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DS Produkte

DS Produkte

Invested:
November 2008

Exited:
March 2012

Return:
1.5x / 17% IRR

Sector:
Leisure and retail

Headquarters:
Stapelfeld

Region:
Germany

Business:
Consumer goods distributor

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Business at time of investment

DS Produkte was the most professional and forward-thinking player in the ‘fast moving consumer goods’ sector in Germany, focusing primarily on small electrical appliances as well as fitness products, home improvement products and kitchen accessories.  In 2007, it had around 250 employees and generated €73 million of revenue.

Investment rationale

The importance of non-food was seen to be increasing as retailers and other distribution channels viewed it as a crucial differentiation factor, essential to attracting and retaining consumers in a very competitive and price sensitive environment

Fast moving innovation goods was a €2.7 billion market in Germany and yet the market was deeply fragmented. Although not large, DS had a long-standing track record of profitable growth, innovative products and concepts, strong relationships with all key retailers in the German market and proven ability to source globally.  It was well positioned to build out a broader position in the market. Furthermore, one of DS’s core strengths was its ability to use its established network to roll out new product ideas into the mass market rapidly.

Value creation

  • Reinforced management team
    • Recruited a COO and senior personnel in Product Management, Shop-in-Shop Management and Sales.
    • Introduced incentive programme for senior management
  • Invested in IT and operations:
    • Implemented a new Management Information System.
    • Implemented account management system to increase sales efficiency
  • Developed business model
    • Launched a Shop-in-Shop concept during 2009 substantially driving growth.
    • Launched a transactional website and long-format TV commercial broadcasts.

Company at exit

By 2011, DS had enlarged its distribution network through its shop-in-shop business model to more than 4,000 points of sale and launching a transactional website. The company had grown revenues by 20% per annum during Palamon’s hold period.

Result

DS was sold to its founding management team following an expression of their interest to increase their stake, following the recapitalisation in 2010. Palamon’s investors received total investment proceeds equating to 1.5 times their money and a 17% IRR.