Target Company Overview

Avallon MBO Fund II, in collaboration with Indian manager Mukesh Patani, has successfully acquired 100% of Novo Tech sp. z o.o., a global manufacturer of polymer processing technology-based products located in Kostrzyn, Poland. Novo Tech represented the European segment of the Indian company Time Technoplast, which specializes in packaging solutions for the markets in India and Southeast Asia. The divestment by the parent company was a strategic decision focused on consolidating operations in their primary business areas across Asian markets.

As part of the transaction, which was formalized on June 5, 2015, Avallon will continue to work closely with Mr. Patani, who has been instrumental in managing the company since its inception in Poland. The deal involves acquiring stakes in two subsidiary companies operating in Romania and Belgium. Novo Tech's product offerings are marketed under well-known brands, including Clear Pass® and 3S® for splash guard products aimed at large and medium-sized trucks, along with AstroTurf®, NovoTech®, and DuroTurf Contract® for the entry mat segment.

Industry Overview in Poland

The polymer processing industry in Poland has experienced steady growth over the past decade, driven by demand for innovative materials and sustainable solutions. The country serves as a significant manufacturing hub in Europe with a robust infrastructure supporting both local and international investments. With an increasing focus on sustainability, firms are exploring eco-friendly materials and advanced production techniques, which contribute to the industry's evolving landscape.

Major players in the area often collaborate with global leaders to enhance their market positioning, leading to a progressive transfer of technology and know-how. This has created a fertile environment for start-ups and established companies alike, facilitating the development of new products and expanding export opportunities.

Poland's strategic location within Europe also positions its polymer processing sector to capitalize on the growing demand for automotive components, construction materials, and packaging solutions. Polish manufacturers cater to both domestic and export markets, with about 80% of Novo Tech's production directed towards international clients, highlighting the potential for growth in exports and market diversification.

Rationale Behind the Deal

The acquisition aligns with Avallon’s strategy of investing in companies with strong competitive positions and promising growth potential in the polymer processing industry. Novo Tech has established itself as a leading producer in this sector, and their existing relationships with renowned European manufacturers such as Daimler, Ford, Scania, and Volvo present significant opportunities for market expansion.

Avallon's intent to continue developing Novo Tech’s export capabilities along with product innovation showcases their long-term vision for growth. The successful partnership with Mukesh Patani offers valuable management experience and industry insight, promising to drive the company's success in both existing and new markets.

Investor Information

Avallon MBO Fund II is a private equity firm established in December 2012, specializing in management buyout transactions in collaboration with business leaders. This acquisition marks the sixth investment by the fund, which has previously targeted companies across various sectors, including marketing, road maintenance, cosmetics, and hygiene articles. With a distinct focus on companies with revenues ranging from 50 to 250 million PLN, Avallon seeks to create value and drive growth in its portfolio.

The firm has garnered investments from prominent international financial institutions, including the European Bank for Reconstruction and Development and funds managed by Swiss firm Akina Partners. Avallon's expertise in conducting management buyouts positions them as pioneers in this investment strategy within Poland.

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The acquisition of Novo Tech by Avallon MBO Fund II is viewed favorably due to the company’s strong position in the growing polymer processing market and its established global client base. Novo Tech’s ability to export approximately 80% of its production enhances its resilience and market reach, making it an attractive investment. Moreover, the technical expertise of Mukesh Patani in leading the company offers assurance in its operational continuity and growth prospects.

Additionally, the strategic partnership with well-known brands and manufacturers positions Novo Tech to leverage new market opportunities, particularly in the evolving landscape of sustainable products. Avallon’s commitment to investing in research and development for innovative solutions further underscores their confidence in Novo Tech's growth trajectory.

In conclusion, this deal presents a strategic opportunity for both parties, with potential significant synergies leading to enhanced market competitiveness. Given the current industry dynamics in Poland and the promising indicators of growth, Avallon’s investment in Novo Tech is likely to yield positive returns in the coming years.

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