Hirschmann Multimedia raises funding

Hirschmann Multimedia started on NPEX a crowdfunding action in the form of bonds with an annual interest of 11%. The networking manufacturer wants to raise at least 500K euro, but aims for 1.5 million euro, in bonds from retail investors and family offices.

Hirschmann Multimedia is a company that is internationally active with communication and industrial networks. Its products happen to be present in the Full Icecat catalog. The international manufacturer has clients like distributor TD Synnex, MediaMarkt, T-mobile, Rexel, Technische Unie and Ziggo. Its market expanded from the Benelux into the Nordics, Germany (DACH), and Poland. The supplier of wire connectors, network antennas and coaxial cables ranks 1,225 out of 35,000 registered international brands in Icecat.

Short history

The Hirschmann story dates back to 1924, when the German founder Richard Hirschmann developed the banana connector. Siemens invested in this plug to improve the connection of fluorescent tubes. It proved to be the alternative to the classic ‘click-and-screw’ solutions, which did not work optimally. In the following century, the company evolved into a leading international organization with a pioneering role in the field of modern communication and data communication systems.

In 1969, Hirschmann Nederland B.V. was established. Finally, in 2009, a management buy out of the Benelux activities took place under the new name Hirschmann Multimedia B.V. In the following 14 years, the electronics manufacturer expanded its activities to Western Europe.

Hirschmann invents and designs its products in the Netherlands, and sources in China, Taiwan, and Turkey. To mitigate the risks of new supply chain shocks, it is rebalancing its sourcing strategies.

Why invest in bonds Hirschmann?

The history of Hirschmann demonstrates that management has a long term view and commitment and is able to generate profits (EBIT). This is the basis for the continuity of the relatively stable company. The management’s main reasoning for the bond issuance is that to grow faster it needs to pre-finance inventory and projects. Further, it needs to refinance a loan and cover postponed taxes (Corona-related). The risk of the investors is somewhat reduced by first lien (“eerste pandrecht”) on the inventory and a guarantee by a holding. Critical for reducing future risks would be if the management can increase revenues, profitability, and reduce the interests it has to pay. Maybe an option to convert bonds into shares would be helpful in such an aim?

Disclosure/disclaimer: neither the author nor Icecat has business relations with Hirschmann Multimedia. Icecat is a shareholder in NPEX. Further, the author is active as an investor with his own private investment strategies and participates now via NPEX in the bonds of Hirschmann Multimedia. In this post, the author shares his private opinion and is not giving investment advice.