Information on the Target

Axicom, based in Wohlen, Switzerland, specializes in the manufacture of high-voltage grid components. These components play a crucial role in the efficient transmission of renewable energy at high voltage levels. With a workforce of approximately 190 employees, Axicom has been recognized for its innovative approaches to enhancing grid reliability and supporting renewable power initiatives.

Since its acquisition by RCP Invest in January 2021, when it was carved out from TE Connectivity, Axicom has significantly expanded its operations. The company has notably increased its market presence across the Asia-Pacific, Europe, Middle East, and Africa regions, contributing to the sustained growth of its revenue by nearly 50% over four years through the development of new high-voltage components and the implementation of strategic cost-saving measures.

Industry Overview in Switzerland

Switzerland's energy sector is undergoing a significant transformation driven by a clear focus on sustainability and the integration of renewable energy sources. Over the last few years, the demand for clean power has surged, accompanying an increase in installations of renewable energy technologies such as wind and solar. This shift requires optimized transmission and distribution systems to handle variable energy outputs effectively.

The country’s aging power infrastructure presents both challenges and opportunities. Reinvestment in grid modernization is crucial to enhance reliability, accommodate new technologies, and meet the rising electricity demand. Swiss power grid operators are likely to spend billions in upgrades, aiming to improve efficiency and resilience against the increasing strain of renewable energy integration.

Furthermore, the Swiss government has set ambitious climate goals that include a commitment to achieve net-zero carbon emissions by 2050. As part of this initiative, energy transition-related investment has gained momentum, focusing on sustainable energy sources and methodologies. This environment creates a favorable landscape for companies like Axicom which provide essential components for high-voltage energy transmission.

The Rationale Behind the Deal

The sale of Axicom to Trilantic Europe signifies a strategic move aligned with Trilantic's Investment Thesis within the energy sector. The increased demand for electricity and the concurrent rise in renewable energy installations emphasize the necessity for advanced infrastructure development, particularly in transmission and distribution systems.

Vittorio Pignatti-Morano, chairman of Trilantic Europe, underscored the strategic importance of this acquisition. Not only does it provide an avenue for capitalizing on the multi-billion-dollar investment opportunities within the energy transition, but it also positions Trilantic to access a business that directly supports global efforts in modernizing power grids.

Information About the Investor

Trilantic Europe is a prominent private equity firm that has been actively investing in diverse sectors since its establishment. With a track record of over €2.7 billion deployed across 29 companies since 2004, Trilantic has developed a strong portfolio emphasizing companies positioned for sustainable growth in high-demand sectors.

Currently, Trilantic manages approximately €2.6 billion in assets. The firm's Energy Transition Investment (ETI) fund, which closed at €375 million in February 2024, is a testament to its commitment to investing in businesses that are crucial for the transition to a low-carbon economy. Investing in Axicom aligns with their mission to capitalize on themes that are critical for economic sustainability.

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This acquisition is viewed positively from an investment perspective. Axicom’s established position in the high-voltage component market, coupled with its recent growth and expansion efforts, makes it a promising asset for Trilantic’s portfolio. The alignment of Axicom's operations with the global energy transition movement provides a significant growth opportunity, aligning well with current market demands.

Moreover, as electricity consumption rises and renewable energy proliferation continues, the need for reliable grid infrastructure becomes paramount. This investment allows Trilantic to leverage Axicom’s expertise and strategic positioning within a high-growth sector. The anticipated increase in spending on grid modernization across Europe reinforces this investment's potential upside.

Additionally, the potential synergies between Axicom and Trilantic’s existing portfolio companies focused on energy solutions could lead to operational efficiencies and enhanced competitive positioning in the market. Overall, this deal exemplifies a well-considered investment strategy that aligns with both market trends and rigorous sustainability goals.

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