Latvian Company Storent Makes waves with US Acquisition
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The Latvian equipment rental company Storent has become one of the few Baltic companies to successfully complete an acquisition in the USA, purchasing 70% of Texas-based Connect Rentals this fall. This move has doubled the company’s value from 79.9 to 158.2 million euros, signaling a new phase of growth.
AS Storent Holding board member and financial director Baiba Onkele revealed plans for an 18.5 million euro bond offering in November to finance expansion in both the US and Europe, with an IPO targeted within the next 2-3 years.
how did a company from Latvia manage to enter the US market?
The successful deal hinged on the collaboration of key individuals. Onkele emphasizes the importance of industry knowledge, clear goals, and honest partnership. Maturity and experience are also crucial,fostering trust and confidence in potential partners. Storent’s growth in the Baltics and Nordic countries, coupled with investments in technology to streamline equipment rental, laid the groundwork for US market entry. Innovation and digitalization proved to be a key advantage. While the US excels in customer service, its technology in this sector lags behind, presenting a significant chance for Storent.
Why the USA and what is the potential there?
The American market dominates the global equipment rental landscape, representing nearly 60% of the total market. The American Rental Association projects growth to 8.2%, reaching €75 billion in 2024.Currently, Storent’s market share is a modest 0.02%,but Texas,the largest rental market in the US,offers the potential to double turnover within a few years. Unlike the seasonal nature of construction in the Baltics, Texas boasts year-round activity, enabling more stable income and higher returns on investment.
Why Texas?
The decision to target Texas was strategic.The state is currently a global hotspot for construction, infrastructure, and equipment rental, fueled by rapid population growth and substantial public and private investment in infrastructure, energy, and industrial projects. Three of the ten largest construction equipment rental cities in the US – Dallas-Fort Worth, Houston, and Austin – are located in Texas, ensuring both high demand and a significant market scale. Storent’s philosophy is to enter the US market where investment,construction,and equipment rental are growing fastest,and currently,that is Texas.
How did you get the financing for this deal?
the transaction was financed through a combination of bonds and a loan from a US bank. first Merchants Bank provided an asset-based line of credit, following a thorough audit and asset valuation.The approach of US banks to financing companies is diff
Ramirent, a leading provider of equipment rental services in the Nordic countries and Baltics, is experiencing growth in Lithuania and Estonia, driven by infrastructure projects and a strategic focus on niche markets. The company is capitalizing on infrastructure development in lithuania, particularly the modernization of the Via Baltica highway, while simultaneously increasing its market share in Estonia through expansion into new segments like events, production, and industrial applications.
Growth in Lithuania Fueled by Infrastructure Investment
Lithuania is a key growth market for Ramirent, largely due to significant investments in infrastructure. The ongoing modernization of Via Baltica, a major North-South road route connecting the Baltic states with other European countries, is a primary driver of demand for Ramirent’s equipment.Via Baltica is a crucial transport corridor, and its upgrade is expected to significantly boost economic activity in the region. The project involves extensive road construction and reconstruction,requiring a wide range of rental equipment,including excavators,loaders,and road paving machinery.
Strategic Expansion in Estonia: Targeting New Niches
While growth in Estonia is more moderate compared to Lithuania, Ramirent is proactively strengthening its position by diversifying into specialized market segments. The company is focusing on three key areas:
Events
Ramirent is providing equipment solutions for a growing number of events in Estonia, including concerts, festivals, and sporting competitions. This includes temporary power solutions, fencing, and access platforms.
Production
The production sector in Estonia, encompassing film, television, and other media, represents a new opportunity for Ramirent. Equipment rentals for this segment include lighting, sound systems, and specialized lifting equipment.
Industrial Segments
Ramirent is expanding its offerings to serve various industrial clients in Estonia, providing equipment for maintenance, repair, and operations. This includes specialized tools, welding equipment, and safety gear.
Key Takeaways
- Ramirent is experiencing strong growth in Lithuania, driven by infrastructure projects like the Via Baltica modernization.
- In Estonia, Ramirent is focusing on increasing market share by entering new niche markets: events, production, and industrial segments.
- The company’s strategy demonstrates a flexible approach to market conditions, adapting to varying growth rates across the Baltic region.
Ramirent’s strategic approach in the Baltic states positions the company for continued success. By capitalizing on infrastructure investments in Lithuania and proactively expanding into new niches in Estonia, Ramirent is demonstrating its commitment to long-term growth and market leadership in the region. Future growth will likely depend on continued infrastructure development and the successful penetration of these targeted niche markets.