Case study – RoyalDesign

The founders of Royal Design considered selling the company or to invite a strategic investor during the fall of 2012 when the company had sales of SEK 95 million and an EBITDA of 6 million. eEquity became the preferred investor and we agreed to set-up a new holding company in December 2012, wherein eEquity invested. The independent chairman was bought-out and the founders got a partial exit, but re-invested most of the proceeds in the holding company. Royal Design is now a category leader in the Nordics where we in FY2014 (the company operates with a split financial year) reached sales of SEK 240 million, which gives a more than 60% growth compared to 2013. An even higher growth rate is expected going forward, further fuelled by the add-on acquisition of Rum21 in May 2014.

 

Business overview

RoyalDesign is the largest design and home furnishing online retailer in the Nordics and operates well established online stores in key European countries.
The company currently offers more than 69,000 design products from over 120 premium brands such as Kosta Boda, Orrefors, le Creuset, Swarovski, Global Knives etc.
RoyalDesign was founded in 1999 by Hans Bengtsson and Andreas Ekberg and is based in Kalmar, Sweden.
The company launched their first flagship store in one of Stockholm’s most premium locations in 2010. In October 2013 RoyalDesign took over several franchise stores from Cervera, the largest offline competitor.

How we have built the company and enhanced the value

Over 20 new premium brands added on an annual basis – a key factor of driving sales.
A franchise program was rolled-out in October 2013 and over 15 additional stores are planned to open in the next three years, significantly driving growth and profitability.
Rum21, a premium design/furniture store was acquired in May 2014.
A CFO has been hired as well as an accounting assistant. Further broadening of the management team is in process.
The board has been strengthened through eEquity senior advisor Ulf Lindstrand, former VP of Åhlens (one of Sweden’s largest department stores) who is highly experienced in multi-channel sales.
The company has launched several private label products.
A new warehouse opened in October 2013 in Orrefors, facilitating further assortment growth, reducing the cost per order and overall warehousing expenditures.

 

All our investment criterias where met when we invested in Royal Design

Exceptional historic sales growth

EV target size (SEK 60-150 million)

Sales between SEK 50-200 million

EBITDA positive

Potential to increase sales >300% times over holding period

Expected exit multiple of >4,0x invested capital

 

 

Sales split – by geography

Since the investment we have launched in Finland.

 

RoyalDesign_sales_split

Historic sales development

Royal Design has had strong organic growth during our holding period and the online penetration in home interior and furniture continues to increase in the Nordics, indicating further high growth potential. The add-on acquisition in 2014 will further fuel growth.

RoyalDesign_sales_development

Visit the site