InnovationsKapital exited its investment in Formex AB of Anderstorp following the sale of the five year old developer of leading edge expanded beam connectors for fibre optic communication in harsh environments to Tyco International’s subsidiary Tyco Electronics.
Tyco International is listed on the New York Stock Exchange and was, says Staffan Ingeborn managing director at InnovationsKapital, already well aware of Formex since Tyco was one of Formex’s customers. Formex’s products are used mainly in civil aviation as well as in telecommunications and the defence industry. Tyco Electronics, however, develops, manufactures and markets fibre optic connectors and contacts for fibre optic communication and has business activities worldwide. It is a 75,000 employee business and has sales of just over $10 billion. It was set up in 1999 and it is already the largest company within the Tyco International Group. By comparison Formex has just 17 employees and sales of SEK20 million.
Although no value figure for the sale of Formex to Tyco is being released, at the request of Tyco, Staffan Ingeborn notes that InnovationsKapital’s investment in the business earned it a 27 times multiple on its investment. InnovationsKapital was introduced to the Formex business by one of its existing portfolio companies Radins, which is in the phototonics space and InnnovationsKapital invested in the Formex business when it was a start up back in 1995. InnovationsKapital itself was more of less a start up too at this time having only begun operations in 1994. “Shortly after we started ourselves we invested a modest amount in conjunction with Formex’s start-up in 1995. The value has progressed well,” says Staffan Ingeborn.
Staffan Ingeborn was on the board of Formex from the time of InnovationsKapital’s investment to its sale to Tyco. The deal is structured as a cash transaction with the three founders. The founders own 60 per cent of Formex and InnovationsKapital owns 40 per cent.
“The sale is positive for Formex, for our employees and for the area around Anderstorp. Having a major international owner like Tyco Electronics behind us significantly improves our opportunities of developing and expanding,” says Peter Fldi, chief executive officer and one of Formex’s founders.
“Even if Formex is a small company, their cutting-edge competence is important for us. The acquisition is completely in line with our long-term strategy of expanding our market shares and strengthening our competitive edge in advanced component solutions for fibre optic communication,” says Christer Thibblin, managing director of Tyco Electronics Nordic activities.
Tyco Electronics, headquartered in Harrisburg, Pennsylvania, US, is the largest passive electronics components supplier in the world, providing advanced technology products from its AMP, Alcoswitch, Buchanan, Critchley, Elcon, Elo Touchsystems, M/A-COM, Madison Cable, OEG, Potter & Brumfield, Raychem, Schrack, Simel and TDI brands.
InnovationsKapital’s business is focused on investments within information & communication technology and healthcare & life sciences. In addition to Formex other investments that InnovationsKapital has made in the optics field include Proximion, Radins, Kreatel and most recently in the summer it invested in Heptagon. InnovationsKapital’s total capital under management is SEK500 million.