Palamon Capital Partners sells Espresso House

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.  

Espresso House

Espresso House is Sweden’s largest branded coffee shop chain, with 120 directly owned and operated units in prime locations across Sweden. Espresso House serves high quality speciality coffee, supplemented by a broad menu of warm and cold drinks, hot and cold food and bakery products. All baked goods and breads are prepared in its own bakery. The strong company culture delivers great customer experiences, and Espresso House’s loyalty card scheme has over 135,000 active users. Espresso House has about

900 employees, and estimated turnover for 2012 is over SEK 560 million.

For more information on Espresso House refer to www.espressohouse.se

Palamon Capital Partners

Palamon Capital Partners, LP is an independent private equity Partnership founded in 1999, which is focused on providing equity for European growth services companies. Palamon, as a pan-European investor, originates, executes and manages investments in the UK, Germany, Italy, Spain, Norway, and Sweden. The Firm targets investments in companies where it can be the lead private equity provider and where it can provide strategic direction and partner with management to help build equity value. The Firm manages Palamon European Equity, L.P. and Palamon European Equity II, L.P. with commitments of €1.1 billion.

For more information on Palamon refer to www.palamon.com

Herkules Private Equity

Herkules is the leading Norwegian Private Equity firm, founded in 2003, with a total capital base of NOK 12.25 billion. Herkules targets companies located in the Nordic region, primarily in Norway. Herkules acquires established companies with strong growth potential, either through organic growth or add-on acquisitions. Herkules acquires majority share in companies and has positive experiences from partnership with existing shareholders.

For more information on Herkules Capital refer to www.herkulescapital.no

Advisers to the vendor:

Advisers to the transaction: Commercial Due Diligence providers: Financial Due Diligence providers: Tax advisors providers:
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Nordea Corporate Finance Allegra Strategies PriceWaterhouseCoopers PriceWaterhouseCoopers Mannheimer Swartling