Diversification of the company’s end-markets was part of Equistone’s base case. Due diligence had revealed a potential over-reliance on certain end-markets, particularly solar. This deterred other would-be suitors, but Equistone felt that it could help address these commercial risks, and so instead, focused on RENA’s fundamental merits of a strong leadership team, German-style technical excellence and cutting-edge R&D.
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THE STORY OF RENA’s success shows the power of combining technical competence with an engaged and experienced international shareholder.
RENA operates at the cutting edge of ‘wet chemical processes’ for industries such as semiconductors, wafers, glass applications, green energy, additive manufacturing and medical technology, and this involves a relentless R&D effort.
Since 2019, the Equistone deal team members have used their commercial acumen, knowledge of end-markets and deal-making skill set to identify lucrative new sources of demand and create untapped opportunities for the business, across the world.
At the outset, RENA was strong in China and in green energy, with a smaller global business in wafering and semiconductors. Since then, says Equistone’s Stefan Maser, “There has been a complete repositioning of RENA, in terms of its geographical focus on Europe and North America, and its end-markets, with a pivot towards semiconductor-related applications and processes.”
Much of this repositioning has been achieved through strategic M&A. Equistone has advised the management of the company on a number of pivotal acquisitions and disposals, the first of which was its acquisition of Oregon-based MEI in 2019, a business that was at the time turning over $15m a year. It is now RENA North America and has proven a strategically important foothold, enabling the company to accelerate its growth in the North American semiconductor market.
Next, in 2020, RENA used M&A to reinforce its technological capabilities with the carve-out of Hirtenberger Engineered Surfaces from an Austrian industrial group. This gave the company an entry into the cutting-edge of additive manufacturing.
By 2021, the obvious successes of the business began to attract the attention of prospective acquirers, including a Hong Kong-listed investment firm, Productive Technologies (PDT).
At the same time, RENA became increasingly conscious of the growing supply chain risks of a deglobalising world, which prompted a rethink around RENA’s solar business in China.
“RENA’s management decided to decouple the business from a dependency on China and the solar sector,” says Stefan. “It is a competitive market, and to be successful in the long term would require a significant investment to build a greater physical presence in China.”
Amid growing geopolitical tension, in the summer of 2022, RENA took the decision to sell its China solar business.
“Since PDT had followed RENA for quite a while already, Equistone was able to establish a dialogue over time,” says Equistone’s Tanja Berg. “This proved important because Chinese players can have a different culture and style of negotiating.”
While a divestment isn’t obviously a growth strategy, for RENA it was very positive because it freed it up to focus on areas where it really had a competitive edge: in semiconductors, wafering, med-tech, glass, additive manufacturing and batteries. But very importantly, RENA is still the number one player for wet chemical equipment in the green energy industry outside of China.
RENA still has a strong presence in Asia, and it has been able to focus more of its resources on growth markets. In addition, the sale allowed Equistone to return money to its fund investors and significantly reduce the company’s debt. “The sale of the China business was a very important strategic and financial transaction,” says Equistone’s David Zahnd. “As a result of these two acquisitions and disposal, the Funds own a completely repositioned business that is far more attractive than it was previously,” he says.
Today, RENA’s turnover is already larger than it was prior to the sale of its China solar business, driven by new account wins and organic growth in its core markets.
The sale of the China business was a very important strategic and financial transaction
Partnership for growth
Today, RENA is in a much more resilient position regarding its end-markets. In particular, a stronger focus on semiconductors is positive in terms of both growth, innovation potential and diversification, given that the market is being driven by multiple mega-trends, including AI, electrification, as well as a geopolitical trend to on-shore production facilities. “RENA is a direct beneficiary of this trend for each region to have its own advanced semiconductor capabilities,” says David.
To support this, RENA has built a new production facility in Mönchweiler. And in the wake of the China solar sale, the company has invested in the reskilling and upskilling of its German workforce around solar equipment.
As RENA enters its fifth year of working with Equistone, it is looking stronger than ever.
“The order book looks strong,” says Tanja. “All end-markets demonstrate a positive momentum. RENA’s projects tend to have a long lead time, so RENA has good visibility for next year and the year after, and they can plan their capacities and deliveries to customers accordingly.”
It would be fair to say that with Equistone’s support, RENA’s growth story so far constitutes a strong execution of relatively classic private equity skills. But, as ever, it is the soft factors that are most difficult to report on. In fact, the true secret to the success of its partnership with RENA is a mutual respect that allows everyone to do what they do best. It’s simple chemistry. ☐
A full version of this article appeared in PLATFORM 10, Winter 2023/24