Target Company Overview

Founded in 1980 by Michel Denis, Delta Service Location (DSL) is a pioneering company specializing in the rental of pumping equipment and generators for the construction, energy, and industrial maintenance sectors. The company has also developed expertise in groundwater lowering services, establishing itself as a leading player in this specific market within France.

Headquartered in Corbas near Lyon, DSL operates nationally through a network of eight agencies and employs over 160 staff members, ensuring comprehensive geographic coverage and rapid response capabilities across the territory. Despite underlying cyclicality, DSL maintains a strong leadership position in its niches, demonstrating a notable capacity for innovation and participation in market transformations over the coming years, particularly in areas of consolidation and the provision of decarbonized energy.

Industry Overview in France

The rental services sector in France has seen significant growth, driven by increasing demand for specialized equipment in construction and industrial maintenance. Factors such as urbanization, infrastructure development, and energy transition initiatives have bolstered this sector, providing robust opportunities for companies like DSL to expand their service offerings and geographic reach.

In addition to traditional construction needs, there is a growing emphasis on sustainable practices, with an increasing number of firms seeking environmentally friendly solutions. Companies are innovating to provide low-impact and energy-efficient alternatives in equipment rental, aligning with the global push towards sustainability.

The groundwater lowering services market is particularly promising, as the need for effective management of groundwater levels becomes more critical amidst changing climate patterns. DSL's stronghold in this niche positions it advantageously as both public and private sectors ramp up investments in infrastructure while focusing on resource conservation.

As companies across various sectors pursue digital transformation, equipment rental services are increasingly integrating advanced technologies. This evolving landscape opens new avenues for operational efficiencies and enhanced service offerings, compelling firms like DSL to innovate continuously and adapt to market demands.

Rationale Behind the Deal

After experiencing significant development beyond initial projections, Xavier Denis has decided to implement a long-term strategic plan that includes attracting new investors. As a result, DSL has welcomed three new investors—GENEO Capital Entrepreneur, Société Générale Capital Partenaires, and Alliance Entreprendre. This investment also coincides with the integration of the Rabatech group companies (ERF, Neptune, and Action Ecologie), which generate a combined consolidated revenue of €13 million.

These strategic acquisitions will enhance DSL's market position in groundwater lowering and temporary pumping services, further diversifying its expertise in drilling, point-filtering drainage, and water treatment. This capital reorganization will enable Xavier Denis and the management team to become majority stakeholders while also extending capital access to all employees through the establishment of an employee shareholding fund (FCPE), which will be finalized in the coming months.

About the Investors

GENEO Capital Entrepreneur is an investment and support company that assists SMEs and mid-sized enterprises (ETIs) with their development and transition projects. They specialize in minority investments in companies with revenues exceeding €10 million and operational profits over €1 million. Operating as an investment company rather than a fund allows GENEO to control timelines and implement long-term strategies effectively.

Each invested company benefits from a tailored support program established in collaboration with the management team, known as the Carnet de Croissance. The GENEO community consists of 130 entrepreneurs and families, sharing experiences and business networks to enhance value creation. At GENEO, investment equates to commitment.

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This deal is poised to be a positive investment for both DSL and its new investors. The strategic alignment between the company’s growth ambitions and the expertise brought in by the new shareholders creates a strong foundation for future scalability. With DSL's existing reputation and market leadership, alongside additional resources and support from its investors, the company is well-positioned for sustained growth.

Additionally, the integration of Rabatech companies strengthens DSL's capabilities in the growing sectors of groundwater management and temporary energy solutions, which are critical as France moves towards more sustainable practices. The joint effort in these areas aids in mitigating risks associated with cyclicality, thereby enhancing overall profitability.

Furthermore, the introduction of an employee shareholding fund signifies a commitment to fostering employee involvement and aligning interests, potentially improving morale and productivity. Engaging employees in ownership can help drive performance and commitment to DSL's long-term vision.

As such, we believe this transaction not only emphasizes the importance of strategic partnerships in today’s market but also reflects a proactive approach to addressing industry shifts towards sustainability and innovation. Overall, the deal appears to be a compelling opportunity for both existing stakeholders and new investors.

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