In one of its largest European growth capital deals, 3i has acquired a 30% stake in Sistemas Técnicos de Encofrados (STEN), a leading provider of formwork and scaffolding in Spain.

A leading player in its market
Founded in 1982, STEN specialises in developing formwork and scaffolding systems for construction works, either for sale or rental and is one of the leading players in the formwork market. STEN is primarily a Spanish business, with 95% of sales generated in its home market; however, it also has warehouses in Portugal and Poland, exports to other countries and plans to operate in Dubai.

Maintaining a close relationship
3i identified STEN as a potentially attractive investment target in 2003 and Agustín Pla Vila, 3i Partner, was chosen to track the company because he knew Pedro Nueno, a personal advisor to STEN's founder, José Luis Ubiñana. Over the following years, 3i met Nueno frequently to keep up to date with the company's performance. Daniel Viñas, 3i Director, explains: “During this time, our focus was on maintaining a close relationship with key stakeholders in the company. Ubiñana was not looking for investment at that time, but the situation changed in the second half of 2005.”  In late 2005, STEN was approached by a potential buyer. Although Ubiñana rejected the offer, the event caused him to reconsider his options. The company's founder still wanted to eventually exit the business but not before adding significant value to it.

The inside track on the deal
Having built up a close relationship with Nueno over three years, 3i was in a prime position to secure the deal, but it still had to prove its business credentials. 3i was able to illustrate how its international network could add real value to the company and in addition, its strong sector expertise -it had recently invested in Renta Corporacion and Gebomsa, two companies operating in the construction sector- was an important factor in winning the deal.

Two areas of key focus
Working in partnership, STEN and 3i will now grow STEN's international presence using 3i's global network of contacts, and introduce talented board executives from 3i's People Programmes to transform STEN's management. Since completing the deal, STEN has already been introduced to three potential acquisitions in Italy, Spain and France and been introduced to new contacts in Dubai and India. Both Ubiñana and 3i agreed that the business needed to become more professional if it was to fulfil its potential, and as a first step, 3i recently introduced a non-executive director, Pedro Luis Uriarte to the board. Uriarte is a high calibre and very well respected individual in the Spanish financial sector and was CEO of BBVA from 1994 to 2001, and a member of 3i's Spanish Advisory Board. In addition, Alfonso Ruano, non-executive director of other 3i investments in Spain, was brought in as a part time project leader to improve STEN's financial management systems. Viñas explains: “Uriarte is objective oriented and has a wide network of contacts. We believe he can be very valuable in helping STEN achieve its ambitious growth plan, both domestically and internationally, by ensuring the speed of expansion. Ruano will be working with the financial director and his team to develop a new reporting system that will provide real time intelligence on how the company is performing.”

Through its People Programmes, 3i introduced a list of potential candidates for the appointment of a new CFO who will join the company in March 2007. The appointee, Javier Salleras, who used to work in the auditing and transaction service departments at Arthur Andersen and Deloitte, brings a wealth of experience to the role. Daniel Viñas concludes: “This is a business with great potential. STEN is already a leader in the Spanish market but has the ability to become a truly world-class business. I look forward to working with the management team to achieve this goal.”