Target Company Overview

On May 5, 2022, MVI Fund II completed its latest platform investment by acquiring a significant minority stake in SMP Parts ("SMP"), thereby becoming the controlling investor in the company. MVI Equity has been a controlling investor in SMP since 2014, when it acquired the company alongside its investor network and Fouriertransform AB ("FTAB").

Founded in 1980, SMP Parts is a leading comprehensive provider of attachments for excavators, including tiltrotators, quick couplers, and buckets. With production facilities in Ilsbo, Sweden, SMP delivers integrated solutions within the ecosystem of smart attachments, boasting a strong presence in the Nordic region and continuous international growth. The company emphasizes flexibility and safety in its product features, enabling quick and secure changes between various tasks and tools while maximizing efficiency.

Industry Overview in Sweden

The construction equipment industry in Sweden is dynamically evolving, spurred by increasing automation and a focus on energy efficiency. This sector has experienced robust growth, supported by a heightened demand for advanced machinery and attachment solutions. Companies are increasingly seeking innovative equipment to improve productivity and respond to labor shortages within the industry.

Moreover, the trend towards electrification within construction equipment is gaining traction, which could present new opportunities for manufacturers like SMP. As the industry adapts to environmental standards and embraces sustainable practices, the market for hydraulic attachments, including tiltrotators and quick couplers, is anticipated to expand significantly.

Internationally, the demand for such innovative solutions is on the rise, further facilitating the growth potential of companies operating in this space. SMP is well-positioned to capitalize on this trend, as it has already begun exploring the electrification of relevant parts of its product offerings.

Rationale Behind the Deal

MVI sees the change in ownership as a catalyst for accelerated value creation within SMP. The company has demonstrated strong growth under MVI's management, with its tiltrotator product line driving double-digit annual growth. This product category currently accounts for nearly half of the company's revenue, bolstered by a solid aftermarket support.

The ongoing growth of tiltrotators and hydraulic quick couplers is structurally supported by increasing automation in the construction industry, a greater emphasis on energy efficiency, and a labor shortage. These factors underscore the strategic importance of SMP's offerings in addressing the challenges faced by the construction sector.

Information About the Investor

MVI Equity has transformed SMP from a blacksmith workshop into a knowledgeable, leading, and high-tech manufacturing facility during its investment period. Since 2020, the company has been guided by a highly competent management team, adept at proactively developing operations and fostering business growth.

The management team is expected to elevate the company to new heights, and MVI looks forward to supporting SMP on its global growth journey, providing smart solutions that contribute to critical infrastructure for the transition to sustainable communities.

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This investment appears to be a sound decision, as MVI is poised to enhance SMP's capacity to capitalize on emerging global trends. The company has already shown significant growth potential, especially in the hydraulics sector, which is set to expand further as construction practices evolve.

Moreover, the company's dedication to innovation and development under a skilled management team bodes well for future returns. MVI's strategic direction aligns with the growing need for advanced construction solutions, positioning SMP favorably within the industry.

Additionally, the proactive stance towards electrification demonstrates a forward-thinking approach that could resonate with the demands of an increasingly environmentally conscious market. This commitment might not only enhance product offerings but also strengthen the brand's market position.

Therefore, if MVI and SMP continue to leverage their strengths and the prevailing industry trends, this deal is likely to yield positive returns and potentially high growth in the coming years.

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