Verdane will have increased strategic freedom with Polytech, a developer of advanced systems for protecting and enhancing wind turbines, after bringing FSN Capital on board as a shareholder, Verdane’s co-founder and managing partner, Bjarne Kveim Lie, and FSN’s principal, Kasper Sørensen, told PE Hub Europe.
Oslo-headquartered private equity firms FSN Capital Partners and Verdane announced an investment of approximately €135 million in Polytech, a global firm providing rotor-blade technical products for wind turbines, in mid-January. Polytech, headquartered in Bramming, Denmark, has been part of Verdane’s portfolio since 2016, and in early 2021, Verdane established a continuation vehicle, into which Polytech was transferred.
“For us, bringing on FSN as a partner isn’t bringing in a partner into a six-year-old investment – they’re coming in as a partner into an investment we’ve had for a couple of years,” said Lie.
The length of the holding period creates an alignment around the investment horizon, according to Lie, which would have been “complicated”, had the investment been six years old.
FSN had kept its eyes on Polytech and the wider industry for a while. “Now there was an opportunity and we saw it as a great fit together with Verdane,” Sørensen explained. “I think we have competences that complement each other quite nicely.”
From Verdane’s point of view, adding FSN to the shareholder base allows the firm to “double down” and increase investments in additional areas. “It gives us an increased strategic freedom and the capacity to do M&A,” said Lie.
Out of Polytech’s four segments, the lightning protection and leading edge protection systems have limited opportunity in terms of acquisitions, according to Sørensen. “Within blade monitoring, optimisation, where they develop smarter wind turbines and wind blades in particular, there are probably some nice add-ons and tuck-ins you can do, to complement the technology.”
As for international expansion, the firms are mostly content with Polytech’s global footprint. The company has factories in Denmark, Mexico and China. “As other markets emerge, we may want to add additional facilities, but it’s not on the short-term roadmap,” said Lie.
Decarbonisation, a trend that the invasion of Ukraine added geopolitical dimension to, is driving the installation of “tonnes” of wind turbines and solar, according to Lie. “You need a lot of people to supply all the components and technology you need,” he added. “Polytech is really at a sweet spot there.”
This need for components and tech is also attractive in terms of offshore, as it presents further opportunities, such as subsea cabling, according to Sørensen. “Polytech already possesses the competencies within material science and engineering,” he said. “That market is undeveloped and it’s probably looking for a champion – why not Polytech?”
While Sørensen would be “surprised” not to still be an owner in six years’ time, exit options are something the firms are able to envision. “In terms of what route this one can take, this company is going to be quite a lot bigger by the time we together decide on an exit,” he explained. “For example, you could do an IPO in Denmark at that point in time.
“I believe you will have pretty much every single door open when you want to do an exit.”