Target Information

Sortera Skandinavien Holding AB ("Sortera") is a leading provider of building waste collection and sorting services in the Nordic region, particularly focusing on the builder bag segment. Founded in 2006 by Conny Ryk and Henrik Westöö, Sortera has established a reputation for exceptional customer service. The company operates in major cities such as Stockholm, Gothenburg, and Oslo, and manages two sorting facilities in Stockholm. With around 3,500 customers and a committed workforce of over 90 employees, Sortera generated a pro forma revenue of SEK 193 million in 2015.

Industry Overview

The construction waste management industry in Sweden is rapidly evolving, fueled by increasing environmental awareness and stricter regulations. As urbanization intensifies, the demand for efficient waste collection and sorting services is expected to rise significantly. Swedish legislation also emphasizes recycling and sustainable waste management practices, providing a framework that encourages innovation and investment in the sector.

In addition to legislation, market dynamics play a crucial role in shaping the industry landscape. Companies like Sortera, which adopt strategic initiatives focused on optimizing logistics and customer service, are well-positioned to capitalize on growth opportunities. The competitive landscape consists of a mix of local and regional providers, all vying for market share in an environment that rewards efficiency and quality.

The Nordic region as a whole exhibits a strong commitment towards sustainable practices. With both public and private sectors prioritizing eco-friendly solutions, waste management services that reduce environmental impact will continue to attract investment and demand. This backdrop provides an advantageous setting for established companies like Sortera to expand their offerings and enhance their market presence.

Rationale behind the Deal

The decision for Norvestor VI, L.P. ("Norvestor") to divest Sortera to Summa Equity stems from a successful period of ownership characterized by remarkable growth. Since Norvestor's investment in May 2012, Sortera has more than doubled its size and nearly tripled its underlying EBITDA. The expansion of Sortera's service offerings and the establishment of new sorting and operational facilities underscore the value created during this period.

Summa Equity's acquisition of Sortera presents an opportunity to leverage its established brand and operational model. By continuing to foster Sortera's growth strategy, which emphasizes innovative environmental solutions, the deal aligns well with Summa Equity's investment focus on sustainability-driven businesses.

Investor Information

Norvestor Equity AS is a prominent private equity firm in the Nordic region, specializing in lower mid-market buyouts. Since its inception in 1991, Norvestor has built a reputation for insightful investment strategies, successfully executing 58 acquisitions and 41 exits, including 14 IPOs. The firm is particularly committed to fostering growth in its portfolio companies and has substantial experience in guiding businesses through various market phases.

The firm emphasizes investments in companies poised for significant growth, particularly those with the potential to achieve a leading position in the Nordic or international markets. Norvestor's track record showcases its ability to identify and cultivate talented management teams, as seen in its partnership with Sortera, which has consistently demonstrated exceptional performance.

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The divestment of Sortera by Norvestor to Summa Equity appears to be a strategic move that reflects the strong growth and value created during Norvestor's ownership. Given Sortera's established market position and its proactive expansion efforts, the deal seems favorable for both parties. Norvestor's successful track record with Sortera adds an additional layer of credibility to the transaction.

From an investment perspective, Summa Equity's commitment to further develop Sortera's operational model aligns with current market trends favoring sustainable and efficient waste management solutions. The ongoing demand for such services in the Nordic region will likely support Sortera's future growth trajectories, making the investment attractive.

However, potential investors should closely monitor market dynamics and regulatory landscapes, as these factors can significantly impact performance. Furthermore, maintaining high levels of customer service and operational efficiency will be critical as Sortera seeks to enhance its competitive position amidst rising competition in the waste management sector.

In conclusion, the acquisition of Sortera by Summa Equity represents a promising opportunity in a market poised for growth, provided the management team can successfully execute on its strategic vision. Overall, the deal could very well be a sound investment given the right execution on the post-acquisition growth strategy.

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