11 March 2021 - Last month European private equity firm IK Investment Partners announced it was acquiring a majority stake in Innovad. IK also said it was acquiring Italy's Add-Co Nutrition (a sister company of Innovad) and a company called Add-Essens, which is specialised in the extraction of plant/fruit-based ingredients.
The acquisition has no consequences for the core activities of the companies involved in the deal but will likely fuel the next stages of their growth.
Following the transaction, Jamal Al Saifi, the founder and current majority shareholder of Innovad, will retire, and Ben Letor, fellow co-founder, will become the new CEO of Innovad.
Feedinfo recently discussed the rationale of the acquisition and internal consolidation with incoming Innovad CEO Ben Letor, Massimo Neri, co-founder of Add-Co, and Remko Hilhorst, Partner at IK and advisor to the IK IX Fund.
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Massimo Neri
Remko Hilhorst |
Ben Letor began by explaining that Innovad started a strategic review of operations in 2019 and studied options beyond organic development. “Our solid growth over the past few years had generated free cash-flow, opportunities and ambition for the next five years,” he said. “We had a few projects under evaluation from in house manufacturing expansion, acquiring businesses, licensing in technologies, or joint venture discussions.” According to Letor the search for an investment partner became clear for the further acceleration of the company’s growth in an overall market which remains fragmented but is looking to consolidate more. Letor added: “More science-supported solutions are demanded, as consumer behaviour pushes the agenda to more eco-sustainable solutions. Innovad was on a path to meet this demand. IK’s vision, resources, keen interest and competences led to a perfect match for all stakeholders and will enable us now to roll out a full value creation plan for all.” Also commenting on the strategic review, Massimo Neri said discussions were held with several potential investors to see who could best support the companies. |
Ben Letor
“IK showed a clear understanding of our business due to their previous investments in CID Lines and Ceva Santé Animale. This allowed them to appreciate the synergies the Innovad and Add-Co businesses can produce,” he commented. “We held several specific meetings where we explored the future possible development of our collaboration. Both parties believe in the new promising project.”
From Remko Hilhorst’s perspective, Ceva Santé Animale and CID Lines, both active in the animal health sector, were able to show strong growth during IK ownership and allowed them to understand the animal health industry better.
“We were impressed with Innovad’s and Add-Co’s product portfolio, which creates a solid basis for further growth,” he said. “We foresee a continuation of trends such as antibiotic reduction, the focus on gut health and mycotoxin reduction, and an increase in natural ingredients (natural pigments, plant-based anticoccidial programmes, etc). By increasing the investments in research, we believe we can service Innovad’s and Add-Co’s clients even better in the future. These investments in research will be complemented by strategically filling in white spots in the product portfolio.”
“The new venture will keep focusing on Innovad and Add-Co traditional core product lines: intestinal health, mycotoxin and stress control, natural pigments, plant-based nutraceuticals, and concentrates,” also argued Neri.
“We will surely improve the market approach thanks to the synergies of our organisations, kind of like a re-fresh of applying existing solutions,” he added.
Letor nodded: “We will keep our strategic focus in continuing to build core expertise in identified platforms. The focus is on continuing to develop technologies and applications addressing bacterial resistance to medication, nutrient use optimisation, disease prevention without antibiotic use, ensuring biosecurity control with preservatives, and meat quality.”
Add-Co will further benefit from Innovad’s distribution network for reaching global natural pigments markets, and Innovad will benefit from Add-Co’s Italian pigments plant, adding to its current production capacities in Essen, Belgium.
“Add-Co will also benefit from Innovad’s market introduction to possibly export our Home Mixing Concentrates model in some selected countries. Innovad will benefit from the Add-Co technical team which is specialised in farm applications to complete its own technical and product development team,” Neri added.
In the short-term, all parties involved will be fully focused on bringing these synergies to light and work on expanding the portfolio and services to customers globally. And beyond 2021, Innovad and Add-Co will seek to boost their technical and commercial teams in core segments.
“More specifically our expansion plan consists of solidifying our market grip in Europe which still represents a big part of our revenues, by hiring/acquiring access to the market, continuing to add basic production technologies in some key active components we formulate with (glycerides, plant extracts, probiotics) as well as launching a number of new product applications,” said Letor.
“Outside of Europe, we plan to continue gaining a position in the US with No Antibiotics Ever poultry producers, and expanding our progression in South East Asia, Japan, China, Brazil, and Mexico with our local subsidiaries,” he added.
It is clear that under the new partnership with IK, Innovad and Add-Co aim to grow organically. However, selected add-on investments are also part of the strategy.
“Innovad and Add-Co have an impressive track record, with plenty of runway for future growth, both organically and through selected add-on opportunities,” said Hilhorst.
In Neri’s view, add-ons should be carefully selected on the basis on acquiring production or distribution strengths and knowhow that may be lacking in the new set-up.
“Proceeding this way, we will be able to develop further synergies and sales,” he said.
“We believe in creating relationships with industry players based on trust. Trust comes with commitment, transparency, knowledge, a problem-solving attitude, a fair way to profit and true partnership. Our approach is to build in the coming months, in a very participative mode, a solid expansion plan, looking at the way we did and do things, identify areas of improvement, and growth opportunities defining a clear road map,” Letor added. “Buy and build will be a tool to achieve that if it makes business sense.”
