Nurturing value
Successful value creation stories in the healthcare space from BaltCap and IK Partners
Via our growth fund, we invested in elderly care chain Pihlakodu and its subsidiary, Karell Kiirabi, in 2019. Karell Kiirabi is one of the first private ambulance service providers in Estonia, also providing emergency medical services. The company serves north and northeast Estonia.
We immediately changed the whole management team when we came in, bringing in higher governance standards and professionalism. The regional co-heads, who had a deep understanding of the business and were business savvy, were promoted to co-CEOs.
We also set up a proper supervisory board consisting of BaltCap investment team members and co-shareholders, who bring broader healthcare expertise as they have a long track record of investing in healthcare assets in Estonia – having experience from developing medical laboratories and dentistry to primary healthcare. Good governance hygiene and professionalism is vital for a business like this, as you’re providing a crucial service to society.
We predominantly invested in physical assets, upgrading the ambulance stations and retrofitting ambulances with higher standards. A modern high-tech fleet is the cornerstone of a high-quality ambulance service.
We were the first in Estonia during Covid-19 to implement a self-disinfection capability, which involves pressing a button at the ambulance station that sprays the whole vehicle in 45 seconds, instead of somebody manually scrubbing it – a necessity after a patient has been dropped off to the hospital.
The fleet was also equipped with telemedicine capabilities through a 5G modem, making consultations with standby doctors easier on-the-go.
We predominantly invested in physical assets, upgrading the ambulance stations and retrofitting ambulances with higher standards
We also invested in an in-house training centre for staff, as vocational skills need to be updated systematically for paramedics. Secondly, as most of the employees of the company don’t speak Estonian as their mother-tongue, we focused on supporting the employees by upgrading their language skills and becoming more proficient in Estonian.
As you can imagine, a paramedic who doesn’t speak the local language faces challenges with patients, particularly if you’re from a small community.
We exited Karell Kiirabi in February 2024. The exit saw Pihlakodu sell 100% of the subsidiary to the owners of local elderly care chain Südamekodud.
Organic revenue growth during holding period
Of fleet upgraded (18 out of 18 units)
Employee churn per annum
We acquired Mabtech in November 2019 through our IK Small Cap II Fund. Founded in 1986 by immunology researchers at Stockholm University, Mabtech is a manufacturer of antibodies and live-cell assays (Elispot/Flurospot), used predominantly for oncology research, to study immune responses and develop advanced vaccines.
When we acquired our stake in Mabtech, I would’ve described it as a small, niche antibody manufacturer that was well known for exceptional quality and customer service but had only just launched the first ever reader for its Elispot/Flurospot assays. Being a scientist-led company, it focused on selling to academia and the team lacked the commercial experience needed to roll out their new reader in international markets.
During our ownership period, we worked closely with the company and consultants to develop a new go-to-market approach with greater customer interaction and communication of offerings relative to customer needs within pharma, biotech and contract research organisations. We built out the commercial team significantly, increasing the number of FTEs from approximately 50 to 80.
An important part of our value creation story was geographic expansion in the US and China. A US adviser, coming from a leading firm in this field and who was within the IK network, was appointed to help. We set up a new office in Boston, significantly improving our US coverage. After thorough analysis, we decided to go through distributors in China and not set up an office at this point. Through these efforts, we were able to roll out Mabtech’s reader globally. When we bought the business, Mabtech had only sold one reader, but when we exited, it had sold 300.
An important part of our value creation story was geographic expansion in the US and China
At the time of our acquisition, Mabtech was a leader in the niche market of Elispot/Flurospot assays. Given the limited size of this market, we established, early on, a framework to explore new technologies and extract further value from existing capabilities and Mabtech’s core knowhow. As a result of this, we automated the flagship reader during our ownership period, which enabled us to sell it to pharma companies working in clinical trials, as the scale of analysis requires automation, a market previously not addressed that constitutes 70% of the Elispot/Flurospot reader market.
We then proceeded to look at adjacent markets, one of which was the multiplex industry for proteomics, which prompted us to develop a multiplex instrument with assays and expand our total addressable market (TAM) by more than $1bn. As an antibody producer, Mabtech also became a contract manufacturer to diagnostics and pharma companies. Previously, Mabtech had done this on an ad-hoc basis for ‘friends and family’, but we built out a department that focused on this market worth more than $2bn and which provided recurring revenue.
When we invested in Mabtech, the business didn’t have a finance function, so we recruited a CFO and financial controller, basically building a team from scratch. We established a reporting system to track both the monthly financials and the different margins on a product level. We also streamlined and brought antibody and assay manufacturing in-house and hired a new CEO, following the transition of the previous one to a senior adviser position.
We sold our stake in Mabtech to EQT Partners in January 2024.
The portco more than doubled its sales and Ebitda
Expansion of TAM
Rollout of instruments, raising installed base from 1 to 300
