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Babcock Wanson

Kartesia builds on strong foundation and familiarity with acquisition of Babcock Wanson

In April this year, Kartesia announced that it would acquire a majority of the share capital of leading European industrial process heating equipment business Babcock Wanson, having already been a minority investor for the five years during which the business was owned by previous majority owner FCDE.

Since the investment by FCDE in 2016, at which point Kartesia also entered as minority shareholder, the Group has experienced a strong growth trajectory, with sales increasing by 7% per annum and reaching €118m in 2021. This strong performance was the result of the in-depth transformation efforts supported by FCDE and Kartesia. During the first three years, the implementation of a 360° transformation plan enabled operational improvements identified on commercial, industrial and financial fronts, including the digitalization of the Group, achieving productivity gains, an increased cash generation - thanks to working capital optimization - and an improved management and financial control set-up. 

The Group is well-positioned to capitalise on a growing market, as the supportive regulatory environment aligns the challenges of environmental and energy-efficient improvements for the European industry. The Group also benefits from strong exposure to resilient and growing industries like agri-food and pharmaceuticals. Kartesia’s aim for the business, alongside the highly experienced management team, is to start a new era of growth with a focus on accelerating the buy-and-build strategy and extending the services business in Europe. 

This was a transaction the deal team were very confident in closing and being able to deliver on the business strategy given our familiarity with the operating environment the business has faced in recent years and, perhaps more importantly, its resilience through the difficulties of the coronavirus pandemic. We first invested as a minority shareholder five years ago, at a point of transition for the company coming out of a larger industrial organization and worked closely and collaboratively with both FCDE and the management team to steer it through that period. It has been a steadily growing business in all its key markets in the past five years, which is testament to the strength of the management team, which was also able to manage performance and limit negative impact on revenues through the coronavirus. 

The strong ESG credentials of the business also convinced us that this would be a suitable investment for our KCO strategy. The sector is a key component of the energy transition in Europe, by replacing ageing boilers with more efficient equipment both in terms of energy consumption and CO2 emissions. The digital offering is advanced compared to most peers, allowing customers to manage energy consumption effectively and efficiently. Babcock Wanson also has a dedicated product line designed to capture harmful gases in the atmosphere, the development of which will enhance their sustainability focus. 

With the support of the financing capacity of Kartesia, we are certain that we can help the management team develop on its already impressive growth through external acquisitions to help it grow across a broader range of European markets. Our European network, with offices in all of the key Western European markets, will allow us to source opportunities for the business to buy and build and develop the already impressive service offering embedded into the business model. 
We are looking forward to continuing to work closely with the management team to realise continued success for the business.  

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