Industrial decarbonization-focused private equity investor Ara Partners today announced that it has acquired Vacuumschmelze (VAC), a leading global producer of key magnetic materials and solutions critical to the energy transition across a broad range of sectors, from Apollo Global Management.
VAC was acquired in 2011 by specialty chemicals and materials company OM Group for approximately $1 billion. OM Group was subsequently acquired Apollo in 2015.
VAC is a vertically integrated magnetic solutions provider that designs and manufactures mission-critical soft and hard magnetic materials for a wide variety of industrial applications across the automotive, renewable energy, industrial automation, medical and aerospace sectors. Headquartered in Germany, with manufacturing facilities in Slovakia, Finland, China, and Malaysia the company is poised to meet the significant and growing global demand for hard-to-replace, magnetic materials critical to the energy transition.
Tuan Tran, Partner at Ara Partners, said:
“We believe the demand for VAC’s differentiated, customized products will continue to grow rapidly as companies around the world decarbonize their industrial processes and the electrification of mobility advances, and we look forward to leveraging our expertise to further enable VAC’s continued success. We are excited to collaborate with VAC’s management team, and to support the company’s next stage of growth as it expands its manufacturing capabilities in North America to drive the decarbonization of transportation.”
Transitioning to renewable energy and electric-powered transportation will require access to large quantities of materials that are used in EVs, renewable energy technologies such as windmills, and other electronics. Historically China has been responsible for the production of roughly 90% of rare earth elements and about 60% of wind turbines and EV batteries. As global alliances and economies shift, Western countries, including the U.S. are seeking to shift their supply chains to other Western producers as well as working to find alternatives to rare earth metals.
VAC is the only Western manufacturer of sintered NdFeB EV-grade permanent magnets. In January 2023, VAC entered a long-term agreement with General Motors (GM) to build a facility in North America to manufacture permanent magnets, using locally sourced raw materials, to supply the electric motors used in a broad portfolio of GM electric vehicles. Through permanent magnet sales for use in EVs alone, VAC has the potential to catalyze the abatement of a gigaton of CO2E in the next five years.
Erik Eschen, Chief Executive Officer of VAC, said:
“Ara Partners has a strong track record of working closely with management teams across the industrial economy to create value while achieving meaningful decarbonization benefits. Ara and VAC will capitalize on significant growth opportunities for soft and hard magnetic solutions alongside our partners and customers. In addition, we will accelerate work towards building our rare earths value chain, pursuing a range of strategic growth opportunities to establish a robust supply chain for EV manufacturing in the Western World.”