A year has passed since StormGeo went from being owned by a private equity firm to getting a commercial business as its owner. One aspect in particular has changed for StormGeo, the CEO tells WPO.
About a year has passed since Alfa Laval bought StormGeo from the private equity fund EQT, and if you ask CEO Søren Andersen, there is a significant difference with the new owner on board.
The tech company, which amongst other things develops systems for weather forecasting for the shipping industry, is currently working on ways of integrating its services with its mother company’s services. It was in May last year that the acquisition was announced with a price tag of about NOK 3.6bn, which corresponded to NOK 2.7bn at the time.
A private equity fund has a shorter time horizon than a commercial business owner. Alfa Laval is an evergreen owner and focuses more on where we want to be as a company in the next 20 to 30 years.
Søren Andersen, CEO, StormGeo
”The private equity fund did several good things for StormGeo. They helped us mature, become more professional, and expand our reach through several important acquisitions. So, there was a lot of development,” says Andersen and adds: ¨
”However, a private equity fund has a shorter time horizon than a commercial business owner. Alfa Laval is an evergreen owner and focuses more on where we want to be as a company in the next 20 to 30 years.”
Planning to hire
Andersen says that Alfa Laval as owner invests more in research and will not ”necessarily pay itself back within a couple of years, but rather builds capabilities we will need in the years to come.”
StormGeo’s timeline
Source: StormGeo
The investment in research will also include hiring new people. Andersen explains that StormGeo will hire data scientists in ”the double digits” as part of process of beefing up R&D.
The fact that the company takes a long-term perspective does not translate to longer time being spent on making investments decisions.
”It means taking a big-picture view of our market offerings to ensure that we develop competitive products that increase our market share in our relevant industries,” Andersen says.
He adds that Alfa Laval will invest in both short- and long-term projects and that there is a requirement to deliver both short-term growth and revenue goals.
Integrated solutions
Andersen tells WPO that the two companies are very different and that there has been no incentive from Alfa Laval to integrate StormGeo fully and change its structure.
”Alfa Laval is very much about steel and hardware and equipment. And StormGeo is all about software and development. And so, Alfa Laval did not buy us to reap some sort of economies of scale or efficiencies or anything like that. There’s not a lot of overlap between the Alfa Laval team and what they do and the StormGeo team and what we do. Alfa Laval decided very early on to do what they call a light integration,” the chief executive explains.
However, there are ways the companies are looking to overlap. Mostly in the terms of services and what digital products to bring out next.
We will spend more time on the integration of products. I don’t see a change in the way we operate. I think that’s very cleverly done.
Søren Andersen, CEO, StormGeo
”We will spend more time on the integration of products. I don’t see a change in the way we operate. I think that’s very cleverly done. I think some of the mistakes industrials make when they acquire different types of companies, they want to fit a square peg in a round hole,” the CEO says.
Private equity funds in shipping
EQT acquired StormGeo in March 2014, and when the acquisition was announced, EQT stated that it ”looked forward to embarking on a journey to realize the full potential of StormGeo.”
EQT also has other interests in shipping. At the end of 2020, the equity fund offered billions of Norwegian kroner to buy transport company Torghatten shortly after having acquired ferry operator Molslinjen.
EQT is not the only equity fund taking an interest in shipping as several others have bought stakes in the sector. This goes for the Swedish equity fund Altor, which invests in Wrist Ship Supply, but it is probably most known for its ownership of OW Bunker, which went bankrupt in 2014 after a short stint on the stock exchange.
Another equity fund, Polaris, currently invests in G&O Maritime Group and has previously invested in Molslinjen, which was sold to StormGeo’s previous owner EQT.
