Auto supplier: Aequita holding company takes over IFA Group, which is steeped in tradition

Production at the automotive supplier Ifa

In 2018, however, the company came close to bankruptcy.

(Photo: dpa)

Frankfurt The IFA Group is one of the traditional brands among German automotive suppliers. The company, which was founded in 1959 as the vehicle construction industry association, was regarded as one of the model companies of the GDR and, after reunification, a successful example of trust privatization. Now the drive shaft and joint specialist has found a new owner. The Munich family office Aequita wants to buy the company.

A binding agreement for the complete takeover has been signed and the transaction is expected to be finalized in the coming year. The parties have agreed not to disclose the purchase price. An insider reports that the company valuation would have resulted in a “substantial three-digit million amount”. According to the information, hardly any of this is likely to flow to the previous owners, because IFA’s balance sheet has to be restructured and the company has to be forgiven.

IFA is one of the world’s leading manufacturers of drive shafts and joints for the international vehicle industry. The company from Saxony-Anhalt supplies many large manufacturers in Europe, Asia and North America. “From our point of view, IFA is a very good investment opportunity, also because the company is already very far in converting to electromobility,” says Christoph Himmel, Managing Partner at Aequita, explaining the calculation behind the deal.

In 1992 the entrepreneurial family von Nathusius bought IFA from the Treuhandanstalt. In 2018, however, the company came close to bankruptcy. The reason was too ambitious growth plans. Within just four years, sales had doubled to around 700 million euros. At the same time, IFA invested heavily in new plants and the expansion of existing production facilities. With that growth, the organization has not kept pace, results have fallen sharply, and the company breached credit conditions. At the end of 2018, IFA was in debt with 280 million euros, around half of which was due to promissory note loans.

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In 2019, after tough negotiations, in which eight banks and 40 promissory note creditors were also involved as customers, IFA reached a restructuring agreement. The Nathusius family of shareholders transferred their shares for fiduciary management to the well-known insolvency administrator Arndt Geiwitz, who was to initiate the restructuring of the supplier. Even then, it was agreed to sell the company after the renovation. “The previous shareholders are involved in the solution,” assures Aequita partner Himmel.

Aequita already has two suppliers in its portfolio

Originally, the renovation was supposed to work without cutting jobs, but the economic consequences of the pandemic prevented the plan from working. In mid-2020, the company announced the cut of 400 jobs. Today around 2,600 people still work for the supplier.

For Arno Haselhorst, CEO of IFA, the reorganization is largely complete: “Operationally, we are in the black. In view of the known burdens for the entire industry, we are a little below plan – but our sales are almost the same as last year of around 540 million euros.” says the restructuring specialist, who was also involved in the restructuring of the automotive supplier Benteler in 2020.

According to Haselhorst, IFA is still struggling with two stress factors. On the one hand, there are high capital costs, which can be attributed to debts and depreciation, and the significantly increased material prices due to the corona crisis. The company is currently negotiating whether the higher costs will be passed on with its customers. Some agreements on this have already been concluded.

The sale to Aequita is supposed to help with the restructuring of the balance sheet. “We will relieve the company and create flexibility for new investments,” emphasizes Himmel. As a family office, Aequita has specialized in special situations such as corporate spin-offs, succession and restructuring situations in Europe. According to Himmel, the automotive industry and especially its suppliers are among the investor’s “specialty areas”.

There are currently two other suppliers in the portfolio. The Willi Elbe Group produces steering systems and cardan shafts. The turnover is around 200 million euros per year. This makes the company roughly a third the size of IFA. The Meteor Group produces rubber seals for all major car manufacturers in the premium and luxury segment and has an annual turnover of around 220 million euros.

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