Intouch Spring/Summer 2008
Facilities management for Nordic giants
Excellent board-level access and shared values helped Coor and 3i build the Nordic region’s leading provider of integrated facilities management – delivering essential services to blue-chip names.
Ericsson.Nokia.Volvo. Saab.E.ON. DetNorskeVeritas.”Mats Jönsson, the CEO of Coor Service Management, reels off just a few of the household names headquartered in the Nordic region.
Sweden, Denmark, Norway and Finland, with their internationally-minded, outward-looking focus, are well known for creating global giants. In 1998, one of those giants, Skanska, identified a market opportunity created by the interaction of three factors: the huge success of the region’s multinationals, the increasing trend for focusing on core activities, and the growing acceptance of outsourcing.
To take advantage of this, the Stockholmbased construction group established a facilities management business – now known as Coor. From the start, Coor took a distinct approach:
- In addition to the usual staples of outsourcing, such as cleaning, catering and property management,the company offered specialist, production-related services, including instrument calibration and tool-sharpening.
- By offering a wide range of services, Coor was able to provide integrated facilities management – taking over services in bundles rather than piecemeal and consequently simplifying life for large companies.
As Coor grew in expertise and scale, it added further value by streamlining operations, migrating best practice and cutting costs – truly managing services, rather than simply delivering them. With an emphasis on employee training, IT support and quality systems, Coor consistently increased its contribution to clients’ success.
Winning the deal though local expertise
As one of the ten founding employees, Mats Jönsson has led Coor in its decade long journey from start-up to a business with €530m revenue a year in 2007. One of its defining moments came in 2004, when Skanska decided that facilities management was itself non-core and put the business up for sale.
As Jönsson recalls, the market opportunity was highly attractive to potential investors. “Compared to other European markets, integrated facilities management was fairly under-developed in the Nordic region, but the demand was clearly there,” he says. “Under the growing pressure of international competition, more and more Nordic multinationals were keen to outsource non-core activities, producing market growth of 15% a year.”
With widespread interest in Coor, 3i had to work hard to show that it was the right partner for the business. 3i’s global presence is often its unique deal-winning factor – but in this case,it was the firm’s local presence, network and chemistry that carried the greatest influence.
“When major companies adopt integrated facilities management, it’s a strategic decision taken at the highest levels, so we needed a private equity partner with board-level access to the major players in the Nordic region,” explains Jönsson. “That’s what 3i’s local network provided. Of course, 3i’s international network is useful – but frankly, if we hadn’t partnered with 3i, the logical alternative would have been a major regional investor.
“This emphasis reflects the business strategy at the time of the buyout. Our absolute priority was to achieve leadership in the Nordic countries, with wider international expansion deferred until we’d achieved our regional goals. In this, we had total support from 3i.”
Targeting growth in new markets
The market was growing rapidly but Coor was determined to grow even faster. To achieve this, two strategic priorities were identified. Firstly, the company needed to balance its strength in the telecoms sector by winning more manufacturing and industrial clients. Secondly, Sweden represented about 90% of turnover, so there was a clear need to achieve major growth elsewhere to become a truly regional player.
Over the next three years, these diversification goals were pursued rigorously. The doors opened by 3i’s network helped Coor win major new contracts, while a series of joint ventures and mergers transformed Coor’s profile in Finland and delivered market leadership in Norway (see panel).
In the view of Mats Jönsson, the way Coor and 3i do business is very similar. “Our remit is narrower than 3i’s but we’re both identifying target opportunities, evaluating them and guiding the most exciting opportunities to completion. 3i’s Nordic teams provided us with practical help and were particularly strong on tactical aspects.
“In Sweden, we had in-depth support from 3i’s Gustav Ström, Fredrik Karlsson and Gustav Bard, while in Finland, Kalle Helander joined our Advisory Board and was a major factor in establishing a substantial local platform.
“Ultimately, we had great chemistry with 3i. They expected high levels of performance but they didn’t just focus on the return on investment. They shared the same sense of values and ethics, and they only wanted us to grow in ways that created long-term value.”
An exceptional partnership
During the three-year partnership with 3i, Coor doubled its turnover and profits, and grew its workforce from 1,800 to 3,700. In November 2007, the next phase in Coor’s story began when 3i transferred its holding to European buyout specialist, Cinven, in a transaction that valued Coor at €540m.
For Mats Jönsson this signals an exciting new beginning. “Cinven was the preferred new partner of the management team and we’re very much looking forward to working with them. That said, we could equally have remained with 3i for several more years – it was a partnership that simply worked exceptionally well.”