Target Information

Avallon MBO, a private equity fund, has successfully sold its complete stake in Novo Tech after seven years. Novo Tech is a Polish company that specializes in the production of high-quality polyethylene products for various sectors including automotive, industrial, agricultural, and household markets. The company has established itself as a prominent European player with a history spanning several decades. Its diverse sales reach over 50 countries across all continents, with an impressive 95% of its production dedicated to exports.

In recent years, Novo Tech has focused on enhancing its flagship solutions, leveraging continuous injection molding (CIM) technology, a unique aspect among Polish manufacturers. The company maintains a leadership position in the growing European market for splash mats under the Clear Pass brand, serving well-known clients such as Daimler, Scania, Paccar, and Schmitz. Additionally, Novo Tech is recognized as a leading producer of entrance mats for households and related industrial products marketed under the AstroTurf brand, which includes specialty products like artificial ski slopes and Formula 1 track edge mats.

Industry Overview

The polyethylene production industry in Poland has seen significant growth, driven by robust demand across various sectors. Given Poland's strategic position within the European Union, companies like Novo Tech are benefiting from increased trade and access to broader markets. The country's favorable business environment, combined with a skilled labor force, has led to sustained investments in advanced manufacturing technologies.

Furthermore, Poland remains a key hub for automotive and industrial manufacturing, creating a solid foundation for companies involved in producing essential components and materials. The emphasis on innovation and the adoption of new technologies, such as CIM, has positioned local firms to compete effectively on a global scale. This is critical as the demand for high-quality, versatile polyethylene products continues to rise.

Isosport Verbundbauteile GmbH's acquisition of Novo Tech marks a significant milestone as it reflects the increasing interest of foreign investors in the Polish market. As a subsidiary of Constantia Industries AG, Isosport aims to leverage Novo Tech’s existing capabilities to extend its product offerings and market reach. This acquisition is poised to enhance Isosport's competitive edge in niche markets.

As European markets evolve, companies are recognizing the opportunities presented by sustainable practices and eco-friendly manufacturing processes. This shift in consumer preferences is likely to impact how products are developed and marketed, encouraging further innovation within the industry.

Rationale Behind the Deal

The primary goal of this transaction was to support Novo Tech in its ongoing international expansion. With stable funding from Avallon, the company was able to invest in research and development, introducing new products and successfully serving global markets. This approach has yielded significant results, with 2021 marking the best year in Novo Tech's history, achieving sales of 83.35 million PLN and an EBITDA of 21.2 million PLN.

Mirosław Janicki, an investment director at Avallon overseeing the transaction, highlighted the successful exit following the recent divestiture of another company, Stangl. Novo Tech’s achievements are indicative of the well-planned investment strategies employed by Avallon and its commitment to fostering growth within its portfolio companies.

Investor Information

Isosport Verbundbauteile GmbH, part of the Constantia Industries AG group, marks its first investment in Poland through the acquisition of Novo Tech. Constantia is a family-owned industrial holding company based in Austria, operating globally through its subsidiaries, including Fundermax, Isovolta, and Isosport. The group's strategy involves diversifying its portfolio while effectively exploring niche markets, making this acquisition a strategic move aligned with its growth objectives.

Karl Mad, the managing director of Isosport, emphasized their focus on tailoring innovative solutions to meet the specific needs of clients. This acquisition broadens Isosport's portfolio and facilitates entry into new markets, reinforcing the group’s vision for strategic development in the industry.

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From an investment perspective, the acquisition of Novo Tech could potentially be a strong strategic move for Isosport. Given the company's established market presence, robust export capabilities, and innovative production techniques, this deal positions Isosport to capitalize on growing demand in the polyethylene sector.

The divestiture reflects well on Avallon’s investment strategy, as it successfully navigates exits from its portfolio companies while achieving significant growth metrics. For Isosport, the opportunity to expand its product offerings and enhance its competitive position in Europe makes this acquisition not just beneficial but essential to its long-term objectives.

Overall, Novo Tech's established client base, technical expertise, and diverse product range underline the potential for future growth and innovation under Isosport's ownership. With clear market trends leaning towards sustainable solutions, the investment reinforces the commitment to developing environmentally-friendly products that cater to both existing and emerging markets.

In conclusion, if managed effectively, Isosport's entry into the Polish market through Novo Tech stands to yield fruitful returns and solidify the company’s presence in a vital segment of the European manufacturing landscape.

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