Pieter Hundersmarck of Castra presented his thesis on Lifco (Sweden: LIFCO B) at European Investing Summit 2024.
Two Years On: Premium members, scroll down for an automated review of how this thesis played out from November 2024 to October 2026.
Thesis summary:
Lifco is a Swedish serial acquirer of niche B2bn businesses across three segments: Dental, Demolition & Tools, and Systems Solutions. The Bennet family owns 47% and the Swedish government pension fund about 8%, giving Lifco a perpetual-owner culture built on decentralization. It has made more than 200 acquisitions over 20 years, and from 2010 to 2022 revenue compounded at 16.5% and NOPAT at 26%. Pieter frames the case around one question: will that capital allocation discipline persist?
Lifco buys only small, often founder-led companies of 50-70 employees in super-niche markets that short-term operators ignore. Targets must be profitable without scale, asset-light, B2bn, simply structured and not dependent on one person. Pricing power is tested by contract: right after closing, the target typically raises prices 8-10%. Systems Solutions has grown to 47% of EBITA (2022) and Demolition & Tools to 34%, while Dental fell from 56% in 2014 to 22%. Operating margins rose from 15% to 19% over five years.
Acquisitions, funded with self-generated cash rather than new shares, are how Lifco deploys capital; net debt is 1.4x EBITDA. From 2006 to 2022 it consolidated 108 companies with SEK 12.5bn of sales, compounding revenue at 14% and EBITA at 19%. From 2015 to 2023, EBITA grew 22% a year on average: 12 points from acquisitions, 8 organic and 2 from currency. Lifco closes 10-15 deals a year, with typical target sales near SEK 100m (€8.8m), and pays 7-11x EV/EBITDA.
Management is long-tenured and aligned. CEO Per Waldemarson, in his mid-40s, has been with Lifco since 2006 and recently bought shares in the open market; the Bennet stake has been largely unchanged for nearly 25 years. Pieter expects reinvestment rather than capital returns while opportunities abound. Expansion has moved from the Nordics into Germany and now the UK, with deals such as Real Spirit of Coffee and Orto-Care. At a market cap under $10 billion, he sees a long runway.
Lifco recently traded near SEK 320, about 40x blended forward earnings and a 16% premium to its 35x average P/E since 2018. EPS is expected to slip 1% in FY2024 on weaker demolition demand, then grow 15% in 2025. Pieter ascribes the premium to an expected rebound and to recent acquisitions not yet fully contributing. He judges the shares close to fair value but a long-term holding. Risks include strategy drift, the need for ever larger deals, construction cyclicality and private equity competition.
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European Investing Summit 2024 was held from October 29 to 31, 2024. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
