Z&J Technologies was the market leader for the development and manufacture of high-performance valves and components for the iron and steel industries (approx. 45% of sales), the petrochemical industry (approx. 40%) and the glass-making industry (approx. 10%). The product and service portfolio ranged from development and design to production, installation and after-sales service; operational units were located in Germany, the USA, South Africa and China.

The acquisition

Z&J Technologies was owned by the HTE Group, a portfolio company of DBAG, which intended to divest its non-core units ahead of an exit. Reynolds Luchterhand managed a process targeting strategic and financial buyers. NEXX’s industrial due diligence depth and excellent rapport with management secured the transaction.

Investment Rationale

Z&J operated in a market segment supported by emerging-markets steel demand and characterised by high barriers to entry in the petrochemical industry. Historical growth rates of 23% p.a. and a double-digit EBITDA margin provided the foundation. A technological edge in the manufacturing of high-precision valves and a new high-margin product (delayed coker) offered additional revenue potential.

Implementation of the growth concept

During the holding period, new customers were won in the high-margin petrochemical segment, including a leading energy group from an Eastern European growth market. The delayed coker developed into a meaningful growth driver with significant margin contribution. Z&J reinforced its presence in China and Russia and used the favourable investment environment in these markets specifically for further growth.

Exit

The exit was completed in March 2008 to a Luxembourg private equity fund advised by J. Hirsch & Co.