Target Company Overview

Nordisk Bergteknik has announced its largest acquisition to date, signing an agreement to acquire all shares in Infrastructure Group Nordic AB ("IGN"), a subsidiary of Connecting Capital, along with its operational subsidiaries, Rovalin and Soil Mixing Group. IGN generates approximately 420 million SEK in annual revenue with strong profitability, specializing in foundation work and ground reinforcement services. This acquisition enables Nordisk Bergteknik to expand its operations in the Stockholm region, one of the largest local markets for foundational services in the Nordic countries, and also enhances and complements the company's service offerings.

Founded in 2014, Rovalin has established itself as a leading provider in deep foundation services, employing 45 professionals and primarily operating in the Stockholm area. The acquisition will not only strengthen Nordisk Bergteknik’s geographic presence in northern Sweden but also enhance its overall market position. Soil Mixing Group, which has 22 employees, specializes in soil and ground reinforcement services for real estate and infrastructure projects throughout Sweden and Norway.

Industry Overview in Sweden

The construction industry in Sweden, particularly in the foundation sector, has been witnessing steady growth due to increased investments in infrastructure and housing. As urban areas expand and the need for modern amenities rises, the demand for specialized services like those offered by Rovalin and Soil Mixing Group is expected to grow significantly. With a robust economy and ongoing governmental projects, the foundational industry is positioned to thrive in the coming years.

Furthermore, the Swedish government has outlined significant infrastructure investments aimed at improving transportation, energy, and communication networks across the country. This governmental support not only facilitates growth but also attracts investments from both domestic and international players looking to tap into the thriving market. The introduction of new technologies and environmentally friendly construction practices is also reshaping the industry, leading to increased competitiveness.

In the context of the Stockholm region, the demand for construction and foundation services remains high due to rapid urbanization and the increasing complexities of construction projects. The strategic location coupled with a skilled workforce makes Stockholm a favorable hub for construction-related industries. Companies operating in this space must remain agile to adapt to changing regulations and environmental standards while ensuring profitability and sustainability.

Rationale Behind the Deal

This acquisition is expected to significantly strengthen Nordisk Bergteknik's position in a lucrative segment of the construction market. By integrating Rovalin and Soil Mixing Group, Nordisk Bergteknik enhances its operational capabilities and extends its service offerings, thereby capturing greater market share. The deal not only fortifies the existing business but also provides an opportunity to penetrate new geographic areas in northern Sweden and Norway with substantial infrastructure investment planned for the coming years.

Investor Background

Nordisk Bergteknik is committed to a clearly defined growth strategy aimed at contributing to the development of sustainable societies. The company specializes in rock and foundation management, merging client needs with natural prerequisites. With a strong presence in the market, Nordisk Bergteknik continues to expand its footprint strategically, ensuring long-term value creation.

Connecting Capital is a family-controlled investment firm rooted in a Swedish family-owned industrial company. The firm focuses on establishing solid and long-term relationships that foster industrial value creation through active and engaged ownership. Connecting Capital invests in well-managed industrial and trading companies in the Nordic region, supporting their growth and market expansion efforts.

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This acquisition represents a significant opportunity for Nordisk Bergteknik to solidify its leadership in a promising market segment. By integrating Rovalin and Soil Mixing Group, the company stands to enhance its operational efficiency and revenue streams. Both companies bring valuable expertise and a strong market presence, which can lead to increased customer trust and loyalty.

Moreover, the deal aligns perfectly with the ongoing infrastructure investments within Sweden, providing a strategic advantage as both companies leverage increasing demand for construction and foundation services. As Nordisk Bergteknik expands its offerings, the potential to enter new markets also arises, particularly in northern Sweden and Norway, which are set for substantial development in various sectors.

Furthermore, the financial structure of the deal, involving both immediate cash and equity investment, reflects a well-thought-out approach to asset management and growth. By issuing shares with a lock-up agreement until spring 2023, Nordisk Bergteknik ensures alignment of interests between the investors and the newly acquired companies, mitigating risks associated with market fluctuations.

In conclusion, this acquisition could potentially serve as a robust investment for Nordisk Bergteknik, enhancing its market position, driving profitability, and opening doors to future growth opportunities in a rapidly evolving industry.

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