Could you tell us a bit about yourself and your background?
– I am Timo Pulkki, the CEO of Tamturbo. I have worked at Tamturbo since 2012 and as Tamturbo’s CEO since 2014. I have a Master of Science degree in Engineering and during my career, I have held various positions ranging from product development to sales support and controlling. Prior to Tamturbo, I worked for Konecranes Oyj where I gained experience in the development and management of the global service business. Prior to Konecranes, I worked at M-Real Oyj (Metsä Board Oyj). I am currently the sixth largest shareholder in Tamturbo.
Please give our readers an introduction to Tamturbo.
– Founded in 2010, Tamturbo is a technology company that develops and manufactures 100 per cent oil-free industrial air compressors. Tamturbo enables cleaner, more energy-efficient and virtually maintenance-free compressed air production with next generation Touch-Free™ compressor technology, and with its flexible and scalable business models.
As a result of long-term product development, the Company has developed a product family of high-speed turbo compressors for the industrial pressure class. Tamturbo's Touch-Free™ technology is 100 per cent oil-free. For the Company’s customers, who represent the world’s leading industrial companies, it also offers significantly lower total cost of ownership in comparison to traditional technology. Tamturbo's solution can also be implemented as an Air-as-a-Service business model, where the customer only pays for the compressed air they use.
The company's first air compressors were sold in 2017. In 2019, the company received several of the world's largest companies within the food, beverage, paper and electronics industries, including AB Inbev (who’s best-known brands are Budweiser and Stella Artois), as customers. Tamturbo estimates that the company's current customers have a total of more than 1,500 compressors from various manufacturers in hundreds of different industrial factories, and the company is in negotiations with dozens of similar potential customers. In 2019, the company's net sales were approximately EUR 2.1 million, an increase of 285 per cent compared to 2018.
Could you elaborate on Tamturbo's business model?
– Tamturbo currently sells most of its compressors according to a traditional business model: the customer either i) buys a compressor and maintenance (investment + maintenance) or ii) buys a compressor and an extended warranty that includes all consumables, spare parts and related labour for, for example, 10 years (investment + extended warranty).
In addition to traditional sales and spare parts business models, Tamturbo’s Air-as-a-Service service model provides customers with value-added services. Customers can focus on their core processes by purchasing only the compressed air they need with the Air-as-a-Service business model. This allows customers to purchase compressed air as a service instead of having to invest in an air compressor.
If any, what impact has COVID-19 had on Tamturbo and your business operations?
– Despite the fact that the Covid-19 pandemic has posed significant challenges to companies around the world, we need to look to the future. In our main market segments, the food and beverage industry and the paper and pulp industry, there is currently no significant decline in demand in the horizon due to the pandemic.
Tamturbo is currently raising 6.0 MEUR in an IPO and the share is to be listed at Nasdaq First North in Finland. How are you going to use this capital and why have you decided to go public?
– In order to continue our growth in the global market, we are planning the offering to raise new capital and support the implementation of our growth strategy.
The FN listing opens up the capital markets for the company and, according to the company, strengthens its awareness and credibility among customers, suppliers and potential new employees of the company. The FN listing will also enable more liquidity in the company's shares. The company also wants to offer investors the opportunity to be part of building a Finnish industrial growth story.
Tamturbo plans to use the net proceeds of the offering for the following purposes:
* To increase the sales, marketing and customer service organisation in order to enhance the global “go-to-market” strategy
* To finance capital tied up in inventories and accounts receivable due to growth
* Expansion of other operations to meet growth targets
* The necessary capital expenditures as the sales volume increases, the most significant of which is the planned expansion of the test laboratory
How does your competition look like and what do you do better/differently than your peers?
– Industrial oil-free compressed air can be produced by a number of different technologies. The technology that competes with Tamturbo’s air compressors in the same power range is the “oil-free” screw compressor technology manufactured by only a few large companies, such as Atlas Copco AB, Ingersoll Rand Inc., Hitachi Ltd., Kobe Steel Ltd. and ELGi Equipments Ltd. In addition, numerous medium-sized manufacturers purchase essential oil-free compressor components or compressor cores from these large manufacturers and build their own oil-free compressor packages. However, it’s important to underscore although the name oil-free screw compressor refers to complete oil-freeness, the unit still uses oil. The gearbox and bearings of the compressors are lubricated with oil, but the compression spaces of the elements themselves are completely oil-free. So, being able to offer the most sustainable solution on the market is something we do better than our peers.
From the customer's point of view, Tamturbo's products compete mainly with oil-free dry screw compressors. Indirectly, Tamturbo also competes with traditional geared turbo compressors and oil-lubricated screw compressors.
What is the size of Tamturbo's potential market?
– A market study published by Research and Markets in 2020 has estimated the global industrial air compressor market to be worth about USD 14.0 billion, with a CAGR of about 3.3 percent until 2025, when the market is estimated to be worth about USD 16.9 billion.
The market is divided into oil-free and oil-lubricated compressors. In 2018, industrial oil-free air compressors accounted for approximately 20 per cent, meaning USD 2.8 billion, of the market value. Based on the Company’s own assessment and the source material used by it, the need for oil-free compressed air in the future will increase the market size for oil-free air compressed air to 50 per cent in the next 5–10 years in terms of air volume.
According to you, what are Tamturbo’s strengths?
– Tamturbo operates in a fast-growing, existing global market and the Company’s growth is supported by global megatrends. Tamturbo’s strategy is strongly based on both direct sales to large customers and the rapid growth sought through sales partnerships. The scalability of the Company’s business, strategic partnerships with major subcontractors and technology suppliers enable the Company to grow in a controlled manner.
* Existing industrial growth market
* Tamturbo meets the demands of industry and sustainability
* New generation compressor technology
* Scalable and flexible business model
* Global customer base
* Experienced and committed management and Board of Directors
Finally, what is your long term vision for Tamturbo? Where do you see the company 5 years from now?
– Tamturbo aims to lead the way in technological disruption of industrial oil-free compressed air compressors. A key goal of Tamturbo is to capitalise on ongoing technological disruption by enabling cleaner and more energy-efficient processes with its completely oil-free air compressor solutions with, according to the company, clearly the lowest total cost of ownership, and thus replacing traditional technology.
The company aims to continue its strong growth in the medium and long-term through a global sales network and strategic partnerships.
THE COMPANY HAS SET THE FOLLOWING MEDIUM AND LONG-TERM GOALS:
* 8 percent market share in the market for industrial oil-free compressors globally, calculated by dividing the Company's revenue by market size
* Operating margin of 20 per cent
* 25 percent of compressors manufactured are delivered as Air-as-a-Service business model
Erbjudandet i sammandrag
Teckningskurs: 3,00 EUR (~31,83 SEK)
Emissionsvolym: 6,0 MEUR
Pre-money värdering: 19,2 MEUR
Teckningsperioden för Erbjudandet till allmänheten avslutas (svensk tid): 28 maj 2020 kl 15.00
Teckningsperioden för Erbjudandet till institutionella investerare avslutas (svensk tid): 29 maj 2020 kl 11.00
Resultatet från Erbjudandet publiceras (estimat): 1 juni 2020
Första dag för handel på First North Helsingfors (estimat): 9 juni 2020
Kortnamn för aktien: TURBO
Ankarinvesterare: Vissa fonder förvaltade av OP-Fondbolaget Ab, EAKR-Aloitusrahasto Oy, KWH-koncernen Ab, Nurmiranta Holdings Oy