Target Information

Connecting Capital has acquired a 70% stake in Rovalin AB, a leading Swedish provider of foundation work. Based in Nykvarn, Rovalin generates approximately 250 million SEK in annual revenue and employs around 30 staff members.

As part of the acquisition, the sellers reinvested to retain a 30% stake in the newly formed Infrastructure Group Nordic AB, indicating their confidence in the partnership and future growth of the business.

Industry Overview in Sweden

The foundation work industry in Sweden operates within a competitive landscape characterized by high entry barriers. Established companies must navigate regulatory requirements, secure specialized equipment, and maintain skilled labor forces to remain viable. As such, firms like Rovalin that boast extensive experience and a robust portfolio of services are well-positioned for growth.

Sweden’s construction and infrastructure sectors have shown resilience in recent years, supported by government investment in public infrastructure. This has led to an increasing demand for foundation work, particularly in urban areas where development projects are frequent.

Moreover, sustainability is becoming a critical focus in Sweden's construction industry. Companies that embrace innovative, eco-friendly practices can capture market share as clients prioritize environmental considerations in their procurement processes.

Furthermore, the ongoing urbanization trends in Sweden are expected to sustain the demand for specialized construction services, providing growth opportunities for niche players in the industry.

Rationale Behind the Deal

Connecting Capital's decision to acquire Rovalin aligns with its strategy to invest in successful, niche-leading companies within the infrastructure sector. The partnership aims to leverage Rovalin's established market position and expertise to expand its service offerings and geographic reach.

By integrating Rovalin into the Infrastructure Group Nordic AB, Connecting Capital plans to enhance the customer value proposition while pursuing organic growth and additional acquisitions, positioning the group for long-term success.

Investor Information

Connecting Capital, founded in 2009 and led by Nils Bergström, is a family-controlled investment firm. The firm's legacy traces back to the establishment of ABA (Allmänna Brandredskapsaffären) in 1896, which is now part of NORMA Group AG, a global leader in hose and pipe connection technology listed on the Frankfurt Stock Exchange.

With a strong focus on entrepreneurial and industrial development, Connecting Capital seeks to invest in businesses that display growth potential and strong market presence.

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From an expert perspective, this deal appears to be a strategic move by Connecting Capital, positioning them advantageously in the growing infrastructure sector. By acquiring Rovalin, the firm not only gains immediate revenue but also taps into a market poised for expansion, benefiting from urbanization and increased construction activities.

The decision to retain the previous owners in their current roles is commendable, as their industry knowledge and networks will be invaluable for driving the company’s growth. This collaborative approach may facilitate smoother transitions and strategic synergies as the two entities work together.

Additionally, the emphasis on sustainability and innovation within the construction sector aligns with global trends, providing Rovalin and Infrastructure Group Nordic AB with an opportunity to differentiate in a competitive market.

Overall, this investment by Connecting Capital is likely to yield favorable returns, given Rovalin's existing market position and the favorable industry conditions in Sweden.

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