Target Company Overview

On July 10, 2023, Private Assets AG, a Hamburg-based investment firm, signed a purchase agreement to acquire the Spanish foundry Fundiciones Garbi, S.A. The deal involves the complete takeover of the business operations and the existing workforce of approximately 80 employees.

Fundiciones Garbi, S.A. is a well-established foundry operating throughout Europe, located in Abadiño near Bilbao in Northern Spain, a key industrial hub on the Iberian Peninsula. With a production capacity of 20,000 tons per year, the company serves a diverse clientele across various critical sectors, including wind turbine manufacturing, railway vehicle construction, machine and tool manufacturing, as well as engine production.

Industry Overview in Spain

The foundry industry in Spain has seen significant growth, particularly in response to the increasing demand for low-carbon energy solutions, such as wind power. As one of the leading countries in Europe for renewable energy, Spain's emphasis on sustainability has bolstered its foundry sector, which plays an essential role in providing components for wind turbines and other renewable technologies.

Additionally, the manufacturing landscape in Spain is characterized by a blend of traditional craftsmanship and advanced industrial techniques, fueled by ongoing technological innovations. Trade relationships with other European nations also enhance Spain's position in the foundry industry, leading to improved operational efficiencies and competitive pricing.

The burgeoning automotive and aerospace industries in Spain further contribute to the demand for foundry products. As these sectors evolve to incorporate more lightweight and durable materials, foundries are critical in supplying the necessary components for vehicles and aircraft.

With a supportive regulatory environment focused on promoting industrial growth, Spain's foundry industry is expected to continue developing, offering opportunities for companies to expand their operations and diversify their offerings.

Rationale Behind the Deal

Private Assets AG integrated Fundiciones Garbi into its existing foundry group, Procast, which is already successfully operating in the European market. CEO Sven Dübbers highlighted that Garbi serves as an ideal addition to the Procast foundry group, aligning well with the technical requirements and performance spectrum needed to satisfy existing customer demands.

This acquisition not only strengthens Procast’s market position by expanding its capabilities and operational footprint but also enhances revenue potential and operational synergies, allowing for the diversification of customer industries.

Investor Information

Private Assets AG is an investment company based in Hamburg specializing in acquiring stakes in medium-sized enterprises experiencing transitional challenges. The company's shares are traded in the unofficial market of the Berlin Stock Exchange under the securities identification number A3H223. Over the past two years, Private Assets AG has been recognized as a top performer in the small and micro-cap sector by industry publication Smart Investor.

In 2022, the company reported consolidated revenues of €158.2 million, a significant increase from €82.4 million in the previous year, with an EBITDA of €12.6 million compared to €7.1 million in the prior year. The firm has demonstrated a consistent track record in managing crisis situations within companies, focusing on operational improvements and sustainable growth.

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From an expert perspective, the acquisition of Fundiciones Garbi by Private Assets AG appears to be a strategic move that could significantly benefit Procast’s overall business model. The integration of Garbi's specialized manufacturing capabilities aligns well with the growing demand for components in key industries like renewable energy and automotive manufacturing.

The potential for increased revenue and diversification, given the established customer base of both Garbi and Procast, suggests that this acquisition could lead to substantial growth opportunities. Furthermore, the existing operational efficiencies and the shared technological advancements between the two companies indicate strong synergetic potential.

Moreover, with Spain’s favorable industrial conditions and the increasing emphasis on sustainable practices, Private Assets is well-positioned to leverage these trends through its investment in Fundiciones Garbi. It cemented its foothold in a growing market that is likely to see significant advancements in the coming years.

However, as with any acquisition, diligent post-merger integration and management will be crucial to fully realize the benefits of this transaction. If executed effectively, this investment could provide notable long-term value for Private Assets AG and its shareholders.

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