As the leading manufacturer of gardening equipment in Europe, GGP is known for heritage brands and product innovation. Working with 3i, the company will capitalise on its state-of-the-art facilities and pursue rapid growth.
Gardening brands with a rich heritage
When Global Garden Products (GGP) was formed in 2000, it united the best-loved brands in European gardening equipment. Stiga of Sweden can trace its roots back to the 1930s, while Mountfield of the UK and Italy’s Castelgarden and Alpina have been household names for over 40 years. Together the four brands offer a comprehensive range of products, from ride-on tractors and walkbehind lawnmowers to hand-held trimmers and snow throwers. Headquartered near Venice, GGP opened a state-of-the-art factory in Slovakia in 2006, complementing its longstanding production facilities in Italy and Sweden. In addition, it has plans to open production in China in 2008. As well as making equipment for its own prestigious brands, GGP also supplies products to leading private label retailers, helping it to achieve sales of €546m in the year to 31 August 2007.
Positioned for success
Since 1995, GGP and its main constituents have been majority owned by a series of financial investors, including ABN Amro Capital, who acquired the company in 2003. When ABN decided to sell its holding four years later, 3i was keenly interested, as Lorenzo Salieri, Partner, 3i Italy, explains: “We’d kept an eye on the progress of GGP over the last few years because we were impressed by new management, market developments and company performance. “Since he joined the company as CEO in 2005, Pierluigi Tosato has increased its profitability, transformed its production capabilities and rejuvenated its brands. This has positioned GGP to build on the success it enjoys in Western Europe by seizing new opportunities in Eastern Europe and beyond.”
Driving operational efficiency
In October 2007, 3i acquired a majority holding in GGP in a deal that valued the company at €730m. From its People Programmes, 3i appointed Paolo Antonietti as Chairman. Formerly the CEO of chemicals and textiles giant Radici, Paolo has deep experience of running a global business. 3i also appointed two Non-executive Directors: Lorenzo Salieri and 3i’s Managing Director in Italy, Marco Fumagalli. In Marco’s view, the challenge for GGP is to take its success to the next level: “Under Pierluigi’s leadership, the company has already taken giant strides by opening the new factory in Slovakia and starting to source some components from China. Now that these capabilities have been established, GGP will use them to maximum effect to strengthen its cost leadership and support a wider range of products and markets.” With a core market in Western Europe, there has inevitably been a seasonal aspect to GGP’s sales, with February to July representing a peak. Over the years, the company has responded to this by using flexible working practices and introducing counter-seasonal products, such as snow throwers. The company intends to stimulate its year-round sales further by increasing its profile in new geographies.
Expanding in markets old and new
A sharper focus on Southern Hemisphere nations is just one part of the overall plan for growth. CEO Pierluigi Tosato outlines some of the other elements: “As the population in Western Europe ages and has more leisure time, sales of gardening equipment are rising, with a particular interest in our technically innovative and high-end products. At the same time, increasing wealth in Eastern Europe means that demand is also growing strongly on our own doorstep. “Hand-in-hand with the rise in sales of new equipment come important opportunities to increase the contribution from spare parts, warranties and services.” Alongside its well-known consumer names, GGP also owns Belos, a brand for larger gardening machines aimed at the professional user. In Lorenzo Salieri’s view: “Belos currently accounts for a modest proportion of GGP’s turnover but there’s a tremendous opportunity to develop the brand further and substantially increase sales.”
An ideal partnership
GGP’s commitment to technical excellence and product development is reflected in its plan to spend 3% of sales revenue on R&D in the next few years, with a particular emphasis on ensuring its products meet the best environmental criteria. At the same time, the company will work with 3i to evaluate potential acquisitions on a selective basis – particularly where this will increase the depth of its offering to professional users. As Pierluigi Tosato puts it: “We have a lot of opportunities – for international growth, for acquisitions, for streamlining operations and, ultimately, for an IPO. 3i is vastly experienced in all of these, which makes it the ideal partner for this stage in our development.”
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