Disclaimer: Unless noted otherwise, views and analysis expressed here are the author's own and based on public sources. The article is intended for informational and entertainment purposes only. This is not financial advice. Please consult a professional for investment decisions.

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Welcome to Episode 11 of our interview series.

I sat down with Andreas Bruzelius, the CEO and co-founder of Aspira Partners, a Nordic investment firm that started as a deal-by-deal independent sponsor in 2020 and recently transitioned to a fund structure.

In 5 years, Aspira has built 6 platform companies and completed over 100 add-ons across infrastructure, tech, and business services, which generate more than $500M in pro forma sales. They have raised c.€170M for the first five platform deals, and the latest platform is funded from a fund structure.

What makes Aspira even more remarkable is that it targets 4x MOICs in one of Europe's most competitive and sophisticated markets - the Nordics.

Andreas' journey mirrors many from the RollUpEurope community. Started in Investment Banking (Carnegie, Deutsche Bank). Moved to Private Equity (FSN Capital, which he helped grow from €380M to €4B in AUM). Finally, in his late 30s, stepped out to build his own firm with co-founder Anders Barklöf. 

Want to learn more from Aspira in person? Anders Barklöf will be speaking at the next Serial Acquirers Summit in London on 26 February. Make sure you get your ticket if you want to hear directly from the Aspira team. But be fast, at time of publication, we only have about 10 tickets left!

Read on to learn about:

If you'd rather listen to the audio version, check out our Rollup Stories podcast on Spotify!

This article is free for registered subscribers, courtesy of PPH Financial Group - your Fractional CFO par excellence. Month-end closings. Lender reporting. PPAs. Audits. Dashboards. Automation. PPH Financial can do it all - and then some. Across Europe and in the US. Get in touch with Pavleta today: [email protected]!

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Alex: Welcome Andreas! Please start by introducing yourself to our readers.

Andreas: I started in investment banking - first at Carnegie in Stockholm, then Deutsche Bank's M&A team in London during the pre-Lehman days when the markets were frothy.

I really wanted to move into the lower mid-market. I come from a family of small-scale entrepreneurs. I felt at home being out in the trenches working with founders. Even though my background could have suited large firms like EQT or Nordic Capital, the lower mid-market was the right place for me.

I joined FSN Capital when they had a € 380M fund - not a well-known firm at the time. But we had a great team from bulge bracket investment banks and management consultancies, and a clear growth plan. I worked there 12 years and helped grow the firm to €4B in AUM.

However, as you grow, you need different skillsets in PE. I'm more at home in the lower mid-market. In larger segments, you need different capabilities. I felt it was better to start Aspira with Anders, my co-founder, who I met in 2017. We have the same investment DNA, the same thinking, and we both come from entrepreneurial families. So, it came together very naturally to step down and start Aspira in 2020.

Alex: Aspira has built six platforms in five years. How did you come up with the industries you've invested in?

Andreas: All our investments come from in-house research. We do extensive research to identify sectors with consolidation potential - a fragmented market of sufficient size where you can accrue synergies and create operational value. Enabling resources for this research are the team’s extensive expertise and networks in Aspira’s target sectors.

We seek to be first movers. The Nordics is a very competitive, advanced market. You need to be skilled at identifying new markets and try to be first in a segment that hasn't been consolidated yet.

One focal area is asset-light infrastructure. Qflow is an engineering consultancy focusing on infrastructure. The thesis: much of northern Europe's roads, railways, and water infrastructure was built in the 1950-70s and is aging. There's obvious demand for decades ahead. That's a trend we like as investors. We also invested in WTR Group, which focuses on products for water and wastewater applications.

The second area is tech. We have PubliX, a vertical market software platform focusing on GovTech and public sector customers. And, we also have Generate Group in this segment, focusing on custom software development and custom AI solutions.

A third area is business services. We have Teqt Group on the roofing side, and ServeTek, our latest investment, focusing on servicing food service equipment.

Alex: Walk me through Teqt Group. What was the thought process? How did you find the starter asset? What was the buy-and-build strategy?

Andreas: At face value, roofing services don't sound interesting. But here's what we liked: roofing is mission-critical. If waterproofing breaks down, water seeps into the structure. It's very costly for property owners.

We also saw scope for large synergies. They buy large volumes of standardized roofing material. A fairly large share of total cost structure is material purchasing. We'd seen very successful consolidations in this type of space. Look at car glass – Cary Group owned by Nordic Capital - a great consolidation play with significant procurement synergies.

Third, there were no market leaders. The roofing services market is €6B in the Nordics alone. Complete white space. No large players. Large suppliers like Icopal existed, and large insulation companies were PE-backed. But the installation side of the industry was completely untouched.

You could see consolidation had already started in the US. Clear potential to become a front-runner in northern Europe.

We assembled a platform with around €25M in sales. We're currently at around €250M in sales with healthy margins. We've also expanded within the Nordics and established a platform in Germany.

Today, we see that there's really a pan-European consolidation wave in this industry. Platforms in the Netherlands, multiple platforms in Germany. Consolidation is happening at quite a high pace across many industries.

Alex: Is there a target for when you want to sell platforms? What return metrics do you target?

Andreas: Typically we have a 5-year investment horizon. I think that's the right horizon when working with founders and entrepreneurs. 10 years can be quite long in a person's life. If you buy a company from someone aged 50-60 that's their last job. That said, we focus mainly on teaming up with entrepreneurs in their 30’s and 40’s.

In practice, we have a rolling 2-3 year business plan at any point in time to keep the pace up.

Exit timing depends on internal factors - maturity for exit, value creation to date - but also the overall market. You need to keep your ear to the ground as to when it could be an opportune moment for exit. For example, we now see a trend of smaller sponsors teaming up with larger ones, becoming part of a larger consolidation play and taking minority positions in certain cases. So I would say that dictates the exit timing overall.

In terms of returns, we typically target 4x MOIC. That's what we feel is realistic in most instances. We want to underwrite 4x not only on a portfolio level but for each single investment. If it's not a 4x, it's not a case for Aspira.

Alex: You started as a deal-by-deal Independent Sponsor. Five platforms are doing really well. The sixth platform you raised as part of a fund. What prompted that?

Andreas: We had a very positive experience operating as an Independent Sponsor. When Anders and I sat down in early 2020, we identified that operating as independent sponsors meant we could scale much faster, establish our own track record, and invest in building a team. There's also frankly a market for non-traditional structures and an evolution happening as private wealth investors get access to private investments.

Why did we move to a fund structure? We're currently 12 professionals. The challenge with operating deal-by-deal is that you can't run multiple cases simultaneously. You can't manage the messaging, work with several fundraisers and do capital raising simultaneously.

It's an advantage to operate with a fund and manage several investments at the same time. 

That said, there are obvious advantages for people who want to build and grow in this industry. If you're starting from scratch, there are clear advantages starting as independent sponsors the way we did - being able to show investors you can create value.

Alex: You don't sound like you regret stepping out from PE to start an independent sponsor. But coming up to year six, are there any decisions you regret? Anything you'd do differently?

Andreas: Everyone is imperfect. One thing that comes to mind: we learned that internationalizing a buy-and-build platform can be very time-consuming.

I wish we had internationalized earlier because it took several years to get traction in markets like DACH. If I could step into a time machine and go back, I would have hired locally for a Head of DACH earlier. You need people on the ground to get a significant foothold in a market like Germany.

That's one learning we've picked up over the past few years.

Alex: We have 5,000+ subscribers & 6,000+ LinkedIn followers. Any messages for readers contemplating transition to independent sponsor or ETA? Are there career opportunities within Aspira? If someone wanted to join a platform as head of M&A or set up a new platform, are you open to those invitations?

Andreas: Of course! We're looking to team up with entrepreneurs. We're looking for people in different geographies who want to be part of the journey.

Please feel free to give us a call if you're looking to build in a certain sector or if you're working in a sector we're already active in. I really think it's a big advantage - even if you're looking to build your own track record - to team up with another sponsor. As an entrepreneur, you need to be creative. There's no set way of doing things. We'd be happy to support other entrepreneurs in building together.

Alex: That's great. Also, if you want to learn more about Aspira and find ways to get involved, Andreas' colleague and co-founder Anders Barklöf is speaking at our next Summit in London on 26 February.

Thanks Andreas. Really appreciate the conversation. Best of luck with Aspira!

Andreas: Thanks Alex.