Relais Group: An Off-Radar Compounder
Acquisition-as-a-Business Analysis Series
DISCLAIMER & DISCLOSURE: The author has no position in Relais Group at the time of publication, but that may change. The views expressed are those of the author at the time of publication and may change without notice. The author has no duty or obligation to update this information. Some content is sourced from third parties believed to be reliable, but accuracy is not guaranteed. Forward-looking statements involve assumptions, risks, and uncertainties, meaning actual outcomes may differ from those envisaged in this analysis. Past performance is not indicative of future results. All investments carry risk, including financial loss. This analysis is for educational purposes only and does not constitute investment advice or recommendations of any kind. Conduct your own research and seek professional advice before investing.
Acquisition-as-a-Business (AaaB)
This is now the second post in the ‘AaaB’ series. If you missed the others, here are the links:
Relais Group investment analysis
Fairfax India (podcast/video presentation)
Topicus - Part 2 - How to value Topicus
Judges Sceintic (podcast)
Fairfax India analysis to compliment (4) above
The Backstory of Relais Group
Relais Group ($RELAIS) is not your typical industrial company. At first glance, it looks like a small Nordic distributor and workshop consolidator, but dig deeper and you find a budding compounder in the vehicle aftermarket, a sector that has proven to be remarkably resilient through economic ups and downs.
The story of Relais is one of steady ambition, careful acquisitions, and an attempt to build a long-term value creator in the mould of the Nordic serial acquirers that investors have come to admire.
In a market where demand never sleeps because vehicles always need to be serviced and repaired, Relais has compounded EBITA at 18% a year since 2020.
Relais roots can be traced back to its 1996 founding in Helsinki, Finland. In 2010, however, it acquired Startax Electronics Oy, a Finnish distributor of automotive spare parts and electrical equipment, and that single deal set the foundation for what would become the Relais Group we know today.
Over the next decade, the business expanded through a series of bolt-on acquisitions, adding companies like Maskin-Teknik in Norway and Awimex in Sweden. These were not high profile targets, but rather well-run niche businesses that anchored Relais in the Nordic aftermarket.
By 2019, after merging with AB Reservdelar and Huzells in Sweden, Relais had enough scale and momentum to take the next step: a listing on Nasdaq First North in Helsinki. The acceleration in growth post IPO is clear to see on the chart above.
Throughout this entire journey, the company has remained profitable, testament to the quality of the management team.
The decision to go public was strategic. Management recognised that in order to sustain its acquisition-led growth model, Relais would need access to capital markets and the visibility that comes with being a listed company. The IPO also aligned with its stated ambition of doubling sales within five years by combining above-market organic growth with one or two acquisitions per year. In practice, the public listing gave Relais the currency, both financial and reputational, to accelerate its consolidation play in a fragmented market.
Since then, Relais has lived up to its ambitions. Net sales have compounded at roughly 24% per year between 2016 and 2024.
Much of this has come from acquisitions, but the company has also managed to deliver mid-single-digit organic growth on a fairly consistent basis. Importantly, the businesses it acquires are improved. Relais applies a proven playbook, especially in its workshop segment, where it has shown it can turn good operations into great ones by professionalising management, optimising pricing and sharing best practices across the group.
Management
Leadership has been central to this success. CEO Arni Ekholm, respected for his pragmatic style and steady hand, took the helm in 2015 and for the past decade has overseen the transformation from a local Finnish distributor into a multi-country consolidator with nearly 30 subsidiaries spanning Finland, Sweden, Norway, Estonia, Belgium and the Netherlands.
However, he has announced his retirement in March 2026. This looming leadership change introduces an element of uncertainty. Succession will matter, especially in a company where cultural continuity and disciplined execution are critical.
Ekholm will move to an advisory and non-executive board level role and has committed to continuing to support the business through the transition and perhaps beyond. He owns shares equal to roughly four times his base salary, so it is in his interest to ensure that his succession goes well.
On the board level, however, Relais enjoys strong alignment with shareholders: Chairman Jesper Otterbeck and major owner Ari Salmivuori collectively control nearly half of the shares, ensuring a long-term mindset prevails.
Strategy
Strategically, Relais has positioned itself in two complementary areas.
Its Technical Wholesale and Products (TW&P) division, representing about two-thirds of sales, acts like a niche acquirer, buying up distributors and product companies in the vehicle aftermarket. This side of the business benefits from attractive gross margins and the ability to scale private-label products like its Nordic Parts Development brand.
The Commercial Vehicle Repair and Maintenance (CVR&M) division, roughly a third of sales, resembles a roll-up of service workshops. While lower margin than TW&P, this division provides recurring revenue and showcases Relais’ operational improvement playbook.
Together, the two segments give Relais a balance of stability and growth potential.
Relais Group is now the biggest operator of independent commercial vehicle workshops in the Nordic region.
The aftermarket itself is an attractive hunting ground. Vehicles are staying on the road longer, increasing demand for replacement parts and repairs. Europe’s aftermarket remains highly fragmented, with thousands of small and medium-sized businesses ripe for consolidation.
“Despite its rapid expansion, the company still only generates little over €50 million in EBITA, small enough that a single bolt-on can move the needle, yet big enough to prove its model works.”
Competitors such as Alliance Automotive (owned by Genuine Parts), Swiss Automotive and Parts Holding Europe dominate at scale, but Relais is still small enough that it can grow meaningfully with mid-sized deals without coming onto their radar.
That said, competition for targets has increased as more buyers look for deals. Relais’ focus and industry specialisation should give it an edge, but acquisition multiples will be an area to watch.
Valuation
Financially, Relais has built a record of strong cash generation. EBITA has converted to free cash flow at roughly 77% in recent years and net income to free cash flow at over 100%.
Debt levels are moderate but at the upper end of its recent range, sitting at around 3.5x EBITDA. Acquisitions see the financing debt hit the balance sheet before the EBITDA materializes on the income statement, and recent large acquisitions have caused the debt ratio to spike for this reason. However, once EBITDA from the acquisitions flows through in the numbers, this will come down. The company is also considering some form of debt for equity swap, leaving room for further acquisitions without overleveraging.
Return on Net Working Capital has been over 50%, but due to a couple of large acquisitions which involved assuming their working capital requirements before their returns filter through, that dropped to ~43% in the first half of 2025, but is anticipated to revert to higher levels once the returns of new acquisitions are fully integrated into the numbers.
Both Return on Capital Employed (ROCE) and Return on Equity (ROE) are in the 12-13% range, a little below the mid-teens or better that investors associate with top-tier compounders. Recent larger acquisitions temporarily depressed returns, but as growth moderates and organic operating leverage kicks in returns are expected to stabilize in the mid-teens. Proving that trajectory will be critical for a re-rating.
On valuation, the picture is favourable. With a market cap of just under €300 million Euro, Relais is capitalised at about 10x EV/EBITA for 2026 and a an earnings multiple in the mid-teens. Sales for 2024 were €323 million, so it trades at 0.93x historic sales and a bigger discount on a forward looking basis. For a growing company with gross margins nearing 50% and operating margins around 10%, that looks like good value. It promises steady value creation, with the potential for meaningful multiple expansion if management proves it can drive returns higher, so it certainly looks attractive.
Ultimately, Relais is at an interesting inflection point. It has graduated from its early roll-up stage to become a credible compounder-in-the-making, with scale, a tested acquisition playbook, and a healthy pipeline of targets. The challenge now is less about growth, which is abundant, and more about quality: improving returns, aligning management incentives and navigating leadership succession smoothly.
If it can do that, Relais could deliver exceptional long-term shareholder value.
Conclusion
“Backed by long-term owners who control half the shares, Relais is seeking to build a Nordic-style compounder.”
For investors, Relais offers an opportunity to back a growing compounder at an early stage, in a defensive and fragmented market, with clear levers for improvement. The proof, as always, will be in execution. If Relais continues on its current path, there really may be more to this company than meets the eye.
Relais' recent capital raise of EUR50 million via hybrid bonds, at an initial fixed rate of 7.9%, represents a strategic maneuver to refinance existing bridge financing while optimizing their capital structure.
The subordination of hybrid bonds to senior traditional debt, broadly aligning them with preferred shares in the capital structure, places them in a higher risk category than standard bonds. This increased risk is a fundamental reason for their higher interest rate compared to senior debt.
The perpetual nature of the bonds, coupled with a reset date in 2029, provides Relais with long-term, non-dilutive capital, while the callable feature offers future flexibility for redemption or refinancing.
The hybrid bond issuance presents several noteworthy accounting peculiarities that require careful consideration from a financial analysis standpoint:
- As a key feature, these securities are classified as equity under prevailing accounting rules, which has a significant impact on leverage ratios. Because they are not included in traditional debt calculations, they can make the company appear to have a more conservative financial profile than it would if the capital were raised through conventional debt. This "equity credit" is a primary motivator for companies to issue such instruments, as it helps to maintain or improve credit ratings while still providing a tax-deductible interest expense in most jurisdictions, unlike common share dividends.
- Beyond the balance sheet, the interest costs associated with these bonds are not reported as financial expenses on the income statement. Instead, they are charged directly to equity, which bypasses the profit and loss statement and, consequently, does not impact net income or operating cash flow. This unique treatment means that a simple review of a company's reported figures can be misleading.
For a comprehensive valuation and accurate cash flow analysis, investors must make explicit adjustments to both net income and free cash flow to reflect the true cost of this capital. The interest payments are recorded as cash flow from financing activities, which further complicates the straightforward analysis of a firm's operational performance.