Adding value in a crisis
Kartesia supports lender-led restructuring at Tunstall
In recent years the majority of Kartesia’s investments have provided capital via direct investments, allowing companies to expand into new markets or to support buyouts. Yet our mandate is broader, as the fund initially had its origin in the secondary markets.
This broad mandate of both primary and secondary investment strategies is one of the main reasons the fund is able to deploy capital in an attractive risk-return manner in periods of economic growth as well as in economic downturns. During the recent COVID outbreak this flexibility has proven to be highly valuable as the deal teams assessed over 40 opportunities in a matter of weeks.
A prime example of a combination of both primary and secondary strategies is our work with portfolio company Tunstall (“the Company”). The Company, which was added to Kartesia’s portfolio via a secondary investment in 2014, is a global market-leading provider of strategic and innovation-led healthcare solutions. Founded in 1957, it provides remote digital care & healthcare services to enable secure & independent living. When Kartesia first invested in the business, Tunstall was primarily focused on the first-time sales and the onboarding of new customers but, since then, has pivoted more towards the recurring revenues generated by a service business model.
Tunstall had gone through a failed M&A process and at the height of the COVID crisis the lender pool was informed it would undergo a lender-led restructuring. Thanks to our strong connections with advisors and fellow lenders we were able to perform a thorough analysis in a short time frame. Upon forming our views on the situation we acquired, in a consensual manner, a larger part of the Company’s debt on the secondary market, allowing several lenders to exit and reduce their exposure to the company. Upon increasing our position, Kartesia supported the transaction and will, post restructuring, participate in the new money which will allow the Company to continue executing its strategy and benefit from a post-COVID world where living independently at home for a longer period of time will continue to grow as a trend and generate value for the business.
Kartesia supports the acquisition of International Cookware
As the lockdown started, Kartesia was in the midst of supporting the acquisition of International Cookware Group and its subsidiaries (“The Group”) alongside its Management team. The Group designs, manufactures and distributes cookware equipment, primarily made of borosilicate glass, which offers superior thermal shock resistance. It is primarily sold under the iconic Pyrex® brand, which International Cookware commercialises across EMEA under an exclusive licencing agreement granted by Corning Inc. The Group has also developed its own cookware brand, Ôcuisine, which has a large range of products distributed throughout the world.
We have been following International Cookware for quite some time and the current deal is the result of four years of relationship building with the company. It means that we were undettered when the sales process, although already advanced, was moved from physical to virtual interactions due to the lockdown imposed in France. And despite going into the most tumultuous market for over a decade, we had full confidence in the business. Ordinarily at this stage we would be conducting a site visit to discuss strategy with management in person, which has been rendered impossible, but instead we have had weekly calls with management and a thorough overview of the business and strong visibility over market conditions.
We are pleased with the robustness of the business through the crisis. It has benefited from food retail stores remaining open and and stability of the supply chain to get stock on the shelves. We’ve also seen a pickup in sales as lockdown restrictions have eased compared to the same period last year, reflecting consumer confidence in the brand. Part of the attraction of the asset was the internationally renowned Pyrex brand and significant market share, as well as favourable market trends; as demand for locally produced, high quality glass increasingly reflect health and environmental concerns related to plastic use. We have seen these principles to continue to drive sales and succeed in the toughest of environments.