The pump manufacturer provides De.mem with secure revenues and new customers | rotor.net

(Image source: De.mem Limited)

This is evidenced by a number of company acquisitions that the young company has completed. Thanks to the acquisition of Border Pumpworks, the company continues to grow. The Australian pump supplier serves a wide range of customers, making it particularly attractive to De.mem.

Border Pumpworks was established in 1992 at its current site approximately 300 kilometers northeast of Melbourne and has been operating in the region for over thirty years. The renowned company designs, supplies, installs and maintains filtration and pumping systems. To date, Border Pumpworks’ main revenue has come from long-term service and maintenance work, as well as sales of pumps, filters and consumables. “This suits us perfectly and ensures further stable and recurring revenues,” explains De.mem CEO Andreas Kröll.

The attractive valuation was also a strong argument that prompted De.mem to act quickly. De.mem is paying AUD 400,000 for the acquisition without the need for external financing. Border Pumpworks is valued at just 40% of its revenue and trades at just four times normalized EBITDA. “We believe that the valuation and portfolio of Border Pumpworks are extremely attractive, and we are even more pleased with the successful completion of the works,” says Andreas Kröll.

The acquisition brings many positive effects
Additionally, the acquisition will significantly contribute to EBITDA and break-even in operating cash flow. De.mem expects an additional A$100,000 in normalized annual EBITDA for the company and approximately A$11 million in annual revenue. “The resulting synergies have not yet been taken into account,” confirms Andreas Kröll.

Operational synergies are expected primarily with the Melbourne, Victoria-based subsidiary De.mem-Stevco, which the company integrated in 2022. Kröll anticipates a seamless integration process and a significant increase in cost efficiency due to the terms. The acquisition also strengthens De.mem’s presence in important regions of Victoria and New South Wales. This acquisition continues the company’s geographic diversification.

More cross-selling through new customers
Another strategic reason is Border Pumpworks’ established customer base. “The advantages lie not only in high recurring revenues and in the synergy of revenues and costs,” says Kröll. The acquisition also creates significant cross-selling opportunities through new customers.
In February, De.mem managed to obtain new funds through a capital increase. The company has set aside part of A$22 million for potential acquisitions in the highly fragmented Australian market. “This allowed us to quickly seize the acquisition opportunity,” says CEO Andreas Kröll.

In this way, the company continues its growth course. De.mem now looks back on a series of successful acquisitions. This is the fifth transaction since 2019. Each of the four previous acquisitions led to significant revenue growth. The average revenue growth for these four acquisitions was 63 percent. “We find the model of integrating our innovative membrane technologies with established customer relationships to be extremely attractive. In this context, we continue to see a fragmented Australian market,” explains Andreas Kröll.