK acquires disruptive      10. Moving into specialist         14. Cybersecurity leader
 French asset manager Eres          cables with 2Connect         ­Infradata joins the IK portfolio

        LOCAL PRESENCE

                International
                  REACH
18. Assessing the risks and opportunities as the world turns against single-use plastics
REACH International - IK Investment Partners
CONTENTS/EDITORIAL

CONTENTS/IK NEWS                                                                                                                                      FOREWORD

/ISSUE 45/SUMMER/
                                                                                                                                                      THIS YEAR, IK WILL BE 30 – something of a mile-
                                                                                                                                                      stone in private equity, an industry that was in its
                                                                                                                                                      infancy when we were founded in 1989.
                                                                                                                                                           Our age confers distinct benefits, especially

2019
                                                                                                                                                      when political, economic and market condi-
                                                                                                                                                      tions are hard both to gauge and predict.
                                                                                                                                                      Fortunately, we have experienced a number of
                                                                                                                                                      cycles during the past three decades and learnt
                                                                                                                                                      valuable lessons along the way.
                                                                                                                                                           As we look ahead, we feel confident and
                                                                                                                                                      well prepared. We have grown rapidly in
                                                                                                                                                      recent years, while remaining true to our
                                                                                                                                                      roots as a Northern Continental Europe firm
                                                                                                                                                      combining local knowledge with an interna-
                                                                                                                                                      tional footprint.
                                                                                                                                                           Today, following the opening of our
                                                                                                                                                      ­Copenhagen office this summer, we have ­offices
                                                                                                                                                        in all the areas where we invest (see page 6).
                                                                                                                                                        This both underlines and gives credence to our
                                                                                                                                                        belief in the importance of a local presence.
P – 04                                      P – 06                                            P – 08
                                                                                                                                                           We are not just financial professionals, flying
DISRUPT AND GROW                            OPEN FOR BUSINESS                                 A FAMILY BUSINESS                                         in to see companies without truly understand-
Eres is a pioneer in the French             IK has opened a new office in                     NetCo specialises in the repair                           ing where they come from and where they
employee profit-share and                   Copenhagen, serving Denmark                       and maintenance of conveyor                               want to go. Instead, we speak their language,
retirement plan market. A                   and Finland. The move means                       systems. A family business for                            both literally and figuratively. Unlike most
genuine disruptor, the company              that IK now has a dedicated                       several generations, the French                           local firms, however, we have an international
has substantial growth potential,           presence in all of its chosen                     firm is now expected to expand                            network too, so we can really help portfolio
as part of the IK portfolio.                investment markets.                               internationally, with IK’s support.                       companies to expand beyond their borders.
                                                                                                                                                           In recent months, this combination has
                                                                                                                                                        helped us to secure investments in exciting
                                                                                                                                                        businesses such as Eres (page 4), NetCo (page
                                                                                                                                                        8), SCHEMA (page 12) and Infradata (page
                                                                                                                                                        14). All fast-growing enterprises, they recognise
                                                                                                                                                        the need for established, external expertise to
                                                                                                                                                        allow them to fulfil their potential.
                                                                                                                                                           But growth is not enough: companies in our
                                                                                                                                                        portfolio have to demonstrate that they are su­
                                                                                                                                                       stainable and build their businesses accordingly.
                                                                                                                                                       At IK, environmental, social and governance
                                                                                                                                                       (ESG) issues have long been integral to our
                                                                                                                                                       investment approach but we are increasingly
P – 10                                      P – 14                                            P – 18
                                                                                                                                                       aware of their importance both among our
MAKING A CONNECTION                         SECURITY MATTERS                                  BEYOND PLASTICS                                          investments and within our own firm.
2Connect is a manufacturer                  Netherlands-based Infradata is a                  Amid growing awareness                                       Climate change is a core focus for us: we
of specialised cables and                   leading provider of cybersecurity                 of plastic’s impact on the                               are embedding it within our investment
connectors. A leading player in             solutions. Having been acquired                   environment, concerted                                   process and we are keenly aware of the
its niche, the company has now              by IK, the company is expected                    efforts are underway to reduce                           need for action (see page 18). We will
been acquired by the IK Small               to consolidate and extend its                     waste. The new mood brings                               also be publishing a report on our own
Cap II Fund and is expected to              position across Europe.                           challenges, but also long-term                           carbon footprint this year, a yardstick
deliver fast-paced growth over                                                                opportunities.                                           against which we will measure
the coming years.                                                                                                                                      ­ourselves in future.
                                                                                                                                                           We approach the rest of the year
                                                                                                                                                      with optimism. And we hope you
                      Editorial Director: Mikaela Murekian,                 © 2019 IK Investment Partners Ltd. All rights reserved. Neither this
                                                                                                                                                      enjoy this edition of IK News.
                      mikaela.murekian@ikinvest.com                         publication nor any part of it may be reproduced, stored in a retrieval
                                                                            system, or transmitted in any form or by any means, electronic,
                      Texts: Joanne Hart
                      Art Direction: 25AH Design Studio AB, www.25ah.se
                                                                            mechanical, photocopying­, recording or otherwise, without the prior      Mikaela Murekian
                                                                            per­mission of IK Investment Partners. IK News is published twice a
                      www.ikinvest.com                                      year by IK Investment Partners, T­ he Adelphi, 1–11 John Adam Street,     EDITORIAL DIRECTOR
                                                                            London, WC2N 6HT, UK.

2   ISSUE 45/SUMMER 2019
REACH International - IK Investment Partners
IK /SPOTLIGHT

 ADD-ON                                                                               ­R EBRANDING

FURTHER EXPANSION FOR COLISÉE                                                        OPEN FOR BUSINESS
COLISÉE, A LEADING elderly care provider in France, Italy and Spain, has             HIGHLY REGARDED NORDIC payment company OpenSolution has r­ ebranded
­acquired Armonea Group, a senior care specialist in Belgium, with a growing         its entire business under the name OPEN. The Sweden-based group b
                                                                                                                                                     ­ ecame
presence in Spain and Germany.                                                       part of the IK Small Cap I Fund in 2016, since when it has made several
  Backed by IK since 2017, Colisée has grown significantly over the past three       ­acquisitions, including KDR in Norway and Finnpos in Finland. Now they will all
years. Combined with Armonea, it will become the fourth largest player in the        use the OPEN brand.
European elderly care sector, with around €1bn of revenues, more than 14,000           OPEN covers the entire value chain of payment solutions, making it a single
employees and almost 27,000 residents.                                               point of contact for more than 13,000 customers throughout the Nordics
  “This is the combination of two recognised players in their core geographies,          ­ altics. In conjunction with the rebranding, OPEN will launch the next
                                                                                     and B
with a clear alignment in terms of culture and shared values,” says Christine        ­generation of point-of-sale (POS) solutions to restaurants, convenience stores
Jeandel, CEO of Colisée.                                                             and cruise ships.
  “We are delighted to support Colisée in building the fourth largest European         “We know that an innovative payment solution can increase a company’s
player, thus actively participating in the reshaping of a consolidating industry,”   revenue by up to 30% as well as improve employee wellbeing in the w
                                                                                                                                                       ­ orkplace.
adds Dan Soudry, managing partner at IK.                                             OPEN’s system is the market’s most complete cash register system with
                                                                                     ­everything from hardware, payment solutions, reporting tools, integrations and
                                                                                     support,” says Mikael Hedlöf, CEO of OPEN.

                                                                                      AWARDS

                                                                                     IK WINS IN FRANCE OR                                              Mid-Cap
                                                                                     GRAND PRIX FOR IK                                                Fund of the
                                                                                     IK INVESTMENT PARTNERS has been named Mid-Cap                       Year
                                                                                     Fund of the Year in France at the annual awards ceremony             Private Equity
                                                                                                                                                         Magazine, France
                                                                                     of leading industry journal Private Equity Magazine.
                                                                                     Collecting the award, IK partner Rémi Buttiaux said: “We
                                                                                     are proud and delighted to accept this award twice over the last three
                                                                                     years. This rewards the hard work and dedication of the entire French team.
                                                                                     We also gain ­invaluable support from the rest of IK and this award speaks
 ACQUISITION
                                                                                     volumes about the way the entire firm works and interacts with each other.”

A NEW FIRE PROTECTION                                                                  IK made its first investment in France 2000, and opened a dedicated
                                                                                     office in Paris since 2006.
INVESTMENT FOR IK
IK HAS ACQUIRED BST Brandskyddsteamet, a leading provider of active fire                   We are proud and delighted
protection services in Sweden. Founded in 2012, the company has grown rapidly
since then to become the number one operator of sprinkler system services in
                                                                                     to accept this award twice over the
Sweden, with a full-service offering and a blue-chip client base.                    last three years. This rewards the
  “We are truly impressed with BST management and employees, and we look
forward to supporting the company as it continues on its growth trajectory,” says
                                                                                     hard work and dedication of the
IK partner Kristian Carlsson Kemppinen.                                              entire French team.
  This is the third fire protection investment made by IK Funds, following the       RÉMI BUTTIAUX, PARTNER, IK
highly successful Minimax transaction and the investment by IK Small Cap I Fund
in svt Group in Germany.

                                                                                                                                       ISSUE 45/SUMMER 2019             3
REACH International - IK Investment Partners
INVESTMENT: ERES

IK ACQUIRES
                                                                                                            growth of about 20% for several years. It has
                                                                                                            amassed almost €3bn of assets under manage-
                                                                                                            ment and has a diversified base of around 140,000
                                                                                                            end customers – focused on small and mid-sized

LEADING PROVIDER
                                                                                                            enterprises (SMEs) and individual savers. The
                                                                                                            company is also extremely highly rated by clients,
                                                                                                            competitors and industry experts.

OF EMPLOYEE
                                                                                                            MAKING WAVES
                                                                                                            “Eres is a truly disruptive business in profit
                                                                                                            sharing and retirement savings management. It
                                                                                                            is swift, agile and taking share from the incum-

PROFIT-SHARE
                                                                                                            bents. It also operates in an area that has been
                                                                                                            under penetrated to date. Around 70% of large
                                                                                                            companies operate employee profit-share and
                                                                                                            retirement plans but that falls to just 10% in the

AND RETIREMENT
                                                                                                            SME space. As such, it is a very sound business
                                                                                                            with real scope for growth,” says IK partner
                                                                                                            Rémi Buttiaux.
                                                                                                                 Eres was founded by four industry experts,

PLANS IN FRANCE
                                                                                                            Jérôme Dedeyan, Olivier de Fontenay, Hervé
                                                                                                            Righenzi de Villers and Nicolas Vachon, who
                                                                                                            met at the end of the 1990s. Having already
                                                                                                            built successful businesses together, they
                                                                                                            ­identified the gap in the employee savings
                                                                                                             market and set up Eres to fill it.
Eres is a leading provider of employee profit-                                                                   The business has grown steadily from
                                                                                                             the b ­ eginning, leveraging the founders’
share and retirement plans for SMEs and                                                                      ­entrepreneurial spirit and their experience of the

individuals in France. A disruptor in its field,
                                                                                                              financial sector. Today, much of the distribution
                                                                                                              function is outsourced to specialist and independ-

the company has substantial growth potential.                                                                 ent operators (for example, wealth managers,
                                                                                                              insurance brokers) but some larger clients are

And it is now part of the IK portfolio.                                                                       handled by Eres’ own experts. The combination
                                                                                                              of internal and external salespeople has allowed
                                                                                                              Eres to establish a nationwide presence, while
                                                                                                              retaining a lean culture, with just 40 employees.

T
        HE FRENCH ASSET management industry           client. Second, profit-share and retirement             The company also has a strong management
       is large, well established and dominated       plans are sometimes considered as non-core              team, led by Mathieu Chauvin, who started his
       by banks and insurers. Most of these           areas for them so their people are less trained         career in commercial banking and joined Eres
       groups focus on products manufactured          and up to date on the technical and regulatory          soon after it was founded.
in-house and distributed by internal retail           aspects. Eres has adopted an open-architecture             “I have known the founders for 18 years and
networks.                                             model so it can select and promote the best asset       helped them build up Eres almost from the
                                                      managers for its products, and its salesforce           beginning. We launched the first employee
ERES IS DIFFERENT                                     have real expertise in the financial, HR and            ­savings product together,” says Chauvin.
Founded in 2005, the company structure                legal complexities associated with retirement              Having built up Eres into a highly profitable,
­products from a range of leading international       and profit-share investment plans for both               well-rated and fast-growing disruptor, Dedeyan
 fund managers to create optimal plans for            companies and individuals.”                              and his colleagues began thinking about selling
 clients. Eres also works with more than 3,000            The numbers speak for themselves. The                the company. Fortunately, IK was already well
 highly trained and independent distributors.         ­market has been expanding at around 7% per              prepared when the sales process started, because
 As a result, clients have access to an extensive      ­annum but Eres has been delivering annual              IK partner Thomas Grob knew the business well.
 choice of products and can discuss them with
 genuine specialists in the sector.
     As IK director Vincent Elriz explains:                                                Eres is a truly disruptive business
 ­“Under the conventional business model,                                            in profit sharing and retirement savings
  financial institutions sell their own products
  via their own distribution network. But there                                      management. It is swift, agile and taking
  are two flaws with this. First, their offer lacks                                  share from the incumbents.
  diversity and external benchmarking allow-
                                                                                     RÉMI BUTTIAUX, PARTNER, IK
  ing for best and independent advice to the end

4   ISSUE 45/SUMMER 2019
REACH International - IK Investment Partners
INVESTMENT: ERES

                                                                                                              ERES

                                                                                                              COUNTRY         France

                              The underlying market for retirement and                                        FUND            IK VIII Fund
                                                                                                              SECTOR          Business services
                      employee profit-share plans is growing fast and is                                      WEB             www.eres-group.com
                       likely to continue doing so. Eres is the only size-                                    ACQ. DATE       July 2019

                      able operator in its field pursuing the open-archi-                                     ERES IS THE LEADING French independent
                       tecture and independent distributor model.                                             player in the advisory and structuring, asset
                                                                                                              management and distribution of employee
                                                     VINCENT ELRIZ, DIRECTOR, IK
                                                                                                              profit sharing plans (PEE, PEI, PERCO and
                                                                                                              PERCOI), retirement schemes (PERP, PERE)
A financial services expert, Grob was a manag-               Chauvin and his team had already taken on        and employee shareholding plans. Eres
ing director at Tikehau Capital and a partner at         day-to-day management of the business so the         distributes its products through a network
Equistone Partners before joining IK in 2018. He         process has been extremely smooth. The transi-       of more than 3,000 distributors (wealth
had been following Eres for some time.                   tion is also well timed.                             management advisors, insurance brokers,
   “I had identified the business as one to watch            “We are the only company in France that sells    accountants) and addresses small and mid-
some time ago. I had studied it closely and rec-         a complete suite of employee savings and retire-     sized companies.
ognised its potential so when I joined IK, it was        ment solutions. And the law has just changed in
an obvious target for us,” says Grob.                    France to say that companies need to package         VALUE CREATION STRATEGY
   “Thomas helped us originate and execute               these two products together. This is something       • Increase penetration of profit sharing and
the deal. Thanks to him, we met the founders             that the founders called and now it has so it is a     retirement products
before the sales process officially started and          very exciting time for us,” says Chauvin.            • Gain market share driven by its dynamic
we already had a good understanding of the                   “Our employees are very excited too. It can        distribution network, open architecture and
business. Because we had done our homework               be a difficult moment when founders leave a            well-invested IT platform
in advance, we were able to present them with            business but everyone is really committed to         • Use existing granular and diversified
a strategic plan for the future, which they really       the business – and has invested significantly in       distribution network to achieve product
appreciated,” says Buttiaux.                             it too,” he adds.                                      diversification
                                                             Looking ahead, there are multiple opportu-
AHEAD OF THE PACK                                        nities for growth.
When the sales process began, it was limited                 “The underlying market for retirement and
to a few parties who had demonstrated a real             employee profit-share plans is growing fast
interest in Eres. Competition was keen but rival         and is likely to continue doing so. Eres is the
bidders were local French firms, against whom            only sizeable operator in its field pursuing the
IK had a natural advantage.                              open-architecture and independent distributor
   “The founders could see that we had a lot             model. The distribution network is growing
to offer, in terms of a local presence allied            too and Eres is both acquiring new clients and
with an international footprint, that could              selling more products to existing ones. So there
help them expand inside France and abroad,”              is a really strong base case for growth and we
Buttiaux explains.                                       will look at appropriate add-ons in France and
   The transaction was signed in March, with the         abroad on a selective basis,” says Elriz.
founders reinvesting as minority shareholders.               “The scope for expansion is substantial. This
They remain associated with the company but              is an excellent company and we are confident
will work on specific assignments, such as merger        that it will deliver rewarding growth for all
and acquisition opportunities and lobbying.              stakeholders,” says Buttiaux.

                                                                                                                                  ISSUE 45/SUMMER 2019        5
REACH International - IK Investment Partners
ARTICLE: IK COPENHAGEN

                           IK OPENS UP IN
                COPENHAGEN
            IK has opened an office in Copenhagen to serve the Danish
          and Norwegian markets. The move highlights IK’s commitment
                to the Nordic region and its multi-local approach.

6   ISSUE 45/SUMMER 2019
REACH International - IK Investment Partners
ARTICLE: IK COPENHAGEN

F
        ROM THE TIME that IK was founded in
         1989, the firm has focused on combining
         international reach with local expertise.
            Regional offices in key locations have                                                        Being in Copenhagen will
played a major role in that approach. Over the
years, new sites have been opened, as IK has
                                                                                                     help us to build out the IK brand
expanded across its chosen investment space                                                          and franchise. There will be clear
of Northern Continental Europe.
   These offices reflect and underline IK’s
                                                                                                     advantages as we know from our
belief in the potential of certain jurisdictions                                                     experience in other regions.
and localities. In 2017, for example, IK opened                                                      MADS RYUM LARSEN, PARTNER, IK
a dedicated office in Amsterdam, a recognition
of the role that Dutch and Benelux companies
play within the IK portfolio.
   “We have completed a number of transac-
tions in the Benelux over the years and we               “We describe IK as pan-European but really         ­ enmark and Norway and we are highly
                                                                                                            D
felt the time was right to establish a local          we are multi-local and the Copenhagen office          proactive in our deal sourcing but being on
presence with an on-the-ground team,” says            reinforces that approach,” he adds.                   the ground will give us a lot more flexibility.
IK partner and head of investors relations               The Copenhagen team will include six profes-       We can meet more companies, engage in more
Mads Ryum Larsen.                                     sionals focused on the mid-cap market, as well        bilateral discussions and develop even stronger
   The opening of an office in Copenhagen this        as a local small-cap team and Ryum Larsen.            long-term relationships,” says Klitbo.
spring follows a similar logic.                          “I will still be travelling a lot to meet with        “Being in Copenhagen will help us to build
                                                      investors but it’s going to be great to be back in    out the IK brand and franchise. There will be
TRANSFORMATIVE M&A                                    Denmark after such a long time,” he says.             clear advantages, as we know from our experi-
“It is a natural step for us. It completes the           IK currently has three Norwegian and two           ence in other regions,” Ryum Larsen explains.
branching out of our deal teams, so they sit in       Danish companies in its portfolio and has a
the jurisdictions we invest in. The team covering     long history of successful investments in both        LOCAL ADVANTAGES
Denmark and Norway was based in London but            countries. Looking ahead, Ryum Larsen and             The decision has environmental benefits too.
we have now reached a point where it makes            Klitbo believe there is considerable potential to     Currently, the Danish/Norwegian deal team
more sense for us to be based locally,” says IK       develop IK’s regional presence still further.         spends hours on planes each week. Now com-
partner Thomas Klitbo.                                   “We already have a good network in                 panies and intermediaries are just a short car
                                                                                                            or bike ride away.
                                                                                                               “Everything becomes that much easier and
                                We are already seeing the benefits of                                       more convenient, and it really helps our envi-
                                                                                                            ronmental footprint,” says Klitbo.
                        moving here. And we believe it will only get                                           Some investors have asked why IK has
                       better. Above all, this underlines our commitment                                    chosen to open the Copenhagen office now, as
                                                                                                            it has already been investing in Denmark and
                        to the Nordics and our local approach.                                              Norway for many years.
                                                THOMAS KLITBO, PARTNER, IK                                     “It is a process and the time is right. The
                                                                                                            team is ready, IK is ready and, with ESG rising
                                                                                                            up the investor agenda, being local is more
                                                                                                            important than ever,” says Ryum Larsen.
                                                                                                               IK is already working on several add-on
                                                                                                            transactions and there is a strong pipeline of
                                                                                                            new deals.
                                                                                                               “We are already seeing the benefits of mov-
                                                                                                            ing here. And we believe it will only get better.
                                                                                                            Above all, this underlines our commitment to
                                                                                                            the Nordics and our local approach,” says Klitbo.
                                                                                                               There is a personal element for both Klitbo
                                                                                                            and Ryum Larsen too. Both are Danish and
                                                                                                            both have spent more than a decade away
                                                                                                            from home.
                                                                                                               “It will be really interesting to return to
                                                                                                            ­Copenhagen, after all this time,” says
                                                                                                             Ryum Larsen.
                                                                                                               “Being based in the place where you were
                                                                                                             born does have certain lifestyle benefits,”
                                                                                                             adds Klitbo.

                                                                                                                               ISSUE 45/SUMMER 2019         7
REACH International - IK Investment Partners
INVESTMENT: NETCO

IK INVESTS IN CONVEYOR
MAINTENANCE SPECIALIST
GROUPE NETCO
NetCo is a European specialist in the maintenance of conveyor systems,
with a leading market position in France. A family business for several
generations, NetCo is now expected to expand internationally, with IK’s
support and expertise.

N
        ETCO CAN TRACE ITS ROOTS back to          waste management quarries and logistics.                    NetCo has real oppor-
         1902, when Monsieur Perriez opened a         “NetCo’s business is key. Customers have
         small business in Bordeaux, providing    carry conveyor belt systems, which are subject       tunities to expand in Europe,
         general supplies to the navy, industry   to extreme weather conditions and constant            particularly in Germany, the
and agriculture.                                  use. Over time, the belts break and when
  Today, NetCo is still run by descendants of     that happens, they need to be repaired or           Nordics and Spain. We see this
the founder but the company has evolved to        replaced as soon as possible. Otherwise, the full   business becoming a genuine
become a leading provider of conveyor belt        ­production lines are down and factories are left
maintenance services, with clients in various      sitting idle,” says IK partner Arnaud Bosc.          pan-European player.
end-industries such as, food manufacturing,        The work is complex, highly technical and                 PIERRE GALLIX, PARTNER, IK

8   ISSUE 45/SUMMER 2019
REACH International - IK Investment Partners
INVESTMENT: NETCO

­ on-core so very few companies have the
n                                                          First, the company is a clear leader in
­expertise to do it in-house. Repairs are               France but still has a clear scope for further   NETCO
 ­generally regarded as emergency operations            consolidation. Second, the client base is
  so proximity is essential. Yet the industry is        extremely diverse: the top ten clients are
  ­fragmented, comprising hundreds of small             responsible for less than 20% of sales between
   players across Europe.                               them. Third, the company has delivered
      In recent years, NetCo has proven to be the       impressive growth in recent years, not just
   natural consolidator on the French market:           through acquisition but organically too.
   the company has made 30 acquisitions since              And of course, there is significant
   2000, 12 of which have been completed in the       i­ nternational potential.
   past three years. As a result, sales have soared        “NetCo has real opportunities to expand in
   from €50m in 2016 to €110m last year. The pace     Europe, particularly in Germany, the Nordics
   of change reflects the ambition of the current     and Spain. We see this business becoming a
   managers, Samuel and James Perriez.                genuine pan-European player with an even
      Samuel, 47, joined the family business in       more dominant position in France and a
   2000 and began to run the company in 2008.         strong second leg in Northern Europe and the
   James, 40, joined from international consul-       Iberian Peninsula,” says Gallix.                   COUNTRY           France
   tancy Mazars in 2009.                                   The distribution arm has scope for growth     FUND              IK Small Cap II Fund
      “We could really see NetCo’s potential: we      too. It has already begun to expand in Europe      SECTOR            Business services
   have focused on growth over the past decade        and discussions are underway with potential        WEB               www.groupe-netco.com
   but we know there is still room for further        clients in Asia and Latin America.                 ACQ. DATE         March 2019
   expansion in France and huge opportunities
   abroad,” says Samuel.                              LEVERAGING KNOWLEDGE                               NETCO Founded in 1902 in France, NetCo
                                                      From the start, conversations with the Perriez     has grown to become a European leader in
TIME TO GROW                                          brothers were constructive. IK’s international     the maintenance of conveyor systems across
The company now operates from more than               footprint and strong European presence             key industries including quarries, food and
50 locations in France and has also moved into        meant it was ideally placed to help NetCo          heavy goods.
Belgium, supported by former minority share-          achieve its ambitions. In addition, IK recently      Thanks to its robust operating model,
holder Andera Partners.                               completed a successful exit from German            NetCo has become a strategic partner for
   NetCo has also developed a distribution            conveyor belt specialist Transnorm and is          customers by supporting critical parts of their
arm, leveraging its purchasing power to               currently invested in LINXIS, a French engi-       industrial processes. NetCo is headquartered
procure conveyor belts for its own use and            neering firm focused on specialised equip-         in Bordeaux and operates 55 agencies with
for competitors’.                                     ment solutions.                                    500 employees across France. The business
   “This new business brings several advan-              “Our pan-European presence and previ-           has a further presence across Belgium
tages. It provides NetCo with another string          ous investment in Transnorm increased our          and Luxembourg.
to its bow, it bolsters margins and it gives the      credibility and gave us access to people with
company access to rivals, which can then be           in-depth knowledge of the sector. Samuel and       VALUE CREATION STRATEGY
acquired, if appropriate,” IK partner Pierre          James could see that we had experience in          • Strengthening organic growth in existing
Gallix explains.                                      their industry and that we were relevant part-       geographies
   IK first came across NetCo soon after the          ners to accompany the European expansion           • Consolidation of the fragmented European
Andera investment, keeping a close eye on the         and, over time, we developed a good relation-        market
business, particularly after the 2017                 ship with them,” Bosc explains.                    • International expansion of the Distribution
Belgian acquisition.                                     The transaction was completed in March            Business line
   “We knew Andera from a previous transac-           and there is already considerable momentum         • Further consolidation within the French
tion and, given the firm’s size and focus, it was     around the investment.                               market
clear that NetCo would need a larger partner in          “This is a real buy-and-build story with
time,” says Bosc.                                     strong potential at home and abroad. We are        INVESTMENT HISTORY
   The business duly came on the market in            very excited to be working with the Perriez        • Acquired from Andera Partners in
late 2018, by which point IK had already made         brothers and are really optimistic about the         March 2019
some preliminary assessments of the company           future,” says Bosc.
and gauged its potential.

          Our pan-European presence and previous investment
    in Transnorm increased our credibility and gave us access
      to people with in-depth knowledge of the sector.
                                        ARNAUD BOSC, PARTNER, IK

                                                                                                                              ISSUE 45/SUMMER 2019         9
REACH International - IK Investment Partners
INVESTMENT: 2CONNECT

                                            H
                                                     ARLEY-DAVIDSON MOTORBIKES are
                                                        famously loud, so much so that riders’
                                                        behaviour is restricted in certain loca-
                                                        tions. The Jekill & Hyde Company has
                                               created a novel solution to this problem. The
                                               firm specialises in GPS-linked exhausts, which
                                               allow Harleys and other bikes to roar when they
                                               are on the open road but quieten down in built-
                                               up areas.
                                                  The technology is highly effective and the
                                               wiring that makes it possible is designed and
                                               manufactured by 2Connect, a Dutch company
                                               based in the town of Waalwijk.
                                                  Founded by Marc van der Put in March
                                               2000, 2Connect produces bespoke intercon-
                                               nection devices, used in a vast array of end
                                               products, from MRI scanners to ­agricultural
                                               vehicles to smart lighting. The market is
                                            ­extremely dynamic, driven by growing
                                             ­automation, miniaturisation and digitisation
                                              across industry.
                                                  “2Connect is a truly impressive business.
                                              It’s focused on a niche segment of industry, it’s
                                              highly specialised and it’s delivered double-
                                              digit organic growth since Marc founded the
                                              business nearly 20 years ago,” says Sander van
                                              Vreumingen, IK partner and adviser to the IK
                                              Small Cap II Fund.
                                                  The bespoke nature of the product range is
                                              highly beneficial too.
                                                  “Larger peers are not interested in this area

MAKING A
                                              because volumes are lower and the ­solutions
                                            custom made, which requires a specific
                                              ­business set-up. The cables and connectors
                                               are embedded into the end products’ design

CONNECTION IN
                                               so customers are very sticky,” says IK director
                                               Frances Houweling.

                                            REACHING OUT

THE BENELUX
                                            Most of 2Connect’s clients are based in the
                                            Netherlands but they ship their p    ­ roducts
                                               around the world, giving the firm a real
                                            ­international footprint. Apart from the
                                             ­Waalwijk headquarters, there are two factories
                                              in ­Romania and an office in Hong Kong to
2Connect is a manufacturer of specialised      serve clients operating in the Asian market.
                                               However, as van der Put himself explains, the
interconnection solutions. A leading and      ­opportunity in his home country has been so

differentiated player in its niche, the
                                               great that he has not really needed to look for
                                               customers elsewhere.

company has now been acquired by the             “More than 80% of our sales are generated
                                               by companies operating within a 150-mile

IK Small Cap II Fund and is expected to        radius from our offices,” he says.
                                                 When van der Put launched 2Connect in 2000,

deliver fast-paced growth over the             there were no customers, no orders and no office.
                                               But there was an idea – to supply specialised

coming years.                                  cables for original equipment manufacturers
                                               (OEMs). The strategy resonated with van der
                                               Put’s target audience and the business grew.
                                                 “Initially, we outsourced production. But

10   ISSUE 45/SUMMER 2019
INVESTMENT: 2CONNECT

over time, we brought production in-house and         were very enthusiastic about the business and
extended our range to specialised connectors.         we had ideas for the future that even Marc had    2CONNECT
Today, we are responsible for design, manufac-        not thought about. He really responded to our
ture and assembly. We become involved with            vision for the company, we developed a great
our customers’ needs at a very early stage so we      connection, established a relation of trust and
are much closer to them. In essence, we have          everything fell into place,” says Houweling.
evolved from a component supplier to an inte-            The transaction was noteworthy too because
grated solutions provider,” says van der Put.         it was IK’s first small-cap investment in the
   Having built up the business over the years,       Benelux, highlighting the benefits of opening
however, van der Put realised he needed some          an office in Amsterdam and establishing a dedi-
external support.                                     cated small-cap team for the region.
   “The company was growing at a really fast             “We’re happy to have signed such an exciting
pace, but I realised that we needed external          first transaction here and it is always good to
support to take it to the next level. There were      work with a founder too, especially someone
highly skilled people in the business but it was      who is so passionate about his business,” says
not enough and, to be honest, I’d been running        van Vreumingen.
the business for 19 years and I felt it was time         The deal was signed at the end of 2018         COUNTRY         Netherlands
to get an external perspective. Ultimately, IK        and work is now underway to strengthen,           FUND            IK Small Cap II Fund
seemed like the best partner. Their approach        ­professionalise and grow the business. A COO       SECTOR          Business services
to the business was really appealing, we had         and a CFO have been appointed and a strategic      WEB             www.2-connect.info
several constructive meetings and the feeling        plan has been drawn up, focused on expansion       ACQ. DATE       November 2018
was right. In the end, that was the most impor-      and efficiency.
tant thing for me – that they had the skills, the        In terms of client acquisition, van            2CONNECT is a leading manufacturer
resources and the mindset to take 2Connect to        ­Vreumingen and his colleagues are working         of specialised cables and connectors,
the next stage,” says van der Put.                  with IK’s Operations team, particularly the         designing, developing and producing
                                                    representative in Amsterdam.                        tailored interconnection solutions for
GROWTH OPPORTUNITIES                                     “We are also developing a greater under-       OEM and ODM customers worldwide.
For IK, the appeal of 2Connect was clear.           standing of the existing client base so we can
   “It’s an excellent business in an interesting    find out more about their needs and increase        VALUE CREATION STRATEGY
sector and Marc is a really dynamic and entre-      2Connect’s share of wallet from these busi-         • Continue to grow share of wallet with its
preneurial guy. We clicked with him immedi-         nesses. And we intend to drive operational            current customer base
ately and we could really see the potential of      excellence, not least through the appointment       • Intensified focus on new customer
his company,” says van Vreumingen.                  of the new COO,” says van Vreumingen.                 acquisition
   Keen to partner with van der Put, IK did              “There may be M&A opportunities further        • Broaden end-market applications within
extensive due diligence to understand the busi-     down the line but for the moment, there is so         adjacent niche segments
ness, its growth drivers and the opportunities      much organic growth potential that we are con-      • International expansion
for expansion early on.                             centrating on that and making sure we remain
   “We worked hard early on in the process, we      focused,” he adds.

                                                                                                                          ISSUE 45/SUMMER 2019        11
INVESTMENT: SCHEMA

IK ACQUIRES SOFTWARE
SPECIALIST SCHEMA
Nuremberg-based SCHEMA is a market-leading developer of software
solutions for the management of technical content, with a broad list
of blue-chip clients across multiple industries. Over the coming years,
the company is expected to continue to deliver strong growth through
the addition of new customers, services and geographic expansion.

M
           ARCUS KESSELER AND STEFAN                  and even on the machines themselves. Finally,        Kesseler and Freisler felt that SCHEMA could
           FREISLER first met at an academic          companies have to produce dynamic main-              benefit from external support.
              event in Nuremberg in 1992 where        tenance guidance and ensure that product                “We felt that we needed a partner to help us
              they discussed hypertext, a content     information is adapted if their customers ask        grow to the next level – a partner with experi-
presentation concept, which allows users to click     for machines with individual specifications.         ence working with companies of our size and
on a link and jump to different content.                                                                   acquisition expertise and an understanding of
     Three years later, the duo was captivated by     A MODULAR APPROACH                                   internationalisation,” says Kesseler.
the flotation of Netscape, the first commercial       “All these demands can be very costly, but              In 2018, SCHEMA was put up for sale and
web browser. The highly successful IPO gave           we provide an optimal solution through               IK quickly realised that the business was, in
Kesseler and Freisler an idea:                        our ­Component Content Management and                the words of IK partner Nils Pohlmann,
     “We thought this World Wide Web could be         ­Distribution System,” says Kesseler.                “a hidden gem”.
the next big thing,” says Kesseler.                        In essence, this allows SCHEMA’s customers         “It is in a niche area but one that has
     Shortly afterwards, they founded SCHEMA,           to manage complex content in a modular fash-       significant growth drivers, such as increased
a company that helps clients to manage content          ion, increasing compliance, ensuring reliability   document complexity, digitalisation, regulatory
in a modular format.                                    and improving efficacy through reuse in a cost-    requirements and automation. Companies also
     “Our business works with companies –               effective way. SCHEMA enables ­customers           need to be able to display information on differ-
generally high-tech engineering and manu-              to realise substantial cost and time savings        ent devices and software needs to be adaptable
facturing firms, but also top-tier MedTech             while also increasing their process security of     to different IT systems and infrastructures.
and Pharma firms – to solve their product              ­technical content.                                 SCHEMA is at the centre of all these trends and
­information challenges,” says Freisler.                   The business model has proved highly            able to address and manage the complexity of
     These challenges are many and varied.              successful. SCHEMA is deeply integrated within     semi-structured data,” he says.
 Companies need to offer detailed explanations          its clients’ core IT systems in conjunction with      Having recognised SCHEMA’s potential,
 of their products in an accessible online ­format.     having a high level of recurring sales from its    IK worked hard at getting to know the
  In addition, most of SCHEMA’s customers are           existing and continuously growing customer         management team and gaining a deeper
 ­export oriented and need to provide information       base. SCHEMA has over 400 blue-chip custom-        understanding of the business.
  in multiple languages, often over 20, and are         ers, including some of the biggest names in           “The basis of the business was strong – a
  subject to different regulatory requirements.         German industry such as Bosch, Miele, Bayer,       clear market leader with sophisticated software
  Companies also need to ensure that information        ZEISS, Lufthansa Systems, Diebold Nixdorf          solutions deeply integrated into its blue-chip
  is kept up to date, as technology evolves and         and Siemens. Moreover, SCHEMA has begun to         clients’ IT infrastructure and a high share of
  specifications change.                                successfully acquire customers in Sweden, the      recurring revenue, but we could see that there
     They also need to deliver comprehensive            Netherlands, the UK and Japan.                     were opportunities to expand its position both
  health and safety information, online, in print          After more than 20 years of steady growth,      organically and through acquisitions,” says

12   ISSUE 45/SUMMER 2019
INVESTMENT: SCHEMA

                                                                                                            SCHEMA

                                                                                                            COUNTRY        Germany
                                                                                                            FUND           IK Small Cap II Fund
                                                                                                            SECTOR         Business services
                                                                                                            WEB            www.schema.de
                                                                                                            ACQ. DATE      November 2018

                                                                                                            SCHEMA is an innovation leader and has set
                                                                                                            international industry standards regarding
                                                                                                            the range of features and standardisation of
                                                                                                            CCMS over the last 20 years. Its products
                                                                                                            enable customers to realise substantial
                                                                                                            cost and time savings and increase content
Pohlmann. Together with the founders, IK            create cross-selling and upselling opportunities        processes efficiency.
developed the growth strategy and vision for        and create a broader, tech-enabled services
the company in the future.                          offering. Together, the two companies form              VALUE CREATION STRATEGY
                                                    the fundament for tech-enabled services and             • Upselling opportunities and increased
PREPARATION PAYS                                    enable customers to unlock further service                customer penetration
IK’s efforts and enthusiasm did not go              sales potential,” says Pohlmann.                        • Roll-out of new content delivery solution
­unnoticed.                                               Looking ahead, there is significant potential       (CDS)
    “It was clear from an early stage that IK was   for growth and expansion.                               • Expansion into new end-industries and
 the best partner for us. The sheer competence            “SCHEMA is a leading software company               international markets
 of the team and their understanding of our         in its chosen field, with strong development            • Strategic add-on acquisitions
 business was really striking. And they moved       ­opportunities through further penetration
 quickly and efficiently through the investment      of its existing customer base, as well as the
 process, which was also very helpful,”              ­acquisition of new customers in Germany,
 says Freisler.                                       ­Austria and Switzerland (the DACH region)
    By December 2018, the deal had closed.             and more globally,” says Pohlmann.
 Freisler has moved to the advisory board and             “In combination with TID, we can create
 Kesseler is joint CEO with a colleague who has        an intelligent content provider that allows
 been at SCHEMA for 15 years.                          enterprises to become more efficient across a
    In April 2019, the company made its first          range of different services. Over time, we can
acquisition, TID Informatik, a market-leading          add features and partners to this platform so it
e-catalogue software provider which enables            becomes increasingly comprehensive and effec-
customers to manage their service and spare parts      tive,” he adds.
information in an efficient and automated way             The first few months have already delivered
and thereby improve their service value chain as       progress, as IK has worked with SCHEMA to
well as better support their sales organisation.       professionalise processes and the company’s
TID clients, including Bosch, Kärcher, Voith,          sales approach.
ZEISS and Leica, benefit from significant process         “It’s all working out as we hoped and expected.
and cost improvements. SCHEMA already had              IK has continued to act professionally, reliably
a minority stake in TID: now it has acquired the       and supportively, just as they did during the
entire business, with IK’s support.                    due diligence process. We are excited about the
    “Both SCHEMA and TID are impressive in             future and looking forward to jointly growing
their own right but putting them together will         the business,” says Kesseler.

                                                                                                                             ISSUE 45/SUMMER 2019          13
INVESTMENT: INFRADATA

     IK ACQUIRES CYBERSECURITY
         SPECIALIST INFRADATA
          Netherlands-based Infradata is a leading provider of cybersecurity
          and secure networking solutions. Now part of the IK portfolio, the
           company is expected to consolidate and extend its position in key
                            geographies across Europe.

T
        HE EUROPEAN CYBER AND NETWORK                    In each case, Infradata operates a vendor-­
          security market is estimated at c. €40bn,      agnostic business model, working with a
          of which c. €25bn worth is in countries        ­variety of skilled vendors across its operations.
          where Infradata has a presence, and is
expected to substantially outpace the broader IT         FLEXIBLE MODEL
market growth on the back of rising cybercrime,          “Infradata owns the relationship with clients
increased network complexity and digitisation,           whereby it acts as a reseller of third party
­regulation and technology developments.                 products combined with in-house t­ echnical
    Infradata is ideally positioned to benefit           skills and services. This means it works with
 from that growth trajectory. Founded in 2004,           multiple vendors and can introduce new
 the company has expanded rapidly to become              ones when the need arises. That flexibility is
 a highly regarded player in both cybersecurity          particularly useful in a field like ­cybersecurity,
 and secure networking solutions, ensuring that          which is changing all the time,” says IK
 networks are safe, scalable and reliable. With a        ­associate d   ­ irector Frederik Jacobs.
 presence in the Netherlands, France, Germany,                 Infradata is also one of the very few ­players           We knew the sector,
 the UK, Belgium, Poland and the US, the group           in its field with a footprint that extends              we liked its position in it and
 focuses on large enterprises and communica-             beyond its home market, a position that can
 tion service providers with complex and wide-           be p   ­ articularly helpful when d­ eveloping         we could see the o­ pportunities
 ranging IT needs.                                        partnerships with large, multinational                   for growth. We also have
    “Infradata provides software, hardware and            clients. As Bremer explains: “The market is
 ongoing services to clients that tend to use a lot of    highly fragmented, ­especially when it comes              experience in the field,
 data and have complex IT infrastructures. These         to ­cybersecurity. There are plenty of small             thanks to, for ­example, our
 enterprises need outside help managing their             ­consultancies and systems integrators but very
 infrastructure and keeping it secure. ­Infradata          few operators work across multiple regions.”
                                                                                                                  investment in Visolit.
 can design, build and manage networks for them,”              “Large enterprises often prefer ­partnering                NORMAN BREMER, PARTNER, IK
 says IK partner Norman Bremer.                          with a larger, international business, like
    “Infradata is renowned for its technical               ­Infradata, and the company itself benefits from
 capabilities and deep knowledge of its clients’ IT         its geographic spread as people within the          growth in the company’s core markets
 network, so it builds trusted relationships and            group have different skills and ­relationships      and beyond.
 close, long-term partnerships,” he adds.                    that can drive cross-selling and upselling            “We will continue to pursue organic growth
    These clients include telecommunications                ­opportunities,” says Jacobs.                       in Infradata’s biggest markets, France and the
 groups such as KPN and TalkTalk, as well as                   Over time, IK intends to leverage Infradata’s    Netherlands. We plan to scale up in Germany
 multinationals such as eBay and Arcelor­Mittal.         position and knowledge base to accelerate              and the UK, as there are some interesting op-

14   ISSUE 45/SUMMER 2019
INVESTMENT: INFRADATA

portunities in both these markets and we will        IK’s blend of local presence and inter­national
build out the business in Poland and Belgium,”        footprint was a real advantage too.                 INFRADATA
says Bremer.                                            “We are based in the Netherlands so it was
  Given the current market fragmentation,            great to work with a firm that has a full-time
there is scope for add-on acquisitions as well,      team here, especially one with offices and
both to consolidate Infradata’s position in key      ­investments across Europe,” says Infradata
geographies and gain access to new vendors,           CEO Nino Tomovski.
new clients and new technical capabilities.
  Fortunately too, the company has already           DRIVING OUTPERFORMANCE
proven its ability to absorb acquisitions and        Looking ahead, the potential is clear. Infradata’s
develop greenfield opportunities overseas,           underlying markets are growing fast and
including key transactions in France and the         expected to continue doing so but the company
UK in recent years.                                  is expected to outperform peers, by building
                                                     on its strong, blue-chip client base, established
STRONG KNOWLEDGE BASE                                reputation for excellence and broad set of rela-
IK first came across Infradata several years ago     tionships with skilled vendors.
when the firm was looking at opportunities in            “The space that we work in is really             COUNTRY         Netherlands
the IT space. Having spotted the business as         ­attractive and we are ideally placed to grow, in    FUND            IK VIII Fund
one to watch, IK followed Infradata over the          terms of cross-selling, upselling and recurring     SECTOR          Business services
years, and was in a prime position when it came       management services. There are also plenty of       WEB             www.infradata.com
on the market in 2018.                                opportunities to continue and accelerate our        ACQ. DATE       January 2019
   “We knew the sector, we liked its position         geographical expansion,” says Tomovski.
in it and we could see the opportunities for             Having closed the transaction earlier this       INFRADATA was founded in the
growth. We also have experience in the field,         year, IK has already begun to strengthen the        Netherlands in 2004, where it continues to
thanks to, for example, our investment in             Infradata team and the underlying business.         be headquartered. The company has an
Visolit. We started talking to people close to        Founder Leon de Keijzer has moved onto the          additional presence in Germany, the UK,
Infradata well before it was officially put up for    board as a non-executive director, paving the       France (Nomios), Belgium, Poland and the
sale,” says Bremer.                                   way for Tomovski, previously international          US, with ambitious expansion plans. The
   “The actual sales process was both swift and       vice-president at Infradata, to become CEO.         company provides cybersecurity and secure
competitive. The deal was done in a few weeks         IK’s strategy, operations and business control      networking solutions, from design and
but that was perhaps because we were well             (SOBC) team is working with Infradata to            delivery to aftermarket support and
prepared and dedicated significant time and           analyse the company and identify the best op-       managed services.
resource to the transaction,” Jacobs adds.            portunities for future growth.                        Infradata supports many large ­blue-
                                                                                                          chip clients with high security and data
                                                                                                          requirements across the industrial, advanced
                                                                                                          manufacturing, financial, telecommunications
                                                                                                          and e-commerce sectors.

                                                                                                          VALUE CREATION STRATEGY
                                                                                                          • Organic growth via geographical expansion
                                                                                                          • Leverage cross selling potential between
                                                                                                            countries (networking & security solutions)
                                                                                                          • Product-mix shift (shift towards more
                                                                                                            recurring revenue streams via managed
                                                                                                            services offering)
                                                                                                          • Buy & build to enable acceleration of
                                                                                                            organic growth trajectory
                                                                                                          • First add-on has already been completed
                                                                                                            (DIM in Poland)

                                                                                                                            ISSUE 45/SUMMER 2019          15
ESG: PINARD

                            PINARD:
                        A PLASTIC PIONEER
         Pinard Beauty Pack specialises in the design and manufacture of
          high-quality plastic bottles for some of the best-known brands in
        the cosmetics and fragrance industries, including Chanel, Clinique,
                 Clarins, Guerlain, L’Occitane and Estée Lauder.

16   ISSUE 45/SUMMER 2019
ESG: PINARD

                                                                                                           PINARD

                                                                                                           COUNTRY          France
                                                                                                           FUND             IK VIII Fund
                                                                                                           SECTOR           Consumer goods/Food
                                                                                                           WEB              www.pinard-emballages.com
                                                                                                           ACQ. DATE        July 2017

                                                                                                           PINARD is recognised as a trusted supplier
                                                                                                           to several French and international prestige
                                                                                                           brands because of its technical know-how,
                                                                                                           product quality and service level. Managed
                                                                                                           by brothers Thomas and Pierre-Olivier Pinard,
                                                                                                           the family business employs approximately 90
                                                                                                           people and operates two production facilities

O
                                                                                                           and a logistics site close to Oyonnax, in the
         WNED BY THE IK VIII FUND SINCE 2017                     In the past two or                        heart of France’s “plastic valley”.
          alongside the founding Pinard f­ amily,
          the company produces over 150m                   three years, awareness                          VALUE CREATION STRATEGY
          ­bottles a year and is at the forefront of    has really changed. ­People                        • Continued organic growth in its core
the sustainability trend.
   “In the past two or three years, awareness has
                                                        know about global w  ­ arming                        ­markets leveraging existing customer base
                                                                                                             and gaining new customers both in France
really changed. People know about global warming          and marine ­pollution and                          and in export markets
and marine pollution and they want to be part
of the solution, not part of the problem,” says
                                                         they want to be part of the                       • Buy-and-build strategy to secure further
                                                                                                             decoration capabilities, gain technical
Pinard sales director Delphine Delaroche.                  solution, not part of the                         capabilities (closures and caps) and build
   “They realise that their buying choices can
influence manufacturers’ behaviour so they are
                                                                problem.                                     capacity in other geographies
                                                                                                           • Maintain operational excellence and
asking for sustainable products. Brands are tak-         DELPHINE DELAROCHE, SALES DIRECTOR, PINARD          ­protect margin level/cash generation
ing this seriously. They understand that if they
use recyclable plastic, it is better for them and      ­ pportunities and possibilities. We are looking
                                                       o
their customers,” she adds.                            at plastic made from ocean waste, for example,
   Pinard has been developing more ecological          and, in future, we may help to set up ­collection
plastic products since the 1990s – including           points, where consumers can drop empty
bottles made from recycled plastic (RPET)              ­cosmetics containers,” says Delaroche.
and glass polymer, which looks like glass but is           Over time, greater use of recyclable plastic
lighter, easily recyclable and has a lower carbon       and increased recycling of all plastic products
footprint than glass. Both materials already            are inevitable trends. Pinard, however, intends
represent 20% of Pinard’s plastic raw materials         to remain ahead of the pack.
and are growing double digit. Now, new ideas               “We are at the beginning of a major shift.
are underway, such as bio-plastic, made from            Looking ahead, we expect RPET usage to
sugar cane, and refillable bottles.                     increase dramatically. Pinard is not a large
   “Plastic itself has a lighter carbon footprint       company but it is already a leader in the field.
than many other materials, including glass.             Looking ahead, we will focus on making
The key challenge we face is the need to                sure that it stays ahead of the pack,” says IK
recycle more. But this presents us with fresh           ­associate director Thibaut Richard.

                                                                                                                              ISSUE 45/SUMMER 2019         17
ESG: PLASTICS

                THE PLASTIC PROBLEM
               AND HOW TO ADDRESS IT
        Amid a growing awareness of plastic’s impact on the environment, ­
      concerted efforts are underway to reduce plastic waste. The new mood
     can be challenging for industry but there are long-term opportunities too.

P
         LASTIC IS CHEAP TO MAKE, highly             efficiently and effectively than any other mate-     use or do not have access to plastic packaging
         efficient and extremely versatile. It is    rial,” says Gummer.                                  suffer from food waste of up to 30%. With that
         also ubiquitous in today’s world. Back         In the food industry, for example, plastic is     packaging, supply chain waste tumbles to low
         in 1950, global production of plastic       able to protect goods, extend their shelf life and   single digits.
amounted to just 1.5m tonnes. Today, we pro-         reduce waste. The humble cucumber can last              So plastic is phenomenally useful. But the
duce around 325m tonnes of plastic every             for two weeks wrapped in film. Without that          way it is treated needs to change, specifically
year, almost half of which is used once and          protection, it will last no more than four days.     in the areas of consumer products, house-
thrown away.                                            More broadly, supply chains that do not           hold goods and packaging, which, in Europe,
    Until recently, few people gave plastic much
thought. But attitudes are changing fast, driven
by a growing realisation of the harm caused to
the environment by single-use plastics.
                                                                   One of the biggest problems with plastic is that,
    The statistics speak for themselves. At sea,              in most applications, it does the job more efficiently
the world’s oceans are sullied by more than
150m tonnes of plastic; the amount increases
                                                                  and effectively than any other material.
by between 5m and 13m tonnes each year; and                             FELIX GUMMER, DIRECTOR OF ENVIRONMENTAL CONSULTANCY SANCROFT
the economic cost alone is estimated at up
to €690m. Marine life is suffering, plastic is
entering the food chain and tourists are turning
away from plastic-infested waters.
    On dry land, single-use plastics create
­further issues, littering streets, affecting bird
 life and causing severe environmental damage.
    The tangible effects of today’s throwaway
 culture have united politicians, regulators,
 NGOs, the media and consumers in a concerted
 bid to reduce plastic waste.
    As Felix Gummer, director of environmental
 consultancy Sancroft, points out: “No environ-
 mental issue has ever remained so consistently
 on the front page of the mainstream media as
 this one.”

FROM THEORY TO PRACTICE
But, even though almost everyone agrees that
plastic consumption has to come down, turning
ideology into action is not that easy.
  “One of the biggest problems with plastic is
that, in most applications, it does the job more

18    ISSUE 45/SUMMER 2019
ESG: PLASTICS

­account for more than 60% of plastics use.
    EU legislators are already planning to ban
 certain products, such as fast-food expanded
 polystyrene containers. Widespread targets
 have been introduced to reduce the consump-
 tion of single-use plastic items, such as straws
 and cotton buds. And manufacturers are under
 pressure to increase the recycled content of
 plastic drinks bottles and other items.
    Emerging markets can be even more hard-
 line. In Kenya, for example, anyone caught
 making, selling or even carrying a plastic bag
 faces up to four years in prison or a fine of up
 to $38,000.
    Europe is taking a more gradual approach
 but the direction of travel is clear. Businesses
 already face both inducements and penalties,
 to encourage a shift towards recyclable and
 recycled products. In future, industry is likely
 to be charged with funding the entire
 recycling process.
    Known as Extended Producer Responsibility
 (EPR), this places the onus of recycling squarely
 on the shoulders of companies across the supply
 chain, from manufacturers to retailers.             non-recyclable option might be being used. If         “Companies need to set a target that their
                                                     this is left unaddressed, however, it will cost    products should be 100% recyclable,”
HOW TO COPE                                          the company more in the long term.”                advises Gummer.
The cost of compliance has been estimated at            In this regard, a rigorous streamlining            Transitioning may involve extra cost initially.
up to £1.5bn in the UK alone, and many compa-        ­exercise can be helpful.                          In the long term, however, creating a recyclable
nies are understandably concerned. But busi-            “If companies reduce the number of ­different   business model can deliver tangible benefits. It
nesses that are ahead of the game can derive         plastics and packaging materials they use,         can encourage companies to focus on what they
huge benefits, gaining market share and earn-        it makes life easier for stakeholders along        really need, what they can discard and where
ing a reputation as environmental stewards.          the supply chain, including consumers,”            improvements can be made.
   So what should companies do? First, and           says Gummer.                                          The stakes are high. Those ahead of the
perhaps simplest, they can remove items that            And even if companies find there is no          curve will almost certainly gain competitive
are no longer needed, such as plastic straws         alternative to non-recyclable items today, they    advantage over time. Those that fail are likely
and stirrers in bars and restaurants.                should focus on finding new options tomorrow.      to face serious challenges in the years ahead.
   Second, they can alter their practices so they
no longer use certain products, such as excess
or harmful packaging. Third, they can address
their processes and procurement – questioning
the provenance and make-up of every product
in their supply chain and taking steps to replace
non-recyclable items with recyclable ones.
   “This is often easier than it sounds,” says
Gummer. “In most cases a recyclable option
exists, but through lack of engagement or
knowledge or current price differentials the

         Extended Producer
Responsibility places the onus
  of recycling squarely on the
shoulders of companies across
 the supply chain, from manu-
   facturers to retailers.

                                                                                                                          ISSUE 45/SUMMER 2019         19
You can also read
Next slide ... Cancel