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Deal 5: Innova Capital Senior Partner Andrzej Bartos on Sale of Trimo to Kingspan Group

Deal 5: Innova Capital Senior Partner Andrzej Bartos on Sale of Trimo to Kingspan Group

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On August 25, 2020, CEE Legal Matters reported that Rymarz Zdort and Prica & Partners had advised Innova Capital on the sale of 100% of the shares of subsidiary Trimo d.o.o. to the Kingspan Group. CEEIHM spoke with Andrzej Bartos, Senior Partner at Innova Capital, to learn more about the deal.

CEEIHM: Please tell us a bit about Innova Capital.

Andrzej: Innova Capital is an independent private equity firm, operating from Poland and investing in majority buyouts of mid-sized enterprises with activities in Central and Eastern Europe. From its inception in 1994, Innova Capital has invested close to EUR 1 billion in almost 60 companies located in ten countries in the region. Among many awards, Innova was recognized by the Polish Private Equity and Venture Capital Association as PE Management Firm of the Year 2019.

CEEIHM: Tell us about your investment in Trimo. When did you originally acquire the shares and how has the company evolved since then?

Andrzej: By investing in the Trimo Group, headquartered in Trebnje, Slovenia, Innova Capital gained access to a highly attractive European market for complete solutions in buildings envelopes, roofs, facades, modular units, and soundproof systems.

On December 14, 2015, Innova Capital entered into a binding agreement to acquire 97.45% shares in Trimo d.d. and 44.9% shares in Trimo MSS, d.d. as well as all outstanding bank debt from ten Slovenian banks and other credit institutions. The transaction closed in April 2016 after fulfilling formal approvals and conditions.

The Trimo Group is a leading European provider of high-quality mineral wool insulated building envelope solutions, including fireproof roofs and façades, and modular units for non-residential buildings. The products of the company, manufactured in Slovenia and Serbia, are mostly exported to Western Europe and CEE. The company sells its products and services under its own brand to more than 60 countries worldwide. The group’s unique and proprietary Qbiss One solution is gaining an increasing presence in the most demanding applications and markets, having been installed in places such as Heathrow Airport, the McLaren Production Centre in the UK, and numerous Porsche dealerships. The group reported over EUR 100 million in consolidated revenues for 2019 generating industry-leading margins.

During its over-50-year presence in the market, the company has developed many innovative and high-quality products and solutions widely recognized by European architects and end customers. Investment in Trimo was the first direct investment in Slovenia and leveraged Innova’s significant experience in the building materials sector.

CEEIHM: What about the sale itself? Was the deal initiated by you or the Kingspan Group and what do you believe made this target particularly attractive to the buyer?

Andrzej: Under Innova Capital’s ownership, Trimo has focused on its core competences and strengthened its unique, premium positioning in the sustainable building envelope solutions. The company increased its market share in Europe, reaching approximately ten percent and becoming the number two producer of panels with mineral wool core (up from number four in 2016). Core revenues increased dynamically, mainly in Western Europe, which accounted for 35% of total sales in the 2019 financial year (vs. 22% in 2016).

During Innova’s holding period, the company focused on generating recurring orders from its diversified client base and de-emphasized larger one-off projects. Thanks to this policy, as well as streamlining of operations and discontinuation of non-core activities (for example, steel constructions), Trimo was able to improve its profitability significantly and achieved top-class margins in the industry.

As Bozo Cernila, CEO of Trimo, argued, the successful transformation of Trimo under Innova’s ownership is a great example of how a private equity owner can help develop a Slovenian business internationally. It has been an intense, but very enjoyable time.

“Not only were we able to achieve a very good return, but we have successfully transformed the company from a local champion into a truly international player. I’m particularly grateful to the management team, under the leadership of Bozo, for their invaluable contributions, and also to all the employees of Trimo for their support during our holding period,” says Andrzej Bartos, Senior Partner, who led the transaction for Innova.

Trimo’s strategy calls for strengthening its leading position in the high-end steel facades market. Joining the Kingspan Group will enable the company to realize its full potential by taking advantage of Kingspan’s strong international distribution network and operating synergies.

CEEIHM: Rymarz Zdort, Prica & Partners, and Jadek & Pensa advised on the deal. Did you select each of these individually or did you leave identifying local counsel to your lead counsel? What were the specific mandates — what did each advise you on specifically?

Andrzej: Rymarz Zdort co-ordinated the tender for the selection of local advisors at our request. Jadek & Pensa in Slovenia and Prica & Partners in Serbia worked on the vendor due diligence and supported the Rymarz Zdort team in respect of the local law aspects throughout the transaction. Rymarz Zdort, as the lead legal counsel, led the negotiations and co-ordinated the works of the local legal advisors.

CEEIHM: And, while we're on the topic, why did you select Rymarz Zdort over other potential advisors?

Andrzej: We have worked with the Rymarz Zdort team (also under their previous brand, as the Warsaw office of Weil, Gotshal & Manges) for many years and on many transactions. They are clearly one of the leaders in the market for international M&A transactions in Poland and the region – we were well aware that they had advised numerous clients on significant multi-national transactions and that they are extremely adept at swiftly and actively co-ordinating the work of numerous local advisors (including members of different law firm networks) acting in many jurisdictions. The team definitely met our expectations.

Originally reported by CEE In-House Matters.

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