EQT’s Thomas Rajzbaum: Trescal’s Asia and life science push is ‘just the beginning’

Calibration services company Trescal is valued at around €1.4bn, a jump from its last sale of around €670m in 2018.

Thomas Rajzbaum, EQT
Thomas Rajzbaum, EQT

EQT will leverage its tie-up with Baring Private Equity Asia to grow the geographical footprint of Trescal, a provider of regulated calibration services for testing and measurement equipment, according to Thomas Rajzbaum, managing director and head of EQT’s French infrastructure advisory team.

EQT’s Infrastructure V fund entered exclusive negotiations in late November to take a near 75 percent stake in Trescal. Incumbent majority owner OMERS Private Equity is reinvesting for 25 percent, with management led by CEO Guillaume Caroit holding the rest.

Trescal has an annual turnover of around €450 million and a network of 380 facilities in 29 countries, with its headquarters in Paris.

Toronto-headquartered OMERS bought its majority stake in Trescal from Paris-based private equity firm Ardian in 2018, valuing the company at around €670 million. Trescal has since doubled in size, moved into sectors such as life sciences and entered seven markets, including South Korea and Australia. It has also completed 47 acquisitions.

The company is now valued at around €1.4 billion, PE Hub Europe understands.

“When the company was with Ardian, it was a very, very different animal,” said Rajzbaum. “What has been done by OMERS in the last few years is to start the Asian journey and to diversify in life science. This is just the beginning. Organically there’s a lot to be done and I’m pretty convinced that we’re going to find new geographies and open new verticals.

“The beauty of Trescal as a global leader is that it can serve global clients who want a one-stop shop for their global calibration. But they also serve local clients. They have a global footprint with a presence in Asia and in the US. As a global firm we can really help them in their next phase of growth, especially in the US where they still need to consolidate but also in Asia where EQT recently acquired Baring Private Equity, which makes us one of the leaders in Asia.”

After the completion in late October of the tie-up between Stockholm-headquartered investment firm EQT and Baring to create BPEA EQT, EQT CEO Christian Sinding told PE Hub Europe: “Succeeding in Asia requires local relationships and experience with global capabilities and expertise.”

Those local relationships are also likely to play a part in EQT’s growth plans for Trescal, especially as instrument calibration might not look at first glance like the best sector for organic geographic growth, given differing regulations worldwide.

“It’s not that easy, even for a global brand like Trescal, to do that,” said Rajzbaum. “It’s much easier to do it via acquisition because it’s a very sticky customer base and you have a relationship with the local clients.”

That said, the M&A process can be smoother than one might expect.

“The CEO would say that he’s always amazed that when he gets into a new country, even though it’s a very different culture, they all speak the same language – and that’s the language of calibration,” said Rajzbaum. “There are different local regulations, but in the end, they actually can work together. And every time there’s an acquisition, it’s an opportunity to share best practice.”

That “language of calibration” might include the less romantically named ISO/IEC 17025:2017, an International Organization for Standardization specification on the requirements for the competence of testing and calibration laboratories, with which Trescal’s labs comply.

The calibration sector attracted EQT for several other reasons.

“This is a mission-critical service that serves an industry where most of the production facilities need to be calibrated at a regular interval through specialists,” said Rajzbaum. “This makes it extremely resilient and means that calibration is not volume dependent.

“It makes it very recession-proof. With covid, even though in many countries factories were closed for three months, when they reopened they had a backlog of calibration to be done.”

Calibration is also in many ways future-proofed – not just because it’s a rare industry that doesn’t increase regulation over time.

“Once you’re moving towards a more electrical industry, the need for very, very precise measurement increases,” said Rajzbaum. In the move from traditional combustion cars to electric vehicles, there is an increasing need for calibration, he added.

Trescal itself might also undergo a tech overhaul. EQT is likely to help digitise the firm, letting the technicians spend less time on admin. This will help the firm serve smaller clients, EQT believes.

Infra penny, infra pound

Trescal’s infrastructure characteristics were also a factor behind the investment.

The sectors that Trescal services – such as transport, healthcare and telecoms – will also gel with EQT’s infrastructure strategy. “We have a lot of telecom assets, so hopefully we can find synergy or at least help them penetrate more of these markets globally,” said Rajzbaum. “The beauty of those verticals is that they’re very close to our infrastructure mandate. Not only is Trescal an infrastructure business, but it also serves infrastructure submarkets.”

When it comes to an exit, “infrastructure funds are the most likely buyers”, said Rajzbaum. “But it could also be a trade sale – adjacent businesses may be interested in diversifying into calibration.”