sustainability case study: cogitel (tunisia)

8/6/2019 Sustainability Case Study: Cogitel (Tunisia)

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The Company

CogitelsStory

2011

The Impact of Private Equity in Emerging Markets:Achieving Business Results Through Sustainability

Sustainability CaseStudy:Cogitel (Tunisia)

Cogitel (short for Comptoir GeneraldImpression et de Traitement desEmballages) was created in 1984 by anumber of industrialists from the Tunisianregion of Sfax, and commenced manu-facturing operations in 1987 under thecapable leadership of Hdi Zeghal, its

CEO. Following several years of growth,Cogitel expanded its production capac-ity and quality control systems. By thelate 1990s, Cogitel had launched its!"#$%&'(")*+%'",(")-%).*%,/$)0.+*%).%123%4556%7&)80$9%)##&").:+%:+"$0!:)-tion from AFAQ; however, despite theseadvancements, the company made aloss in 1997 following the closure of theborder with neighboring Algeria, whichaccounted for an important share ofthe companys turnover at the time.

In 1998, TunInvest viewed Cogitels short-term

setbacks as an ideal opportunity for a turn-around investment. With TunInvests capitaland expertise, Cogitel obtained a new quality!""#$!%&'(&'$)*+&!)*,%(-./0(1223452226(!%7(8#*&9:;($')#$%'7(),((?"(@'AB!:(and the TunInvest investment team tookstock of the companys successes, they were

inspired to transform the family-ownedbusiness into a regional packaging leader.

C,(7,(",D(C#%.%E'")('%&,#$!A'7(@'AB!:(),(undertake a leveraged management buyout )B'(+$")(*%(C#%*"*!F"(B*"),$;G(!H)'$(3I(J,%)B"(,H(K,$9D()B'()$!%"!&)*,%(K!"(&,J(This enabled TunInvest to partially exit their*%*)*!:(*%E'")J'%)(*%(M,A*)':D(!%7()B'(@'AB!:(family to increase its stake in the company,a move that would better align interests and

*%&'%)*E*N'(J!%!A'J'%)>(.%(522OD(C#%.%E'")D(through its Maghreb Private Equity Fund II,!%7(/K*&,$

6*%.&$%78$%9$0#2%."%:;"+).$'12%#$8$*?$2%doubled to US$33.3 million, while its exports

grew to 51% of total salesCogitel adopted a number of environmentallysustainable policies to reduce waste and energuse, generating economic gains in excess of$675,000 (or roughly 2% of revenues) in 2010

Cogitel has obtained several internationalhealth, safety, and quality assurance!$#.)7!0.)"*2@%.&$2$%&08$%$*05'$(%.&$%!"AB0*9to penetrate European markets and improve its"B$#0.)*+%$,7!)$*!9%0*(%!?2."A$#%20.)2,0!.)"*

1987 1994 1997 1998 2003 2006 2007 2008 2010

1987Cogitel

commencesmanufacturing

operations

1994Expansion ofproduction

capacity and qualitycontrol systems

1997Cogitel launches

7#2.%?B+#0($%program

1998TunInvest makes7#2.%)*8$2.A$*.

Cogitel obtainsISO 9002

!$#.)7!0.)"*

2003Cogitel obtains

ISO 9001!$#.)7!0.)"*

2006TunInvest makes

second investment(via Altea Packaging)

Cogitel acquires SIED

2007Cogitel acquiresFrench company

Roland and investsEUR10 million

to create Cogitelain Algeria

2008Cogitel obtains

6CD%::;;;%!$#.)7!0.)"*%

Cogitel acquires Optima(Morocco), and theEgyptian companiesPorta and Rotopack

2010Cogitel is the

'$0()*+%3$4)5'$%packaging

manufacturerin MENA

Cogitel Company Timeline


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! Following itsacquisition ofM,A*)':D(?:)'!(Packaging facil-itated Cogitelsacquisition of/.RSD()B'("'&,%7(largest flexiblepackagingmanufacturer*%(C#%*"*!>(?H)'$(

consolidatingthe domesticJ!$9')D(*%(522T(?:)'!(U!&9!A*%A(!&8#*$'7(322V(of the Frenchflexible packagingcompany Roland,a move thatwould allow Cogitel to expand its prod-uct range and would grant the companymore legitimacy with multinational clients.W!)'$()B!)(;'!$D(?:)'!(U!&9!A*%A(*%E'")'7(J,$'()B!%(RXY32(J*::*,%(*%(?:A'$*!(),(

create a new flexible packaging company,M,A*)':!>(.%(522ID(?:)'!(U!&9!A*%A(&,%)*%-ued its growth through the acquisitions of)B'(Z,$,&&!%(&,J(CB'(@'AB!:(H!J*:;($')!*%"(9';(+%!"#$%0.;+#$?ment, Cogitel needed to constitutea core shareholding base in order tofacilitate decision making and stra-$+(0:%0.0$0)$0;+#@%"+.*+"+*%*0A!:&8$%/9%a highly fragmented capital structure.

At the same time, Hdi Zeghal waslooking forward to the strategicbacking that TunInvest would bringto the company.

Following the companys turnaround!%7()B'(7'&*"*,%(),('_

network of business contacts throughoutthe region. These relationships provedto be critical as Cogitel acting as the!%&B,$(&,J(^,)'"(,%'(,H(Cogitels managers, TunInvest created aformal strategic committee which broughtinformed and rational decision making toour company through better reporting,enhanced transparency and governance,and a sense of urgency. The monthly

meetings were much more effective andvalue-creating than board meetings.

In collaboration withthe Tunisian Ministryof Environment andSustainable Development,Cogitel and TunInvestundertook a detailedstudy of the companysenvironmental footprintand impact. As a resultof this study, Cogitel will

hire an external consultantin 2011 to develop anenvironmental managementsystem (EMS) in compliancewith internationalstandards (ISO 14001).

Map of Operations

Employee Growth

900

800

700

600

500

400

300

200

100

0

Prior toTunInvest

(1996)

Tunisia Tunisia(Cogitel)

Globa(Altea

Packagin

After TunInvest(2010)

+118%

+733%800

20996

NumberofEmploy

ees

Increasing Cogitels ValueThrough SustainabilityCogitel achieved a number of value-creatingenvironmental objectives throughout

TunInvests involvement with the company.Prior to TunInvests investment, Cogitelsenvironmental policy was focused onreducing its amount of source packaging(product inputs) and waste production.While these were laudable policies,TunInvest used its strong relationship withcompany management to expand Cogitelsenvironmental initiatives even further.

Cost SavingsS#$*%A(B*"(+$")("*)'(E*"*)(.:;'"(?=7':P!,#'7D(

TunInvests environmental consultant, noticed)B!)(M,A*)':(B!7(!("J!::(",:E'%)(-E,:!)*:'(,$A!%*&&,J


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New MarketsTunInvest brought sophisticated knowledgeof how to penetrate new markets. It recognize)B!)(!))!*%*%A(*%)'$%!)*,%!:(8#!:*+&!)*,%"D("#&B(!"(!(8#!:*);(!""#$!%&'(&'$)*+&!)*,%(H,$(H,,7("!H');(-./0(552224522L6D(K,#:7(J!9'( the company more competitive in Europe, aRXY32(=*::*,%(J!$9')(-$,#AB:;(52_(:!$A'$()B!%)B'(^,$)B(?H$*&!%(J!$9')6D(!%7(J,$'(!))$!&)*Eto multinational clients and strategic buyers.

M,A*)':(*%E'")'7($,#AB:;(X/ab2D222(),(,=)!*%*%)'$%!)*,%!::;($'&,A%*N'7(&'$)*+&!)*,%"(for quality and safety, and to enhance itshealth and safety performance. Cogitel nowleverages its superior environmental andsocial performance to differentiate itselffrom its competitors and build trust with itsJ#:)*%!)*,%!:(&:*'%)"D(KB*&B(*%&:#7'(S!%,%'(and Coca-Cola. !

EnhancingCogitelsSustainability!"#$%&

B+9,.*%$>+%!.).:0)8%()0.#%A",-%$>+%investment, TunInvest worked withCogitels management to create aculture of sustainability throughoutthe company. TunInvest raised theawareness of Cogitels managementto environmental and social issuesand explained their links to the com-').9C#%!.).:0)8%'+"A,"-).:+

Decline in Waste Rate

16%

14%

12%

10%

8%

6%

4%

2%0%

Prior to TunInvest(1996)


10.9%

13.8%


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$13,803

$2,983

$13,002

$4,638

$14,509

$8,041

$15,701

$1,436

$16,393

$11,109

$16,151

$17,181

The Emerging Markets Private Equity Association (EMPEA) is an independent, global membershipassociation whose mission is to catalyze private equity and venture capital investment inemerging markets. EMPEAs 250+ members include leading institutional investors and privateequity and venture capital fund managers across developing and developed markets.

Contact us at www.empea.net Email: [email protected] Phone: +1 202 333 8171

Results of the PartnershipSince TunInvests second round ofinvestment in Cogitel as anchor for the

Altea conglomerate, the group has grown

$,%/+:,-+%$>+%8+)*0.(%D+E0/8+%'):F)(0.(%manufacturer in the Middle East andNorth Africa (MENA). With TunInvestshelp, the Zeghal family business hasobtained a 35% market share and annual"+;+.&+#%!;+%$0-+#%8)"(+"%$>).%$>,#+%,A%the second largest provider in the market.

! Building Human CapitalCogitel has undertaken a number of activitiesto enhance its social and governancepractices. With TunInvests encouragement,Cogitel conducted a risk assessment studyand initiated a number of safety best practicesto accelerate the process of establishing anemployee health and safety managementsystem in line with international standards-0[/?/(3I223D(1V(),(1>OV>

Cogitel has alsoinvested heavily inhuman resourcesand professionaldevelopment.Beginning withthe recruitment ofuniversity students,Cogitel providesnew employeestraining in an array

of topics not onlyin adhesives, inks,and manufacturing,but also in English!%7(J!%!A'J'%)G(

Moreover, the company is a reliable partnerfor most multinationals in the region. To wit,?:)'!(*"(%,K(!J,%A()B'(),

Cogitels commitment to being a responsiblecorporate citizen extends to the communitiein which it operates. The company donates$,#AB:;(X/a52D222(),(:,&!:(",&*!:(!%7($#$!:(development funds every year.

Sales per Employee(thousands of Tunisian Dinars)

250

200

150

100

50

0

+114%


237.5

Prior to TunInvest(1996)

111

From thebeginning ofthe relationship,

TunInvest haspushed thecompany to growits exports andto target the topcustomers in theregion such asDanone, Henkeland Coca-Cola;the introductionof higherenvironmental andsocial standardshas been a keydifferentiating factorto attract and retainthese customers.

Nadia ZeghalMarrakchi,CEO of Cogitel

sustainability case study: cogitel (tunisia)

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