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Q&A with Arvid Trolle: SolidAl transformation under Njord Partners ownership 

In June 2024, Njord Partners successfully exited its portfolio company SolidAl, a Portuguese power cable manufacturer, through a sale to publicly listed Danish power cable manufacturer, NKT. During the years leading up to the sale, the company has undergone a very substantial positive transformation into a top performer within its industry.

Arvid Trolle, Partner at Njord Partners and responsible Portfolio Manager for the investment in SolidAl, here addresses some of the main highlights of the investment.

Question: Why did Njord Partners first invest in SolidAl?

Arvid Trolle: We first invested in SolidAl in 2015, when the Company was facing a complex and short-term debt structure and needed a funding solution for working capital and increasing the capacity of its key production plant. SolidAl was operationally doing well but didn’t have access to traditional funding as it had been in financial stress since the early 2000s, when their debt burden rose due to failed expansion plans.

Their capital structure remained inefficient, with multiple bank loans from a range of different local lenders posing a significant financial risk and uncertainty to the company. SolidAl found little support from existing local bank lenders, who wanted SolidAl to return capital rather than further investing in the company. It was also difficult to attract equity investors for a minority investment without first solving the short-term nature of its balance sheet.

Question: How did Njord Partners invest in SolidAl?

Arvid Trolle: The funding solution provided by Njord Partners was intended to solve the short-dated nature of SolidAl’s debt, its complex capital structure, and to provide working capital. We created a solution that solved both the problem of the short-dated nature and complexity of SolidAl’s in-place capital structure, and the funding need for working capital and growth.

The facility was structured as a 6-year, senior secured loan to SolidAl with full first lien security on fixed assets and full share pledges. The structure created multiple benefits for SolidAl’s management and shareholders including lower risk capital structure in terms of a longer maturity-horizon, reduced exposure to local banks and the ability to fund operations, de-bottlenecking and supporting growth.

Question: Why did Njord Partners become the majority shareholder of SolidAl?

Arvid Trolle: In 2018, SolidAl ran into a severe liquidity crisis that was triggered by the cancelation of supplier credit insurance. SolidAl was again unable to raise funds that were urgently required for raw material purchases, leaving the company just weeks from bankruptcy. Njord Partners provided the company with rescue financing both by advancing significant cash injections to fund working capital in order to ramp up production and converting its existing debt into a majority equity stake.

Question: What did SolidAl’s turnaround look like as a result of Njord’s investment?

Arvid Trolle: Njord Partners quickly introduced a new and highly experienced leadership and advisory team, resulting in a full financial restructuring and operational turnaround. SolidAl underwent a full financial restructuring and operational turnaround plan, consisting of a first “stabilisation” and subsequent “step-up” growth phase. The turnaround included discipline around sales and operational planning; de-risked and optimised production; controlled supply chain; restored client confidence; and improving the capital structure.

The Turnaround Management Association (TMA) recognized SolidAl’s turnaround as the International Company Turnaround of the Year in 2020.

Njord Partners’ investment, SolidAl experienced very strong growth, more than doubling its revenue and EBITDA. In 2023, SolidAl generated revenue of approximately €150 million and EBITDA of approximately €20 million. Additionally, at the time of the restructuring, Solidal had 361 employees, all at risk in a bankruptcy scenario but given the successful turnaround all preserved. Since then and under the Njord Partners ownership the company has kept on growing its workforce and at the time of sale, the total number of employees stood at 436, an increase of 75.

Question: How much did NKT acquire SolidAl for?

Arvid Trolle: SolidAl was acquired by NKT for a total enterprise value of €192 million, which equates to an EV/EBITDA multiple of 9.4x.

Question: Why is NKT the right partner for SolidAl?

Arvid Trolle: We’re incredibly proud of SolidAl’s transformation and the company it had become, a top performer in its industry. The progress made is a testament to the dedicated team behind the turnaround. Joining NKT, a true global leader in power cables and accessories, is a perfect match. NKT will help expand SolidAl’s commercial reach and technical capabilities. We are confident NKT is the ideal partner to continue SolidAl’s journey, and we eagerly anticipate their future success.

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