22.05.2015

Alimak to float

Swedish hoist and mastclimber manufacturer Alimak Hek has announced plans to launch an Initial Public Offering on Stockholm’s Nasdaq stock exchange.

The shares that will be offered to the public will largely come from the company’s primary shareholder - private equity firm Triton - which will continue to hold a significant stake in the business after the flotation. Alimak’s shares are also held by members of the management team and directors. The shares will be offered to qualified institutional investors in Sweden and internationally, as well as to the general public in Sweden.

Nasdaq Stockholm has approved the admission of the company’s shares to trading, subject to approval of a prospectus by the Swedish Financial Supervisory Authority as well as fulfilment of normal distribution requirements. Depending on current market conditions, the IPO is planned for later this year.

Alimak had revenues last year of SK1.7 billion (€188.4 million/$210.1 million) almost 14 percent higher than in 2013. However earnings before Interest and Tax of SK18 million (€2 million/$2.2 million) roughly the same as in 2013. Around half of the company’s revenues come from manufacturing hoists and mastclimbers for the construction, oil & gas and industrial markets, while 34 percent is derived from after sales support and 16 percent from rental.

The company claims that the listing will allow it to benefit from a broader shareholder base and access to the Swedish and international capital markets. It also believes that a stock exchange listing will increase the awareness of the company and its products, strengthen its market position and allow it to take advantage of significant growth opportunities.

Chief executive Tormod Gunleiksrud said: “Through our 67 year long history we have successfully established Alimak as a widely recognised and preferred brand with a unique insight into our customers’ needs which has in turn awarded us a strong global market position. Alimak’s international sales and manufacturing platform in both emerging and mature markets provides us with a key competitive advantage. We are seeing significant opportunities ahead in capturing strong growth in the mid-market segment, driving penetration of after sales services in our installed base and continuing to innovate our product portfolio. The IPO will provide us with better access to the capital markets and facilitate our growth strategy through increased brand awareness.”

Chairman Anders Thelin added: “The management team has done an outstanding job in developing Alimak into a global market leader in its core segments. I believe that Alimak is excellently positioned to expand its leading position to new markets and application areas. Alimak has a proven track record of profitable growth, and the company’s unique manufacturing set-up as well as clear strategic focus will be the key to capturing growth going forward.”

Carl Johan Falkenberg, an adviser to the Triton funds said: “We have worked with Alimak’s management team and employees for over eight years to develop the company into a global market leader with an outstanding product portfolio. The expansion of Alimak’s international presence means the company is now a truly global player and already a considerable step ahead of its competitors. Alimak is well positioned to capture growth from a number of global macro trends, as well as from its own growth initiatives.”

Vertikal Comment

While packaged as an opportunity this flotation looks more like a chance for the main shareholder to cash out part of its holding in the business at a time when flotations are regaining their popularity. It will also providing the other shareholders with the opportunity to more easily convert their shares into cash.

There are of course benefits for the business in terms of raising funds, having a slightly higher profile etc...etc… It does come with additional costs however, along with the burden of publicly reporting every quarter or half year, and having a wider, more fickle set of shareholders, many of whom act like lemmings. Being public – depending on what portion of the company is in public hands – often brings pressures to focus on the short term, while a privately or closely held corporation can ignore short term pressures.

Alimak is well run company and its reporting procedures and financial disciplines will already be in place, having worked with private equity owners for many years. So it might actually find a wider spread of shareholders refreshing. As with everything it all comes down the senior management team. A good management will succeed regardless of the type of ownership/corporate structure it has, while a weak management will fail regardless of whether the company is public, private, or family owned.

For us it is another set of accounts that we can look at each quarter for signs and indications of the market. We wish the company every success with its IPO.