K.E. Fischer was a technologically leading manufacturer of cutting machines for the tire industry. The company specialised in cord-cutting machines used in the production of tires worldwide. Almost all major tire manufacturers were among K.E. Fischer’s customers. Particularly the emerging markets, where K.E. Fischer had a very strong footprint, offered significant growth potential thanks to rising motorisation. K.E. Fischer also offered tailor-made steel processing machines.
The acquisition
The previous private equity owner Halder was looking to exit its investment in Karl Eugen Fischer; management favoured a financial partner over a strategic buyer. NEXX was positioned exclusively thanks to its industrial background and the relationship with management, and closed the transaction in a one-on-one negotiation process.
Investment Rationale
Karl Eugen Fischer was the global market leader for customised cord-cutting lines with approximately 70% market share. The relatively low cyclicality (75% of tires are replacement tires) supported earnings stability. Growth drivers included a globally rising vehicle base in emerging markets, growing commodity prices and innovation, as well as an increased demand for special-purpose vehicles in fast-growing economies. Additional potential was identified in the high-margin retrofit, conversion and after-sales segments.
Implementation of the growth concept
In 2009 a subsidiary was established in Qingdao (China) in order to better capture the important Chinese market opportunity. The company strengthened its position in the tire business and expanded its customer portfolio, in particular by entering the Japanese market and securing one of the world’s leading Japanese tire manufacturers in 2012 – thereby supplying 17 out of the 20 top-tier tire manufacturers worldwide. In parallel, the technological edge was reinforced through intensive innovation and R&D, allowing the company to develop its offering of machines for special applications such as agricultural and bike tires.
Exit
The exit was completed in April 2013 to Equistone Partners Europe (formerly Barclays Private Equity), a leading pan-European mid-market private equity investor.
