The merger between Rask El and Enelco is the local result of a development that has transformed the Danish installation sector in just a few years.
Private equity-backed groups are acquiring companies on a large scale, and according to Andreas Scheelbeck, Deputy Director at TEKNIQ, foreign investors are helping consolidate the industry into larger units.
- Consolidation has been taking place in the technical sector for many years, but it has accelerated in recent years because foreign capital has entered the market, he says.
The big are getting bigger
Two of the largest acquirers are InstallatørGruppen and Koble, both of which were established in early 2023 with backing from private equity firms FSN Capital and Norway’s Credo Partners.
InstallatørGruppen completed its 42nd Danish acquisition in May and at that point employed more than 2,000 people in Denmark and Switzerland. In April, Koble consisted of 21 Danish companies with around 650 employees.
The acquired companies typically continue under their own names and with their existing management. At the same time, they gain access to shared administration and purchasing, and according to Andreas Scheelbeck, the growing amount of work away from construction sites is an important part of the explanation.
- There are more public-sector requirements and more bureaucracy and administration. That means companies need stronger administrative resources than they did in the past. Those requirements are easier to handle when you are part of a larger organisation, he says.
Preparing for the future
Following the merger, Rask El and Enelco will have more than 150 employees. That will make the new company considerably larger than many of the businesses targeted by the acquisition groups.
Koble has previously identified installation companies with revenue of between DKK 30 million and DKK 80 million as particularly attractive. In the spring, Koble’s companies had an average of around 31 employees, while publicly announced acquisitions by InstallatørGruppen have included businesses with 14, 35, 45 and 70 employees.
In Lolland-Falster and South Zealand, companies including Idestrup El, El-Comp in Vordingborg and Filtenborg El have become part of Koble, which is backed by Norwegian private equity firm Credo Partners. According to Rask El CEO Jacob Goldbeck, these acquisitions were among the factors that prompted the owners of Rask El and Enelco to discuss a shared future.
- The aim is to consolidate and make sure there is still a strong local installation company here. If you look around, some owners are getting older. If they do not have a succession plan in place, there is almost only one option left, and that is to sell to someone else, Jacob Goldbeck told FemernBusiness in connection with the merger.
According to Andreas Scheelbeck, succession is only part of the explanation. Some owners are joining larger groups to gain more resources for administration and business development, while smaller installation companies continue to compete by choosing their assignments more selectively and using their size as an advantage when retaining or recruiting employees.
- In a smaller company, employees can be given greater responsibility and the opportunity to work on a wider variety of tasks. You can also have a close-knit culture where everyone knows each other, says Andreas Scheelbeck.
TEKNIQ’s figures also show that the number of companies has already fallen, meaning employees are increasingly concentrated in fewer and larger businesses. Between 2008 and 2022, one in ten electrical installation companies and one in seven plumbing and sheet-metal companies disappeared, while employment in the sectors increased.
