Investment Strategy

Our strategy is focused on value creation in the companies in which we invest at each and every stage of the investment cycle.

 

At Corpfin Capital we have a distinct culture of effort developed by a broad-based team of solid, stable, experienced and motivated professionals, equipped to define investment opportunities and contribute value to the companies in which we have invested by providing strategic and  financial support until the moment of divestment.

 

We identify companies with high growth potential, strategic vision and a unique business model, as well as those where we can offer a differentiated investment angle. We establish a relationship of trust, working proactively with the company management teams, sharing objectives and values, to successfully reach the objectives agreed in the jointly developed business plans. This philosophy of forming alliances with the management teams is a core element of our business model and the key to our success as a firm.

 

We stand out in the market because of our position of leadership, our dynamic and proactive investment team, and our experience acquired from investment in some 50 companies that ensures we understand the risks and opportunities faced by mid-size companies.

 

As an investment firm we are independent from any business or financial entity, and can therefore take our investment, management and divestment decisions without any type of conflict of interest.

 

We invest in companies that fall into the following categories:

 

  • Market Leaders, whether already established or emerging “national champions” with unique and differentiated business models, or that develop new niches and offer their customers competitive value proposals. In the case of these companies, we usually undertake projects for organic growth and “roll-out” strategies. Examples of this type of value creation include Restauravia and Ingesport.

 

  • Consolidation projects based on leading companies with highly talented management teams with the potential to create larger and more efficient groups through inorganic growth leading to margins. We have a history of success with consolidations and build-ups in various sectors, such as the cases of Duplex and Grupo Preving.

 

  • Exporting companies and companies with plans for international expansion, capable of successfully setting up and growing outside Spain. Futura and T-Solar are examples of companies that have grown by carrying out their business on several continents.

 

  • Companies with potential for improvement in operating or financial areas, or by refocusing their strategy. We implement best practices in the businesses in which we invest, achieving significant improvements in many company areas. Recent examples of success in this area include Acuntia and Logiters.

 

Investment Criteria

Type and size of company 

We seek out companies and business projects with a solid business model, a good competitive position in their sector and growth potential, whether organic or through acquisitions. We also invest in companies with increased profitability potential based on improvements to their operating and/or financial performance.

We invest in companies that have management teams with proven experience and a clear commitment to work together with us on the project, aligning their success to that of the company.

As a general rule, we invest in companies with EBITDA ranging between €5 million and €20 million. Typically in corporate consolidations (“buy & build”) or expansion capital projects, we invest in several companies at once, forming groups that reach at least the minimum size required.

Sectors

Our scope is wide-ranging, and we are able to invest in any area except the financial and real estate sectors.

Location

Companies headquartered in Spain or with the main part of their business in the country.

Transaction size and investment amount 

We are comfortable investing in transactions with a company value of between €20 and €200 million.

Through our own fund, we make investments of between €10 million and €38 million per transaction. We can also call on additional investment capacity from some of our investors who seek to co-invest in deals led by us, allowing us to carry out investments for larger amounts.

Transaction type 

We preferably acquire majority and controlling stakes. We also take minority stakes as long as our interests as shareholders are safeguarded and we have control over certain matters, such as divestment.

We invest mainly in the following transaction types:

• Buy-outs: Acquisition of companies by their own management team or by external management teams.

• Consolidation and “buy and build” projects to create leading groups integrating several companies of a certain sector.

• Expansion capital: Companies requiring a capital injection to finance their growth, an investment project or the acquisition of a competitor.

• Companies requiring the support of a professional institutional investor to implement the necessary internal changes so that within a reasonable period an IPO can be arranged, 100% of the capital can be sold to an industry buyer, or the company can be sold to other financial investors.

• Family businesses in which one or several shareholders want to sell all or part of their shares.

• Acquisition of non-strategic assets from business groups or sellers either in a distressed situation or willing to focus on their core lines of business.

• Companies with excessive leverage or with potential for operational improvements, requiring a capital injection to rebalance their capital structure.

Period of investment

The average term for investment in our companies is generally between 4 and 6 years.

 

Value Creation

Our principle objective is to create value for the companies in which we invest

The value creation of our investments is the result of a process that starts at the moment we identify each project, and it intensifies with the completion of the investment and continues throughout its life until divestment. Our aim is to divest companies that have grown larger and more profitable than when we acquired them, creating wealth not only for our investors but also for all the stakeholders in the company (employees, customers, suppliers) as well as society in general.

Throughout the investment cycle, we focus in particular on certain elements:

Origination Capacity
We select leading companies to which we gain access through our extensive contact network, usually on an exclusive basis, where factors other than price are prioritised.  We work hand in hand with the management teams, with the aim to develope a strategic vision and a relationship of trust over a suitable period of time, before the investment takes place. We also participate in market processes, and can be very competitive as long as we have some differentiating angle.
This model ensures us a plentiful flow of top-quality transactions.

Rigorous Analysis Before Investment
Before making our investments we dedicate time and resources to understand the dynamics of the sectors in which the companies operate, their positioning in their markets and the viability of their business plans.
A key part of our analysis consists of getting to know and establishing a relationship of trust with the companies’ management teams, so that they share our objectives and values.
In addition to our own experience investing in different sectors, in each transaction we rely on a network of ad hoc specialist advisors that assist us in strengthening the analysis of the particular aspects of each opportunity from the outset.

Flexibility in the Structuring of Transactions
We have proven capacity in structuring transactions in a flexible and innovative manner, matching our investment objectives and yield requirements to the needs of the companies and their shareholders, either investing by phases, using financial instruments other than capital, introducing price adjustment mechanisms linked to business performance, etc.
We have an excellent reputation among banking and non-banking financial institutions, and use market resources for optimum structuring of transactions, with leverage levels appropriate for each type of project.
This flexibility is particularly relevant to medium size companies which, in many cases, are unable to undertake growth projects because they do not have access to capital markets.

Continuous Support and Alignment of Interests with our Management Teams
During the life of each investment, we become involved in our companies, seeking out long-term value creation, supporting the building of efficient companies, well-managed and keen to achieve ambitious strategic objectives and carry out improvements to operations in order to optimise their potential. We maintain a close relationship of trust with our management teams, providing them with a high degree of management autonomy, strengthening them and participating in the taking of strategic decisions and supporting them in all business areas (operational, financial, commercial, etc.)
We often appoint independent advisors of recognized experience and capacity to add value to our portfolio companies.

Preparation of Portfolio Companies for Future Divestment
Before undertaking each investment, we consider the objective positioning of our portfolio companies at the moment of divestment, and from the beginning of each investment we work towards that aim. We align our interests with those of the management teams through economic incentives linked to the value created in the companies.
As we are independent, we are not under external pressure and can analyse well in advance the timing and the most appropriate strategy for the sale of our investments, anticipating sector trends and identifying the right buyers in order to maximise their value.

Promotion of Environmental, Social and Governance Aspects
In Corpfin Capital we are convinced that compliance and promotion of the principles of good governance, protection of the environment and the ethical values forming part of our DNA as a company are a differentiating element in the creation of value in our portfolio companies. We are committed to environmental, social and governance aspects in our firm and in our investees companies, and we consider them in every aspect of our business.

Our investments

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