Case Study

Velvet CARE

Distribution

The company

  • Region: Europe
  • Sector: Consumer
  • Stage: Mid-market buyout
  • Type: Co-investment
  • Fund Vintage: 2018
  • Exit Type: Secondary buyout
  • Highlights:
Proceeds £3.2m
Net multiple of invested capital 4.1x
IRR 30%

Private Equity Manager (GP)

Case study

About the company

Based in Poland, Velvet CARE is a major producer and distributor of branded paper tissue products, including toilet paper, facial tissues, kitchen towels, moist wipes, cosmetic pads and buds. It employs more than 850 people across offices and manufacturing facilities in Poland and the Czech Republic.

The company owns the iconic Velvet CARE brand in Poland, which has a 20-year history and a brand recognition of 97% in the country.

Investment rationale

  • Abris Capital Partners (“Abris”) has a strong track record in the tissue manufacturing sector. Through its prior investment in a jumbo roll paper producer in the region, and the evaluation of potential add-on acquisitions, Abris has developed significant insights and sector knowledge in the space.
  • Velvet CARE is a non-discretionary consumer staples business, where industry growth is driven by the increase of tissue consumption per capita in the Central and Eastern Europe (CEE) region, as well as product innovations.
  • At the time of the investment, Velvet CARE was considered to benefit from a number of competitive advantages: strong brand awareness; private label growth opportunities; and margin improvement potential following recent capital expenditure investment for the installation of a new jumbo roll machine.
  • In addition, Abris identified upside potential from a possible merger with upstream and downstream value chain players, including those that were already identified by Velvet CARE’s management team, thus offering the potential to create a regional leader.

Our relationship

Pantheon has a long-established relationship with Abris, having invested in the two most recent funds through both primary and secondary investments. Pantheon is also an LPAC1 member in both funds.

1Limited Partner Advisory Committee.

Active management and value creation

  • During Abris’ investment holding period, Velvet CARE sales increased by 2.3 times and the company’s EBITDA grew by seven times.
  • Velvet CARE expanded its export business fivefold.
  • In 2020, the company completed the add-on acquisition of Moracell, the largest manufacturer of paper hygiene products in the Czech Republic. This consolidated Velvet’s presence in the CEE market, strengthened the company’s position as a regional leader, and expanded its international footprint with limited client overlap.
  • More than EUR 130m was spent on production, automation and storage capital expenditure to improve competitive positioning across all product categories. In addition, this improved profitability and product quality.
  • Following the development and implementation of a comprehensive Environmental, Social and Governance (“ESG”) programme Velvet CARE received B Corp certification in 2023, demonstrating the highest standards of social and environmental performance.
  • The company also received a gold medal from EcoVadis, an independent sustainability rating agency.

Exit

Velvet CARE was acquired by a fund managed by Partners Group in December 2023. PIP achieved a gross IRR of 30% and net multiple of invested capital (MOIC) of 4.1x

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