Palamon Capital Partners sells Espresso House for 3.4x return
Palamon Capital Partners (“Palamon” or the “Firm”), one of Europe’s leading mid-market private equity firms, has agreed the sale of Espresso House (“the Company”) to Herkules Private Equity III, a Norwegian private equity fund. The terms of the transaction were not disclosed.
In 2005, Palamon identified a gap in the Nordic markets for a quality, branded coffee bar offering and approached the founders of Espresso House about purchasing a majority interest and initiating a high-growth strategy. Beginning with 22 outlets in the south of Sweden in 2006, Espresso House purchased a 15 store chain in Stockholm to create a national brand with 37 outlets. From that base, the Company embarked on an organic expansion plan which has taken it to 120 outlets across Sweden, making it the largest chain of wholly-owned branded coffee bars in the Nordic region. Today, the Company employs approximately 900 staff and serves more than 30,000 customers daily. During Palamon’s ownership, revenues increased by 30% per annum to SEK 560 million with EBITDA rising more than 10 times.
Dan Mytnik, Partner at Palamon, commented, “We could not be happier with the success of Espresso House. From small beginnings, we have enjoyed partnering the Company’s superb management team in developing a growth strategy and executing to create a leading brand with the dominant position in its segment. For us, this investment has returned 3.4x on invested capital, once again demonstrating the power of our thesis-led investment approach. We wish the company well as it embarks on its next stage of growth.”
Adriano Capoferro, CEO of Espresso House, said, “Palamon’s support and strategic insights were significant at the early stages and then throughout the roll-out of our expansion plans. We have greatly appreciated our close collaboration with the Palamon team which has been an essential component in the Company’s success. Over the last year we have successfully opened 20 more outlets, continuing the steady increase of our presence in Sweden and laying the base for our exciting expansion plans into neighbouring Nordic countries.”
This is Palamon’s eighth realisation event from its 2006 fund, Palamon European Equity II, which has produced realised returns of 2.6x on invested capital on fully exited companies. Palamon invests in high growth businesses and has a strong track record from its inception of its portfolio companies achieving an average revenue growth of 20% per annum.