Olivier Colleau on Kiloutou’s Nordic expansion

Kiloutou reported revenues of €793 million in 2021. (Kiloutou)

In late March, French-headquartered rental company Kiloutou announced the acquisition of Denmark’s biggest rental company GSV from Danish private equity firm Catacap, GSV’s majority owner for the past seven years.

A statement on Catacap’s website confirms GSV’s standing in the Danish market.

GSV’s revenue has grown under Catacap from DKK 270 million (€36 million) to DKK 1 billion (€130 million) over the past seven years, primarily through digitisation and a focus on the sharing economy.

It is now positioned as “a frontrunner in the green transformation of the construction industry,” the statement said.

While the terms of the deal were not disclosed, the acquisition, to close by the end of April, is understood to be valued at around €300 million.

What can be confirmed is that the addition of GSV – Kiloutou’s largest acquisition to date – will create a consolidated group with a combined revenue of around €950 million, adding weight to Kiloutou’s existing network in France, Poland, Denmark, Spain, Germany and Italy.

Post-acquisition, the group will be significantly more diversified in terms of customer base and business mix. Kiloutou’s revenue generated outside France has grown from 18% to 30%; and the acquisition itself equates to almost 15% of the Kiloutou Group’s size.

Rental equipment: fleet expansion

The Danish company has 19 depots and a 28,000-strong fleet including aerial lifts – booms, scissors, spider lifts, truck mounts, trailer lifts and low level platforms, along with telehandlers, mast climbers, earthmoving machines and compaction equipment, as well as modular buildings and site cabins.

Olivier Colleau, CEO of Kiloutou Group. (Photo: Kiloutou)

Kiloutou CEO Olivier Colleau tells IRN plans post-acquisition are likely to include fleet expansion, particularly as the two companies have complementary specialisms.

“GSV has more site huts and more big plant than Kiloutou, while Kiloutou has a wider range of tools. We can help GSV develop new product ranges and the other way around,” he says.

“At this stage, it’s hard to say for sure what those ranges might look like, as we are localised businesses where customer demand isn’t necessarily the same.

“Product expansion won’t be a ‘copy-paste’ - but certainly our combined experience in both product and operations will be valuable; Kiloutou is 42 years old and GSV is 50 years old.”

Business continuity

An important aspect of the acquisition is the retention of GSV management; GSV chief executive Dan Vorsholt will take an executive position on Kiloutou’s board and will continue to contribute to the company’s forward strategy.

“The mutual trust I have with Dan Vorsholt - and between the GSV team and the Kiloutou team - was very important to me in the decision to make this acquisition,” Colleau tells IRN.

GSV chief executive Dan Vorsholt will take an executive position on Kiloutou’s board. (Photo: GSV)

“Dan has been at GSV for 25 years and has outstanding experience of rental. He’s a great leader and manager, with a great relationship with his team.

“He had a critical role in the development GSV, which has grown significantly in last five to 10 years with a consolidation of the Danish market.

“Kiloutou will rely on the experience and expertise of GSV’s teams to continue developing the business in Denmark and beyond,” he says; and he adds that “cooperation between our teams on product expansion and on areas such as digitalisation will be well managed to allow for cross-fertilisation.”

In a departure from the norm for Kiloutou, GSV will also retain its brand name.

Kiloutou has made a number of recent smaller acquisitions; examples over the past year include Spanish earthmoving equipment rental company Almaq S.A. and general equipment rental group Diaz-Miquelez, and Groupe La Centrale De Location (LCDL), a French earthmoving and general construction rental company.

Historically those acquired companies tended to adopt the Kiloutou brand, but in the case of GSV, retaining its identity will be critical, says Colleau.

“Kiloutou has no presence in Denmark, but GSV has been there for many years; it’s a very strong brand that generates pride for employees.”

Rental sector sustainability and digitalisation

One source of that pride is GSV’s record on sustainability and digital transformation, values shared with Kiloutou, whose own environmental strategy aims to reduce direct emissions of C02 by 40% by 2030 and achieve carbon neutrality in 2050 around three priority areas, depots, the delivery fleet and the equipment itself.

In October Kiloutou launched the Impakt brand to promote electric, hybrid and other low emissions products across the earthmoving, access, landscaping and tools categories; and the group has plans to double its investment in sustainable equipment in 2022 and further expand the Impakt range.

Meanwhile recent digital initiatives include Kiloutou partnering last year with French start-up ShareMat to offer a fleet management tool built around digital twin technology.

GSV’s sustainability measures focus on efficient equipment utilisation to minimise downtime as well as heavy investment in electric equipment and delivery vehicles, with a goal to cut CO2 emissions from machines on Danish construction sites.

GSV also has plans to launch a new digital platform in 2022 to help customers measure and document the CO2 footprint of machinery and construction sites.

This aligns with a full digital overhaul of its operations begun around three years ago, encompassing a customer app and a full complement of internal tools.

“Both companies see digitalisation as the key to improving efficiencies and reducing down time, and therefore an important sustainability pathway,” says Colleau.

Kiloutou plans to consolidate its presence in its home market, France. (Photo: Kiloutou)

He adds that both are committed to the idea that digital transformation should support people-centred businesses.

“I am highly convinced that this business is a people business.

“Digitalisation is not about moving away from people; we will always have employees and customers and physical sites because the human relationship is very important.

“Digital is a way to improve what we’re doing. It’s a way to offer additional services, for example giving customers precise location information about their deliveries or providing them with remote technical assistance if they have an issue with their fleet; we can use digital technology to interact with a machine or the fleet and to solve the issue.”

“This is another commonality between GSV and Kiloutou – an open management structure and strong focus on people, both employees and customers.

“When I’ve discussed these things with Dan over the years, I’ve felt we shared the same DNA. Our two cultures are highly compatible.”

As part of the people culture, the acquisition also entails a new public funding round that will give both Kiloutou and GSV employees the opportunity to invest in the business.

“Giving staff that opportunity is a very good way to encourage that sense of shared goals,” he says.

Business resilience

Few businesses in the rental sector have been immune to recent shocks, but recovery is underway for Kiloutou.

In early April, it reported a 22.7% increase in its 2021 sales to €793 million as it continued its rebound from the pandemic, with EBITDA profits of €258 million up 28%.

In its results announcement, the company confirmed activity is now close to pre-crisis levels, and it plans to continue to pursue organic and external growth opportunities, the most recent being the acquisition of GSV.

Investing in a Nordic market leader certainly demonstrates confidence in the future, and Colleau tells IRN the consolidated group is positioned for growth, due not just due to the two companies’ strengths, but to wider sector trends.

“The last two years have made it clear that rental is a resilient business that has not been structurally damaged by Covid-19,” he says.

“All countries have been impacted, to varying orders of magnitude, but rental market growth has been sustained by underlying drivers.

“There is a shift from ownership to rental, and to me this shift will be accelerated by the green transition. Rental has a role to play here, because it’s not easy to know which new technology you should select to replace an old conventional diesel engine.

In short, rental supports the green transition by lowering the inherent risk of betting on new technology.

“For rental companies, it is our job to define the type of technology we can offer, so I expect contractors to rely more on rental companies than they have done in the past. Over the long term, I expect growth in rental to trend higher than construction growth.”

In GSV’s home market, the outlook is positive, he says.

“Growth prospects in Denmark for the next five years are between 4% and 5% and that’s consistent with other countries in Europe. We are in a growing business, despite some of the uncertainties we face at present.”

And while he is mindful of the gravity and impact of the war in Ukraine, he says 2022 started well.

“I am hopeful that the conflict will have a short impact. Overall, rental companies have shown their capacity to navigate through uncertain times.”

(Photo: Reuters/Hans Lucas)

Kiloutou’s European expansion 

With GSV now part of the Kiloutou business, Colleau will maintain the group’s focus on potential growth for Kiloutou’s 525 sites across France, Poland, Denmark, Spain, Germany and Italy.

“We have many things to do in our existing footprint. With GSV in Denmark, Kiloutou is now playing in six countries, and all six are pretty large countries with significant room for growth.”

“When I look at countries such as Germany, Italy and Spain, at Kiloutou we currently have a very modest market share, between 1% and 3% in these markets. There are possibilities for growth, either by opening new depots or through bolt-on acquisitions,” he says.

Further Nordic expansion might also be on the cards over the longer term.

“That is a new market for us, so it’s hard to answer today, but with a foothold in Denmark, we’ll be able to have a closer look at what is happening across the Nordic markets.”

Doubling its share of non-French business with the acquisition of GSV is a good outcome for a company wanting to diversify its sources of revenue; for Colleau, that aim has been achieved, but he says the gains from the acquisition are more than revenue-based and should be measured “not only from an economic perspective, but as sources of inspiration.”

With a next-generation Scandinavian player now joining the Kiloutou stable, all indications are that inspiration won’t be in short supply.