Germany Energy & Resources Deal of the Year for the NGIM Holding Acquisition of Solarion AG Transaction
Established in 1982, NGIM Holding is an Istanbul based company offering solutions in the areas of construction, chemistry, technology and energy. The company’s CEO Can Nuhoğlu reveals more about the company and the acquisition of Solarion AG.
With over 500 employees and a yearly turnover of 85M USD these are exciting times for the company. Our aim is to become a responsible solution partner and an integrated systems provider with an understanding of contemporary quality and environmental consciousness.
In terms of the holding companies we invest, in the construction industry we have been working with Nuhpanel, a flagship company of the holding and a manufacturer of sandwich panels for industrial buildings. Multiplan, Europe’s 3rd biggest manufacturer of waterproof membranes (TPO and PVC) is another stand out investment of ours in the construction industry.
In the Chemistry industry our main investment is Nuhpol, a producer of base polyester and polyether polyol for rigid and semi flexible polyurethane. In the Technology sector we have two outstanding companies; Grafentek and Smarte who specialise in Nano coating applications such as long lasting lightweight batteries and machine to person communication respectively.
Lastly for the Energy sector, we have established OC3 AG, a manufacturer of high tech, industrial rooftop solar panels and flexible CiGS solar cells for cutting edge projects, based in Germany.
Although the Arts and Lifestyle sector isn’t typically considered to be our core market, we have two important institutions; Gaia, a contemporary art gallery in the cultural heart of Istanbul and Atom, a designer and manufacturer of luxury yachts. In the Energy sector, solar companies have faced a serious financial crisis in recent years. The price pressure of Chinese competitors, deregulation in
many developed countries and market saturation has led to many companies filing for bankruptcy. However like many crisis, there is always an opportunity. This sector always needs innovative ideas and new ways to integrate green energy to people’s everyday lives. So entrepreneurs and companies who had such ideas and enough capital now have access to many facilities with more than enough machine parks and know how.
On the other side, the running costs of these facilities are often quite high since they run on high technology. Therefore the trick is having a portfolio of innovative and marketable products that can be mass manufactured in these facilities. Scaling and versatility is a must have checkpoint for M&As in Energy sector.
In regards to the deal itself, Solarion AG was one of the biggest manufacturers of CIGS flexible solar cells. However with the cell efficiency developments in Crystalline Silicon cell technology, CIGS cells became financially obscure. Bounded by several promises given to state and investors, Solarion AG was unable to catch up with market conditions and fallen into an inevitable insolvency.
According to German insolvency rules, an Insolvency agency has taken over the company and their task was either selling the assets of the company as a whole package or setting up an auction for partial sales.
At this stage, sales manager of former Solarion AG has contacted us knowing that our Holding had ongoing R&D activities for a new solar module design and he asked us if we are interested in an acquisition.
We have made several visits to the site and arranged a full scale due diligence process with a very well established law firm specialised on M&A. After careful considerations, we have decided that investing in this production site, machine park, patents and know how would be immensely feasible.
In total the money spent on the facility, including machinery is around €110m with the current book value estimated to be around €47m.
We have also invested an amount that we do not want to disclose; for a debt and liability free asset transfer. In order for the transaction to be a successful process you have to define what actually your company needs and why you are planning to do this transaction. Without a proper strategy and a long term plan, even the best looking deals can turn into nightmares.
After you prove this deal perfectly suits the long term strategy of the company, you have to start asking hard questions; like Why the other party is selling the company? What made them fail? What can make you fail in the future? What are the obvious risks? And what are the hidden costs etc.?
For this process the acquirer needs a very competent due diligence agent. Last but not least, after every fact has been checked and every number has been crunched, the gut feeling of the deal should be ok. If the deal seems too good to be true, or if you are feeling that you are ripped; I think both situations will prove themselves to be true in the end.
If we take a closer look at the industry, we think clean energy solutions are booming again. There is more and more awareness everyday about global warming and at a Paris conference we saw that governments cannot stay silent about it too.
In many countries, including developing and nondeveloped countries, the focus has been on executing long term plans to shift from fossil fuels to green energy in near future. For example, a fast growing and very young Turkish economy with a hunger of energy resources will aggressively invest in solar power plants for converting more than 25% of its energy sources to become green by 2023.
We honestly think that society is ready to make this green energy shift. However financial institutions are failing to catch this trend. There are too little financing options for green energy manufacturers and end users. This is extremely surprising since setup costs and breakeven points of the investments have extremely improved in recent years. Any solar instalment is capable to work for 25 years with system breakeven points around 6-7 years. Still, banks and financial institutions do not consider solar investments as solid investments.
Working in a competitive industry has increased the need for us to identify innovative ways of differentiating ourselves from our rivals. In OC3 AG, a former Solarion AG, we have a three-layer energy concept, energy production, energy storage and energy preservation.
For these three layers, we have several patented products. For energy production, we have flexible CIGS solar cells which have the best weight to energy raito in the world and literally can be applied to anywhere, including harsh environments of space. We also have an industrial type frameless solar module design which has 1/3 weight of conventional solar modules with same power output.
For energy storage, our holding company Grafentek GmbH works on flexible batteries and more efficient Graphene batteries; instead of very old Lithium technology that we currently use.
Maybe the most important part is energy preservation; and for this, two of our technology companies work together.
Grafentek GmbH is manufacturing electrochromic window films that change colour with electricity; which reduces the loss of A/C energy especially in summertime around 25%. Meanwhile our software company Smarte is currently providing market with self-learning and adapting energy control tools, for both B2B and B2C.
Looking ahead to the future, the Insolvency agency is very happy since they have completed a deal before going to the auction phase. The former owners of Solarion AG are happy since they have participated in a deal with professionals like us who appreciate their technology, know-how and work as hard on them as their legacy. We are happy that we have found an opportunity that suits our long term goals like a lego piece. In the short term, we would like to dominate the Turkish and European industrial rooftop solar market with our industrial solar module design. There is huge potential and this is a market that we know well. Our mid-term goal is to combine our solar modules with our energy storage ideas and start providing off the grid systems worldwide.
Thanks for evaluating us to be a part of your magazine and giving us this precious award. We are working hard to reduce the carbon footprint of our clients and heal our planet through green energy. We are open to any ideas around the world, universities, scientific institutions and ambitious entrepreneurs with exciting ideas. We believe that technologies and society only grows healthy via sharing.
Company: NGIM Holding
Name: CEO Can Nuhoğlu
Web Address: www.ngim.com