4 October 2018
A consortium led by Terra Firma, one of Europe’s leading private equity firms, has agreed to buy Parmaco, a fast-growing Finnish company which specialises in building and renting high quality buildings for schools, day care providers and nursing homes.
The consortium is acquiring the business from MB Funds, a leading Finnish private equity fund, through Terra Firma’s latest special opportunities fund, 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.
Parmaco is a market leader in Finland and has recently grown its operations into Sweden. Over the last four years the company has grown its asset base six-fold and now boasts a new build portfolio spanning more than 200,000 sqm of space. Over the next 3-5 years its strategy is to double in size again to over 500,000 sqm, supported by strong demand from local municipalities for flexible, modern space which can meet modern educational requirements.
The transaction complements Terra Firma’s experience and track record of investing in asset-backed operational leasing, real estate and infrastructure businesses in Western and Northern Europe. It comes soon after the successful £4 billion refinancing and recapitalisation of The Annington Group in July 2017.
Terra Firma has extensive experience in infrastructure and leasing businesses, with previous investments including AWAS, the aircraft leasing company, which was successfully sold to Dubai Aerospace Enterprise in April 2017 and Tank & Rast, the leading operator of German motorway service stations which was sold to Allianz Capital Partners GmbH (ACP) in 2015, in a transaction voted ‘Germany, Austria and Switzerland’ large cap deal of the year in the 2016 Private Equity Awards.
Guy Hands, Chairman and CIO of Terra Firma, said: “The Parmaco acquisition is exciting news. Under MB Funds, Parmaco has earned a reputation as a well-run, customer-focused business providing high-quality and flexible modular educational space solutions. We are looking forward to working closely with Ossi Alastalo and his team at Parmaco and with the teams at Metric Capital and Sun Hung Kai. We anticipate investing significant capital in the business to further develop the asset base and diversify into new geographies.”
John Sinik, Managing Partner and Chairman of Metric Capital’s Investment Committee, said: “Parmaco is clearly a fast growing and exciting business and we are delighted to be playing a key role in the next phase of its development. In addition to the growth potential, our investment thesis is supplemented by the downside protection provided by the existing portfolio of modular buildings and rental agreements with municipalities. This deal is a further example of recent asset-backed transactions completed by Metric Capital which have also included DSM/SFG and Beachbox.”
Juha Tukiainen, Managing Partner of MB Funds said: “After years of consistent building development and growth, Parmaco has become the leading provider of modular educational buildings to Finnish and Swedish municipalities. We are pleased to have agreed this transaction with Terra Firma and its consortium partners, who will bring significant expertise and capital to support Parmaco to grow further in the future.”
Ossi Alastalo, CEO of Parmaco, said: “We are delighted to be partnering with Terra Firma, Metric Capital and Sun Hung Kai, and today’s announcement is a meaningful milestone in Parmaco’s development. Terra Firma, Metric Capital and Sun Hung Kai immediately recognised our potential and their experience and strategic expertise in developing and growing businesses will be highly valuable in achieving our expansion plan. The prospects for our stakeholders – employees, shareholders, partners, suppliers and, most importantly, our customers – are very exciting and I look forward to continuing to lead the business through to the next stage of its development.”
Lee Seng Huang, Group Executive Chairman of Sun Hung Kai & Co. Limited, said: “We are very excited to be working with Terra Firma and Metric Capital in our first collaboration together. We believe Parmaco is a unique, high-quality company with extensive growth potential complemented by the defensive underpinnings of a traditional real estate company.”
The transaction is subject to customary regulatory approvals and is expected to complete by the end of the year.
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About Terra Firma
Founded by Guy Hands in 1994, Terra Firma is one of Europe’s leading private equity firms. Terra Firma specialises in the acquisition and fundamental transformation of asset-backed businesses, focusing on investments in transformational private equity, operational real estate and infrastructure. Since 1994, Terra Firma has invested over €17 billion of equity and completed transactions with an aggregate enterprise value of €47 billion.
About Metric Capital
Metric Capital provides private capital solutions to European Small-to-Medium Sized (SME) companies and seeks to support companies’ ambitions to execute strategic transactions. In addition to providing capital solutions, Metric Capital aims to be value-add partners to its portfolio companies.
About Sun Hung Kai & Co Limited
Sun Hung Kai & Co. Limited is an investment firm headquartered and listed in Hong Kong. The Group currently has about HK$40 billion in total assets, invested through a diverse yet complementary portfolio of businesses and investments in multi-asset classes.