Pegroco invests in small to medium sized unlisted companies primarily in Sweden
Pegroco is an investment company that invests in smaller and medium sized unlisted companies, predominantly in Sweden. The company has focus on building value long-term.
The business model is to indentify suitable investments, acquire a minority or majority of the company, build value by developing the company’s business and to in various ways make visible the created value. We are active owners and we focus on investments where we can contribute to building value in the company. We do this by using our collective operational, industrial and financial experience, and our strong business network.
We primarily seek companies with an established market position and preferably those that have a need for a major change. It can be in that the company needs a new organizational structure or to change how it does its business. It can for example be when management wants to buy out the operation from the owners, or when the entrepreneur owner wants to expand the company into new business opportunities but lacks resources. Or it can simply be when the owner wants to sell out after many years of hard work.
We have during our ten years in operation made over twenty investments. Our investments during 2016 were in the measuring technology company Mantex AB in April , in the drilling and blasting company Norrbottens Bergteknik AB in May, in the lift service company RC Hisservice AB in November, and in December in the auto maintenance company Mechanum and in the acquisition of KL Ventures II AB.We have then continued to build around Norrbottens Bergteknik by acquiring three of Norway’s leading companies within drilling and blasting, Vestfold Fjellborring AS and Norsk Fjellspregning AS in 2017 and Songdalen Fjellsprenging AS in 2018, and around RC Hisservice by acquiring Hissteknik i Göteborg AB in July 2018.
We have offices in Gothenburg and Stockholm. Pegroco has over the last ten years perfomed well over twenty investments. The company’s latest and most important exits were the sale of Scandinavian Air Ambulance in June 2014, and of Diakrit in February 2016, which generated returns of 5,3x and 3,5x invested capital respectively.
Holdings portfolio, Base and Growth
Pegroco seeks a balance between the investment categories Base and Growth. Pegrocos assessment is that this balance over time will give Pegroco’s shareholders the best return. During the twelve months up to June 30, 2018 Pegrocos Base and Growth portfolios had a combined turnover of 1 510 MSEK. Further to active holdings Pegroco has holdings in a number of other companies where Pegrocos owner’s share is smaller. The companied turnover of the whole portfolio is 1 959 MSEK.
Investment category Base
The companies in this category should have a proven business model, a strong market position and, over time, a stable positive cash flow. Pegrocos ambition is to own over 50 percent. Pegroco likes to see the companies in this category generate a considerable part of revenues from service and maintenance. These revenues have the advantage that they often are based on long term contracts and therefore provide better revenue visibility. Furthermore such a business is often less capital intensive, less business cycle sensitive and less exposed to technical changes. A central strategy in the Base category is to form hub-companies around which Pegroco can make supplementary acquisitions. Both Nordisk Bergteknik within ground engineering and Nordic Lift within lift services are examples of this.
Investment category Growth
In the Growth category there are several technology companies. Common for these are that the technology should have tangible and computable financial customer benefits, scalability and international export potential. Pegroco also likes to see that the the company’s technology is environmentally beneficial and that its market expansion can take advantage of an underlying environmental trend. An example is Alelion, a provider of lithium-ion energy solutions for the industrial vehicle segment, which can take advantage of the general trend towards electrical vehicles. Alelions solutions enable customers to shift from the diesel engines and lead/acid batteries to the much more environmentally friendly lithium-ion batteries – and at the same time save hundreds of thousands per industrial vehicle over its life.
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