Ecowipes, a converter of biodegradable wet wipes based in Poland, is on a path of growth following its acquisition by private equity firm Cornerstone Investment Management with the support of hybrid financing delivered by Kartesia, a pan-European provider of financing solutions, in July 2023.

Before the acquisition, Ecowipes already made significant investments in its own nonwovens production. The company recently opened its third factory in Pomiechówek, Poland, which has capacity for 12,000 tons of hydroentangled carded/pulp nonwovens yearly and has close proximity to an already operating Ecowipes factory in Nowy Dwór Mazowiecki, Poland. It also operates a factory in Mulhouse, France.

Ecowipes, which produces around 200 million packs of wipes per year, has expertise in developing plant-based nonwovens including its product called Tricell, which is based on FSC-certified cellulose. Tricell is more absorbent than the standard viscose and polyester mixture, and its strength grade is comparable to cotton. The material is biodegradable—both dry nonwoven and finished wet wipes biodegrade in soil in laboratory conditions within three months.

“The major investment program Ecowipes did recently, which cost millions of euros, was to expand those production lines to produce more of the biodegradable nonwoven that they could later convert into the ready product as a wipe,” says Tomasz Pietrzak, partner at Cornerstone Investment Management.

The acquisition of Ecowipes by Cornerstone and Kartesia marks a significant milestone in both the companies’ strategic commitment to ESG investing.

Cornerstone has a background of developing global and pan-European platforms (IT services, food sector, health care, green metals, animal care, and financial services) where it consolidates vertical markets across various countries and industries. “We’ve done it a number of times, and this is yet another example of us trying to achieve the same objective with Ecowipes,” says Pietrzak. “Whenever we do this strategy, we’re looking for certain intrinsic country-specific and/or company-specific center of competence qualities of a business that we can utilize as a consolidation development platform in which we specialize in both financing and branding. We intend to effectively utilize the business model and technological competitiveness of the Ecowipes business in acquiring more businesses.”

Cornerstone was attracted to the Ecowipes business because it has been at the forefront of biodegradability. “That’s in their DNA,” he says. “The industry has been trying to adapt [to biodegradability] even from the retail perspective, which is another tailwind for us. We strongly believe in private label as a concept from the overall FMCG market trends. We are very much a big believer in a transition economy where biodegradability is clearly a trend. We grabbed the moment, we grabbed the technology, which is industrialized already, and those were the key drivers behind our investment.”

Ecowipes delivers private label wipes for Europe’s largest retail chains including Lidl, Beidronka and Auchan, and has also introduced its own Tami and Rapid Clean brands.

Private label is considered Ecowipes’ core expertise. “We have a strong belief in the private label markets, especially during the period of the cost-of-living crisis,” Pietrzak says. “Private label is more resilient than certain branded product categories in an overall difficult consumer environment, but Ecowipes itself performs well, and their margins have improved. The business is doing well, it’s looking for solutions with its customers in what is in general a difficult environment for the consumer.”

Looking ahead, Cornerstone is eyeing further acquisition opportunities, especially in converting capacities and market access. They are currently in certain discussions with potential targets and are open to talking to more companies as part of its platform development which is focused on M&A.

Pietrzak adds: “We have capacity, we have reach, we have growth, we have margin and we have a balance sheet to expand, so we are very much out to acquire various businesses in Europe, especially the converting businesses that are struggling these days with overcapacity, low margins, etc. So, we are very much open to various partnerships or acquisition targets.”