Small and medium sized companies
Pegroco invests primarily in companies with a Swedish base, that are active in the B2B sector and that are in the small to medium company size category. Pegroco invests preferably in companies with a proven business model, a strong market position, in its region or in its market segment, and with a stable positive cash flow. Pegroco’s ambition is that Pegroco shall have an ownership of over 50 percent in the companies they invest in.
A overall strategy for Pegroco to build value in the portfolio is establish hub-companies In and around these Pegroco can make additional acquisitions of complementary companies to consolidate a business segment, or add additional customer offerings, in order to build a stronger competitive position on the market. Therefore Pegroco primarily seeks companies in business areas where there is a possibility to make larger value creating changes, either of business operations or of market structure. Examples of hub-companies among Pegrocos holdings are Nordisk Bergteknik and the recently divested Nordic Lift. Another important investment criterion is that the company has a strong entrepreneurial culture and a business-oriented management. It is Pegroco’s experience that a successful business development is best built on such a culture and the partnership that then can be formed with the companies’ management.
Product and service companies
The holdings that are product companies are primarily for building value through growth. These values can then be realised or made visible for example through a trade sale or by the listing of the company’s share. For product companies technical know-how is a central part fo the company’s competitive strength. Pegroco’s investment in such a company is based on that the products and the company organisation have long term sustainable competitive advantage. In service companies the competitive strength is built on the company’s ability to organise its operations in a cost efficient manner and that it can achieve a high utilisation of its resources, both human and, for example for Nordisk Bergteknik, its capital intensive equipment. Pegroco’s know-how around financing is in such case an important competitive advantage. Pegroco like seeing that that the potential investment object generates a substantial part of its revenue from service and maintenance. Such revenues have the advantage that they are often from long-term contracts and therefore have better predictability. Furthermore, if well executed they often build strong customer relations. Also, such revenue is less business cycle dependent. If the company can couple the service to a product it has supplied there is an attractive potential for a business model that will generate revenue during the whole product life cycle, which was the case for Pegrocos recently divested lift service company Nordic Lift.
Pegroco’s holdings where Pegroco’s ownership share exceeds 20 percent currently comprise Nordisk Bergteknik, Mechanum, CalorMet, Torpheimergruppen and eSite Power Systems. Further to these Pegroco has holdings where the ownership share is below 20 percent such as Alelion Energy Systems and Thinc Jetty Collective. Read more about these companies by clicking on the respective company here below or find them under the menu Holdings.