Acquisition of Border Pumpworks Brings De.mem Secure Revenues and New Customers

11.06.2024
De.mem, the international provider of decentralized water treatment systems and membrane technology, continues to seize every opportunity to drive its growth. The company, headquartered in Australia with branches in Singapore and Velbert, Germany, has by now become experienced with acquisitions.
Acquisition of Border Pumpworks Brings De.mem Secure Revenues and New Customers

(Image source: De.mem Limited)

This is evidenced by a series of company acquisitions the young enterprise has completed. With the acquisition of Border Pumpworks, the company is now continuously moving forward. The Australian pump supplier serves a wide range of customers, making it particularly attractive to De.mem.

Border Pumpworks was founded in 1992 at its current headquarters about 300 kilometers northeast of Melbourne and has been active in the region for over three decades. The established company designs, supplies, installs, and maintains filtration and pump systems. Until now, Border Pumpworks' main revenue has come from long-term service and maintenance work, as well as from the sales of pumps, filters, and consumables. “This suits us excellently and ensures further stable and recurring revenues,” explains De.mem CEO Andreas Kröll.

The attractive valuation also provided a strong argument, leading De.mem to act quickly. De.mem is paying 400,000 AUD for the acquisition without requiring external funds. Border Pumpworks is valued at just 40% of its revenue and costs only four times its normalized EBITDA. "We find the valuation and portfolio of Border Pumpworks extremely attractive, so the more we are delighted with successful completion," says Andreas Kröll.

Acquisition Brings Numerous Positive Effects
Furthermore, the acquisition will make a significant contribution to achieving EBITDA and to breakeven in operating cash flow. De.mem expects about an additional 100,000 AUD in normalized annual EBITDA for the company and approximately 11 million AUD in annual revenues. “The resulting synergies have not yet been factored in,” confirms Andreas Kröll.

Operational synergies are expected primarily with the subsidiary De.mem-Stevco, based in Melbourne, Victoria, which the company integrated in 2022. Kröll anticipates a seamless integration process and a significant increase in cost efficiency due to the conditions. The acquisition also strengthens De.mem's presence in the 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' well-established customer base. "The advantages lie not only in the high recurring revenues and the revenue and cost synergies," says Kröll. The acquisition also brings significant cross-selling opportunities through the new customers.
In February, De.mem was able to raise fresh funds through a capital increase. The company reserved part of the 22 million AUD for potential acquisitions in the highly fragmented Australian market. "This allowed us to quickly seize this acquisition opportunity," says CEO Andreas Kröll.

The company thus continues its growth course. De.mem now looks back on a series of successful acquisitions. Since 2019, this is the fifth transaction. The four previous acquisitions each led to significant revenue increases. The average revenue growth for these four acquisitions was 63 percent. "We find the model of integrating our innovative membrane technologies into established customer relationships extremely attractive. Against this backdrop, we continue to keep an eye on the fragmented Australian market," explains Andreas Kröll.

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