Bregal Freshstream, an investment company of C & A family Brenninkmeijer, takes a minority interest in Euro Caps, a manufacturer of coffee cups for Nespresso. With the contribution of fresh capital, Euro Caps expects to grow significantly in the coming years.
Euro Caps, established in 2012, produces three million capsules a day and is the largest private label manufacturer of this product for Nespresso, a brand of food company Nestlé. The Rotterdam company, with 450 employees, is active in the fastest growing part of the global coffee market, according to Freshstream, in an explanation of the deal. This market segment is expected to amount to € 18 billion in 2019. This growing extent is partly explained by the higher demands that coffee drinkers put on the quality of the products.
Demand for premium coffee
Bregal says that it wants to help Euro Caps achieve sustainable growth. According to Bregal partner Pascal Keutgens, the company is "extremely well positioned" to benefit from the increasing demand for premium coffee.
Euro Caps achieved a financial breakthrough with a net profit of € 5.6 mln in 2015, compared with a modest € 600,000 the year before. The operating result also went up considerably: from € 1.6 million to € 7.8 million, as evidenced by the last registered financial statements of Euro Caps Holding. Sales were also significantly higher: + 86%, without mentioning amounts. At the same time, the company invested in new packaging machines and increased operating efficiency.
Strengthening of asset base
The upward line in the results reflects a strengthening of the liquidity position and the capital base. The company had a negative equity at the end of 2014, one year later, the turnaround was made to a positive capital of € 3.7 million. Solvency (equity ratio divided by balance sheet total) improved from 12.5% negative at the end of 2014, To 13% positive end of 2015.
The cup manufacturer's activities were further expanded last year with the production of capsules for the brand Dolce Gusto in a separate company called Malabar.
Management maintains significant importance
With the advent of Bregal, it was agreed that the management of Euro Caps, including CEO and co-founder Nils Clement, maintains a significant stake in the company. Clement says that the Brenninkmeijers fund has joined, not only because of the investment capital, but also because it is now receiving support from a long-term family investment fund.
For Bregal Freshstream, it is the third investment in the Netherlands, after taking 2016 interests in Verwater, a Rotterdam tank storage service, and in TrueNoord, a company in airline leasing.