Priveq saw the opportunity to invest in a growth industry – the home furnishing segment. Hemtex had a strong management team in place and the company had begun to show profitability. Furthermore, Hemtex had a strong brand and it had the potential to grow its product range and its geographic footprint.
“Hemtex was also a good fit with Priveq’s business concept of creating value growth through long-term investment, and active ownership of companies with stock market ambitions,” explains Louise Nilsson, Priveq’s member on the Hemtex board.
Strong owner let management focus on business
After agreeing upon the idea of an external owner with the board, management and franchise holders, Priveq became Hemtex’s shareholder in 2004. With a strong and neutral minority owner, the management was now able to concentrate on the operational activities. Hemtex moved into several areas simultaneously. The company opened more stores, expanded its store formats and assortments, and expanded into other geographic markets.
“We needed Priveq’s capital injection to help us speed up our expansion plans. We also found an owner who helped us separate operational issues from strategic issues and who could create a listed company,” says Hemtex’s Chairman Leif Larsson.
Priveq’s experience of 23 previous IPOs came in handy when Hemtex was being prepared for the Stockholm Stock Exchange. Priveq played an important role in the evaluation of advisers and in handling ownership issues. A priority issue was which type of investor was best for Hemtex’s future and its continuing expansion in the Nordic region.
In October 2005, Hemtex was floated on the Stockholm Stock Exchange’s ‘O-list’. At the time of listing, Priveq sold one third of its holding and remained an active owner of Hemtex until 2007.
Year of investment: 2004; stock exchange listing in 2005
Fund: Priveq Investment II
Year of divestment: 2007
About the company:
The Nordic Region’s leading home textile chain, with stores in Sweden, Finland, Denmark and Norway. The majority of the stores are owned by Hemtex, while a minority are owned by franchise holders. The company sells home furnishing products with an emphasis on home textiles. The head office is in Borås, Sweden.
Sales: SEK 495m
EBITDA margin: 6%
Number of stores: 98
Sales: SEK 1,470b
EBITDA margin: 17%
Number of stores: 186
Louise Nilsson, Mats Hjerpe