26 February 2021
A consortium led by Terra Firma and Metric Capital, two of Europe’s leading private equity firms, has agreed to sell Parmaco, a leading provider of high quality, flexible modular education buildings in the Nordics, to Partners Group, the leading global private markets firm (acting on behalf of its clients), to fuel its next phase of growth.
Established in 1966 and headquartered in Tampere, Finland, Parmaco designs, builds and leases high-quality modular school and child day-care buildings to municipality customers. With a portfolio of 353 buildings and c. 180 employees, it is the leading leasing company of modular public educational buildings supporting communities across Finland, with a growing presence in Sweden.
The company was acquired from Finnish private equity fund MB Funds in 2018 through Terra Firma Special Opportunities Fund IV, in partnership with Metric Capital, the pan-European private capital manager, and Sun Hung Kai & Co Limited, a leading investment firm headquartered in Hong Kong.
During this time, over €200 million of capital has been invested into Parmaco, which now provides educational space to 35,000 children in over 80 municipalities across Finland and Sweden. The portfolio has grown by c. 50% and now totals over 280k sqm of rentable space. Parmaco’s modular buildings also offer strong ESG characteristics, with a greenhouse gas footprint generally 54% lower than traditional concrete-frame schools over the whole building lifecycle.
Growth has been supported by strong demand from local municipalities for flexible, modern space which can meet educational requirements, and an ongoing shift towards the acceptance of modular solutions as a long-term alternative to fixed buildings. Over the course of Terra Firma’s management of the asset, Parmaco has launched new, innovative solutions to its customers as it seeks to provide smarter learning spaces to the children of the world.
The transaction, resulting from a sales process run by Deutsche Bank, is subject to merger control approval from the Finnish Competition and Consumer Authority and is currently expected to close in Q2 2021.
Guy Hands, Chairman and CIO of Terra Firma, said: “Our investment in Parmaco is a prime example of Terra Firma’s track record of investing in asset-backed operational leasing, real estate and infrastructure businesses. Our investment in and management of the business has helped to unlock significant growth potential and under new long-term owners, this rapidly growing business will benefit from significant additional investment to accelerate its growth and enable Parmaco to further support the local communities that it serves.”
Vivek Ahuja, CEO of Terra Firma, said: “Parmaco is a fantastic example of the type of business that we look for at Terra Firma, where our partnership can help a company to flourish. Following the sale we will look to identify similar asset-backed businesses across Europe with strong potential for future growth, where Terra Firma can add value by actively putting its capital to work and partnering with management teams to deliver value creation.”
John Sinik, Managing Partner and Chairman of the Investment Committee at Metric Capital, said: “Parmaco is a fast growing and exciting business and we are delighted to having played a key role in the recent phase of its development throughout an uncertain macro environment. The company is further evidence of Metric Capital’s investment philosophy of identifying companies with strong growth potential and yet downside protection.”
Sami Laine, CEO of Parmaco Oy, said: “At Parmaco we believe that every child has the right to smarter learning spaces and that these spaces should adapt to the changing educational demand profile. We seek to provide safe, sustainable and economically viable educational buildings. I’d like to thank Terra Firma, Metric Capital and Sun Hung Kai & Co. for the significant contribution they have made to our business, which has been a major driver of our growth in recent years. I’m excited to be embarking on the next chapter for the business in partnership with our new owners.”