Automotive suppliers

From a component manufacturer to a supplier of complete system solutions.

Interview with Tom Alzin, member of the board of management of DBAG

Spheros mainly produces components for buses and is therefore an automotive supplier in the broadest sense - what made Spheros so interesting for DBAG?

We have always been involved in suppliers to the automotive industry, also because of their economic importance. We pay attention to various factors in our investments. As with all investments, it is important to us that the company is managed by an experienced, entrepreneurial management.

On the other hand, it is crucial that the company can identify potential for growth. Spheros was already the global market leader in its product division when we started in 2011. At the same time, the company had not only targeted further growth in existing markets, but also launched a product offensive. So we could make a lot of green ticks.

What exactly did DBAG see as the growth potential at Spheros?

The starting point for us was the world market leadership in the field of air conditioning for buses and coaches. Our thesis was that this should extend to other end markets and also to additional products.

The potential for appreciation was also supported by various megatrends, for example global population growth, urbanization, but also the increasing environmental requirements as climate protection became more and more important.

It is also the case that - unlike in the classic automotive sector - Spheros' end markets are partly driven by public spending and are therefore more resilient in downturns. This promised comparatively stable and predictable revenues.

What was the investment case for the further development of the Spheros?

In close consultation with the management at the time, we developed a detailed growth plan that was intended to further strengthen Sphero's existing market position and at the same time generate higher added value.

Achievements during DBAG’s investment







Number of employees increased from 700 in 2012 to 1,045 in 2016.



per cent

Revenues increased by more than seven per cent per year.



Active at six production sites on three continents.

From a strategic point of view, our goal was to turn Spheros from a component manufacturer into a provider of system solutions. At the same time, we wanted to be able to address a broader customer base in the future. In the further course, the goal was to expand the after-sales business. In addition, we wanted to further advance internationalization.

So, all in all a lot of value levers, right?

Exactly. And that's why the management started right after the start of the investment, by launching a new generation of air conditioning systems on the market. These systems were not only more efficient, but could also be sold with a higher margin. The climate business was also opened up for special, commercial and off-road vehicles. There was also the production of additional electronic components.

This broadening of the product range should be achieved as quickly as possible: that's why ACC Climate Control, an American manufacturer of mobile air conditioning and heating systems, was acquired in 2015. At the same time, this strengthened our presence in this sales market, which is important for the automotive industry.

In addition, the processes at the Chinese locations were restructured. The company's performance also benefited from the fact that well-known companies could be added to the customer base.

How did the changes in the company's numbers impact?

The success of our jointly developed strategy soon became apparent in the key figures: within three years, sales increased by more than 40 percent to 240 million euros in 2015. Despite the growth strategy and the associated investments, profitability also increased: EBITDA increased from just under 20 million euros in 2012 to more than 35 million euros in 2015.

Then what determined the time of the sale? Where did the success of the participation go - after all, did you get back more than twice the amount invested?

Right from the start, we had asked ourselves whether a strategic investor could be a suitable next owner. Strategic investors are our preferred buyers: they can often offer a strategic premium that they can finance from synergies between their existing and nine businesses.

In fact, Spheros has sparked the interest of several strategic investors. A leading manufacturer of heating and air conditioning systems for buses in all global markets is not often for sale.

The French automotive supplier Valeo was awarded the contract. The transaction was completed in March 2016. Today the former Spheros operates under the name Valeo Thermal Commercial Vehicles and is part of the Valeo Group.

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