Desenio puts private credit in frame as bond maturity looms

Josie Shillito
+Fin Strathern

10 November 2023•3 min read

Desenio Group AB, a Swedish wall art provider, is working with private credit funds on financing to save the company from an upcoming 1.1bn SEK (€94m) bond maturity wall, according to 9fin sources.

The business — which charted a remarkable growth story during the pandemic under sponsor Verdane Capital’s wing — has been locked in a downward spiral since its February 2021 IPO.

Based off a 11bn SEK valuation (€1.1bn at the time), share prices in the company have fallen 99.3% since going public.

“It’s a bond that was once a fraction of the company’s market cap,” said one source familiar with the deal. “It’s a tall order to repay now that it’s 11 times the size.”

Direct lenders looking at providing financing include P Capital Partners, Ture Invest, Capital Four, and Park Square, one of the sources said.

Currently priced at 67.85, the STIBOR+550bps senior secured bond is due to mature in December 2024. It was issued four years prior to finance the acquisition of rival Swedish wall art shop Poster Store Sverige AB.

What covid go wrong?

Desenio’s success in 2020 was largely due to the global impact Covid-19 and its accompanying lockdowns had on consumer behaviour. CEO Fredrik Palm summarised it himself in a 2021 interview: “People were spending much more time at home than usual and buying a lot more prints.”

Company EBITDA grew 96% between 2019 and 2020 to reach 249m SEK (€22m). But Desenio’s luck began to turn as 2021 progressed and restrictions began to ease. Palm noted the “unexpected slowdown” in a press releaseannouncing readjusted sales targets.

“The decrease in sales is due to easing of restrictions caused by the pandemic,” he said at the time. “Time spent in front of digital devices and thus internet traffic decreased and also people became temporarily less inclined to decorate their homes when they finally got to go out.”

Palm added: “We knew that relief and vaccination would have tangible negative effects on sales but underestimated the scope of it. This is an unusual occasion that we hopefully will not see again in the foreseeable future.”

Company EBITDA fell by 28% from 2020 to 2021, and by another 40% in 2022.

There was at least one winner from the IPO — private equity. Sponsor Verdane Capital made a 20x return selling half of its 60% stake in the company at the time, according to Private Equity News. The north European buyout shop first invested in Desenio in 2016.

Desenio, Verdane, P Capital, Ture Invest, Capital Four, and Park Square did not respond to requests for comment.