Ara Partners, a private equity firm that specializes in industrial decarbonization investments, has announced that it has acquired Vacuumschmelze (VAC), a global producer of advanced magnetic materials and the largest producer of rare earth permanent magnets in the Western Hemisphere, from funds managed by Apollo. Terms of the transaction were not disclosed.
VAC is a vertically integrated magnetic solutions provider that designs and manufactures mission-critical soft and hard magnetic materials for various industrial applications, reaching across the automotive, renewable energy, industrial automation, and aerospace sectors.
This company is well-equipped to meet the significant and growing global demand for hard-to-replace, high-quality magnetic materials that are critical to the energy transition. This is due to its more than 100-year history of commercial innovation, hundreds of patents protecting its technical know-how and product designs, and longstanding partnerships with blue-chip customers.
In January 2023, VAC entered a long-term agreement with General Motors to build a facility in North America to manufacture permanent magnets using locally sourced raw materials. These magnets will be used 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 abate one gigaton of CO2E in the next five years.
“We are thrilled to acquire VAC, the premier Western producer of high-performance magnetic materials and a key enabler of electrification and energy efficiency across massive global industries,” says Tuan Tran, partner at Ara. “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. We are excited to collaborate with Erik Eschen and VAC’s management team, and to support the company’s next stage of growth as it expands its manufacturing capabilities in North America.”
VAC is headquartered in Germany, with manufacturing facilities located in Slovakia, Finland, China, and Malaysia. It’s the only Western manufacturer of sintered NdFeB EV-grade permanent magnets.
“We are excited to partner with Ara Partners, which has a strong track record of working closely with management teams across the industrial economy to create value while achieving meaningful decarbonization benefits,” says Erik Eschen, CEO of VAC. “Ara and VAC will capitalize on significant growth opportunities for soft and hard magnetic solutions alongside our loyal partners and customers. In addition, we will accelerate work towards building our rare earth’s value chain while pursuing a range of strategic growth opportunities to establish a robust supply chain for EV manufacturing in the Western World.”
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