OEP finds environmental awareness fueling demand for flow-control equipment

ESG as an ‘inherent part’ of the investment approach keeps OEP ‘in a position to seek an increase in profitability,’ says Marc Lindhorst.

One Equity Partners announced the acquisition of DESMI, a manufacturer of pumps, pumping systems and environmental cleaning equipment, earlier in June. The deal is expected to close in the second half of 2022.

PE Hub caught up with Marc Lindhorst, principal at OEP, for his thoughts on the deal and the sector.

Nørresundby, Denmark-headquartered DESMI is a company specializing in development, manufacturing, sale and service of pumps, pumping products and environmental cleaning equipment. DESMI’s products are sold in over 150 countries, and they cover a variety of sectors: marine and offshore, industrial, utility, defense, fuel and environmental services.

Founded in 1834, DESMI is one of Denmark’s oldest companies, which is part of the appeal for OEP. Lindhorst describes the company as a great example of how businesses can change and adapt over time. “The company’s core business today was developed in DESMI from the mid-20th century, built on the know-how within related products like hand pumps, turbines, and steam engines,” he said.

Investor focus on the environment is a key factor as well, according to OEP. “Growing demand for flow-control equipment as a result of increased environmental awareness is driving the sector,” said Lindhorst. “Furthermore, the market remains heterogeneous and fragmented, both in terms of technology and product offerings, but also regarding the level of integration along the value chain.”

OEP sees value especially in DESMI’s customer relationships, which are built on the company’s technological know-how, system efficiency and a strong aftermarket and service offering. This infrastructure is what OEP plans to utilize when planning the path forward for DESMI.

New product segments are also on the horizon. Lindhorst describes DESMI as “strongly positioned” in the marine end markets. While this core of the business will also be strengthened by OEP in collaboration with DESMI, non-marine sectors, namely industrial and utility, will be the targets of the firm’s growth plans. “We are jointly focused to develop DESMI going forward into an even stronger and more diversified flow control specialist,” Lindhorst added.

ESG is integrated into OEP’s investment philosophy. Lindhorst says this “inherent part” of the firm’s process, which is taken into consideration throughout the entire investment lifecycle, positions OEP well economically.  “We believe that this approach puts us in a position to seek an increase in profitability and reduce the risk of loss in our investments,” he said.

DESMI’s ballast water management system (BWMS) aids with the prevention of discharge of invasive species into the sea as a result of ballast water discharge from ships. Environmental products, used for oil response, seaweed collection and cleaning of waterways were also considered as aspects that fit the ESG demands set by OEP.