Reaching new heights

When construction companies need lifts and hoists, Alimak Hek is the premier brand they turn to. Over a five year period, under 3i’s ownership, Alimak Hek has emerged from a loss-making operation to become a well balanced company delivering strong growth in turnover and revenue.

The roots of Alimak Hek go back to the foundation of Alimak in Sweden in 1948 and Hek in The Netherlands thirteen years later. Both companies supplied hoists and platforms for elevating people and equipment at building sites, gaining superb reputations for the quality of their rack and pinion technology. The merger of the two businesses in 2001 had a clear business logic but there was one major issue: the new company was heavily reliant on the construction sector, which was going through a cyclical downturn. At its birth, Alimak Hek was losing money.

A belief in the future
Around the time of the 2001 merger, 3i became an equal 50% co-owner of Alimak Hek. In the words of 3i Director and advisor Christer Nilsson: “We strongly believed in the company’s products and reputation but clearly needed to address the cyclicality of its business. Working closely with management, we agreed a plan that focused on profit improvement in the short term and broadening the application areas and revenue growth in the years ahead.”

Streamlining and efficiency
Alongside classic profit improvement techniques – such as inventory reduction, process outsourcing and cost control – the company focused on simplifying its product range. By reducing the number of core products and components, Alimak Hek was able to streamline its own operations while also making life simpler for its clients. By 2004, the company’s bottom line had been restored to health and the focus turned to growth.

Planning a well-balanced business
To lead the company through its next phase, experienced new executives, led by CEO Petter Arvidson, formerly of ABB, were introduced. The new team devised a threepart plan to build a more balanced business. Firstly, Alimak Hek set out to grow its rental activity and after-sales service. Secondly, it resolved to increase sales to the industrial sector, so that its products could be used in a wider range of scenarios, from oil rigs to industrial chimneys. Thirdly, it decided to further grow the global presence that matched its market leadership in Europe.

2006: The year of transformation
Petter Arvidson explains how the strategy led to a transformative year: “We made steady progress during 2003-05 but 2006 was the year all our efforts came to fruition. In  January, we acquired Champion in the US, which opened up access to a wide variety of industrial customers. In July, we bought Conrent in Australia, which was a key step for our rental business. And in November, we opened our manufacturing facility in China, to supply the booming local market. 3i were active partners in all that we did, providing insight, advice and hands-on support – their teams in Hong Kong and Shanghai were particularly valuable when we were setting up our factory in Changshu.”

The next chapter
During the strong growth focus in 2004-06, the company’s global workforce grew by almost 200 and Alimak Hek became a wellbalanced business, in which revenue from product sales was complemented by rental and after-service income, while turnover was evenly distributed across Europe, the US and Asia. This was reflected in its strong financial performance: by 2006, Alimak Hek had earned a profit of €27m on turnover of €174m – a strong contrast to the net loss of €4m on turnover of €126m back in 2001. With the three-part plan delivered, it was time for the company to move forward under new ownership. The company attracted strong interest from several potential buyers and was sold to private equity company Triton in December 2006 for €238m. For 3i, this was a money multiple of 4.8x and an IRR of 30%.

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