Cornerstone Investment Management is conducting due diligence for a pair of add-ons for Ecowipes, a biodegradable wet wipe and personal hygiene product company, partner Tomasz Pietrzak told PE Hub Europe.
The targets are in the Netherlands and Germany, which is in line with Cornerstone’s goal of growing the Ecowipes business across Europe.
Private equity firm Cornerstone and SME financer Kartesia jointly acquired Ecowipes in mid-July. The enterprise value was between €100 million and €200 million, said Pietrzak.
Ecowipes is headquartered in Warsaw – also where Cornerstone is based – and has a French business, Hydra. While the company’s central European base gives it a cost edge, among other advantages, it lacked the ability to commercialise in the pan-European markets – which is where Cornerstone’s expertise comes in, said Pietrzak. Growth will come via buy-and-build – hence the potential add-ons – and developing internal processes, supporting the business with capital and other organic means.
The lack of consolidation in Ecowipes’ industry also offers growth avenues. “The barriers to entry are very high, but there is still room to find paths for expansion,” Pietrzak explained. “It’s the right place and moment to capitalise them and begin the next level of their growth and expansion.”
The deal itself used a “substantial” amount of debt, according to Pietrzak. London-headquartered Kartesia provided debt facilities and co-invested on the equity side in a minority capacity, he added.
Reasonable price
What Cornerstone saw as Ecowipes’ technological edge helped draw its attention to the business. Most wipes are plastic-based, meaning Ecowipes has been ahead of the curve in developing biodegradable alternatives at a reasonable price for customers, said Pietrzak. “Biodegradable alternatives do exist on the market, but those are very pricey.”
Ecowipes developed its technology after researching manufacturers from various industries, allowing it to create a biodegradable product with a similar price but of better quality than traditional plastic-based products, he added.
Another advantage for the company was its vertical model. “It develops its own fabric, and then turns it into a final product for either large brands or private label clients,” said Pietrzak.
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