Every time you see a MAN, Volvo or Tata truck, its components are likely to include parts produced and supplied by Hyva Investments BV (Hyva) of Holland. The Dutch group was founded in 1979 and spent 15 years developing its Western European operations. In 1992, it established Hyva Malaysia as a base for the Far East, the start of an expansion programme that has seen it set up operations in locations such as Brazil, India, Thailand, Poland and China.
It is this blend of global expertise and local presence that made it so attractive to 3i. The management team's skill in consolidating Hyva's position in developed markets whilst adopting an entrepreneurial approach in emerging ones was a key distinguishing feature.
Jaap Vaandrager, founder of Hyva recognised that the scale of the opportunity required external investment. He had previously raised smaller amounts of financing, but in late 2003 he and his management team recognised the growth opportunities available to Hyva organically and through acquisition. In summary, there was a need for a new partner.
"Hyva is operating in more than half of the countries in the world," says Mark Redman, Director 3i Benelux. "To have such considerable opportunities in so many emerging markets is quite special." This was a key factor in 3i's decision to lead the €125m buyout of Hyva in 2004.
Adding value 3i style
After the deal was completed, 3i worked closely with Louwrens Dijkstra, the newly appointed Chief Executive, to boost value within the business. It did this principally
through helping Hyva build its Board. 3i introduced Hamdi Conger, who had held senior positions with engineering groups Alstom and Lockheed, as chairman of the supervisory board. It also brought in Roelof Koch as CFO and Günter Schiele as COO.
A decision was then taken to introduce Hyva to a number of potential acquisition targets, with the first likely to be completed by the beginning of 2006. 3i's global network has been pivotal to this process. For example, the firm introduced Hyva to its local partners and network in Italy, where a key potential acquisition is located. These initiatives together with the company's organic growth, currently running at over 10% per annum, should enable Hyva to grow revenues from €146m in 2003 to up €500m within three to five years.
Meanwhile, Hyva continues to grow organically. It recently entered the US market with products made in Brazil. The US is one of the largest potential markets for Hyva, and the firm is now able to compete with US suppliers in that market thanks to its production operations in Brazil. "It is important to know that our strategy of organic growth and potential acquisitions is not just supported by 3i, but is positively encouraged," says Hyva's Dijkstra.
Lessons Learnt
The blend of 3i's engineering sector experience and its international network made it an attractive equity partner for Hyva's management when the deal was signed in 2004. More than 18 months on and the reality is matching the aspiration.
Dijkstra believes that Hyva will grow faster with 3i than without. "In this MBO, the management was again able to take a substantial interest in the business, which for us is motivating. It's good to feel yourself being an entrepreneur in a company partly owned by yourself."
Redman said: "We are committed to making sure Hyva remains entrepreneurial, with a structure that will enable it to triple revenues and profitability over a three-to-five-year period via organic and acquisitive growth. Hyva may be a Dutch headquartered business, but few have its international reach or outlook. This international perspective is what makes our partnership so effective."
"3i is positive, supportive, cooperative and contributes truly international thinking," says Dijkstra. "It is completely committed to working with us to develop the business to its full potential."
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