Steyr Arms part of RSBC Defence fund

September 1, 2024

Since August, firearms manufacturer Steyr Arms has been the second asset of the qualified investor fund RSBC Defence, which is part of the RSBC investment group.

„The RSBC Defence fund was established by the group in 2022 with a clear vision of adding other interesting assets from the defence industry. We are proud that 100% Czech capital plays a key role in strengthening security in Europe. The transfer of Steyr Arms to the fund is the next step in our strategy of building a robust and diversified portfolio in the defence industry, which is why future acquisitions will also be directed towards the defence fund,“ says Milan Šlapák, CEO of the RSBC investment group.

The Austrian company Steyr Arms has become an integral part of the RSBC Defence portfolio, strengthening its strategic position, providing access to a new market in the USA, and expanding production capabilities on other continents. So far, production capabilities have included facilities in Brazil, Austria and Slovenia. Now, North America is joining them in the form of a production facility in Alabama, USA.

Steyr Arms is a significant product portfolio expansion and a synergistic addition to the AREX manufacturing company, which has been part of the fund since 2022. Steyr Arms has an exceptional position in the field of high-quality long guns. Arex has a strong position in the production of training ammunition and the quality production of small arms.

The fund continues to benefit significantly from the trend growth of the defence sector and the geopolitical situation, which is conducive to the purchase of products and services from this sector. Since its inception, the RSBC Defence fund has achieved a total appreciation of over 20% for both PIA and BIA share classes, with an average annual appreciation exceeding 10%. The annual guaranteed return is 8% and 9%, depending on the share class, with investors having the opportunity to participate in an excess return of up to 30% per year.

STEYR ARMS will become a new valuable addition to the RSBC Defence fund

April 24, 2024

RSBC Investment Group Acquires Leading European Weapons Producer, Austrian STEYR ARMS, to Its Portfolio

STEYR ARMS, GmbH (STEYR ARMS), a global manufacturing company, is now part of Robert Schönfeld's Czech investment group, RSBC. The transaction was closed on April 23, 2024. The RSBC Group is taking over 100% of STEYR ARMS from the previous owner, SMH Holding GmbH. This will allow RSBC to fully focus on the strategic development of STEYR ARMS, with a particular emphasis on strengthening its position in foreign markets.

STEYR ARMS is a globally operating arms manufacturer with a tradition dating back to 1864. The company has more than 200 employees in Austria and the USA. Its turnover in 2023 exceeded EUR 45 million. STEYR ARMS is a major global supplier of firearms for police and military professionals, as well as hunting rifles (STEYR Mannlicher). The flagship of the production is the Steyr AUG, which is used by more than two dozen armies and many special police units around the world.

Robert Schönfeld, founder of the RSBC investment and industrial group, said: „STEYR ARMS has an excellent reputation and tradition in the world. It is synonymous with trust and quality. Its products are among the best in the hunting, civil and defence sectors. We believe that in the new partnership, we will contribute the scale, resources, and deep expertise of RSBC to accelerate the growth of STEYR ARMS.”

Milan Šlapák, CEO of the RSBC Group, added: „The acquisition of STEYR ARMS is a once-in-a-generation opportunity. We are proud to continue the development of this traditional brand. STEYR ARMS has an exceptional product portfolio, particularly in the area of long guns for the military and armed forces, so-called Military/Law Enforcement, as well as in the hunting and sporting weapons category.”

The RSBC Group is creating a new holding that will cover both STEYR ARMS and the Slovenian manufacturing company AREX. The RSBC Group acquired AREX in 2017 and later became the first asset of the RSBC Defence fund. The new holding will be led by Tim Castagne, the current CEO of AREX, who has almost three decades of experience in the world of the defence industry. Since the new management structure was set up, the management has promised to effectively use opportunities for the strategic development of both companies. The key synergistic effects today lie in the combination of the product portfolios of both companies, the expansion of capacity in the field of research and development, and the strengthening of sales and service channels. The group's management plans to invest in a new addition to the RSBC Defence fund in the second half of this year after the implementation of the initial business, legal and managerial settings of the production unit.

Successful year 2023: Fund with strong appreciation of over 18% since inception

April 5, 2024

The fund's preferred share class rose 17.4% and the bonus class increased 18.2%.

The market value of FKI RSBC Defence assets reached CZK 2.3 billion at the end of December 2023. The year-on-year growth in sales of the fund's main underlying asset, the Slovenian manufacturer AREX, reached 42% in 2021. The positive trend continued in 2022 and 2023, when sales grew by more than 40% year-on-year.

Among customers from EU member states, the increase was almost 60% in 2023. In the last two years, the Defence industry has become the focus of interest of defence institutions, governments, and the private sector. Given the long-term tense geopolitical situation, its growth can be expected to continue for at least the next decade. AREX is gradually successfully building its position as a global player in the defence industry. As part of its expansion into world markets, it is strengthening its activities in Southeast Asia and the American continent, which is associated with the active expansion of defence production.

We are actively working on the analysis of the fund's growth opportunities, especially regarding possible new acquisitions. We are currently evaluating three potential targets in the "Defence" area. For 2024, we expect the announcement of at least one strong acquisition in the defence industry from Western Europe, which will complement the fund's main asset so far, the manufacturing company Arex, in the portfolio, and thus synergistically support further growth of the fund and the appreciation of our investors' funds.

AREX IN 2023

• Operating profit before depreciation and amortisation increased by almost 40% year-on-year. EBITDA in 2023 preliminary: EUR 4.8 million.
• Launch of strategic cooperation in the field of pistols in the US - expected volume of long-term cooperation over 100 million EUR.
• The order backlog for 2024 exceeds the sales volume in 2023. Preliminary sales in 2023: EUR 21 million.
• Launch of a new automated line to produce cartridge belts. OEM production of pistols, their parts, barrels, and other products for renowned European and American gun manufacturers

RSBC Defence increased investor funds by 12.0% in 12 months

September 11, 2023

The RSBC Defence Fund has met expectations with its growth. It has achieved strong performance over the past twelve months: the fund's preferred share class has increased by 12.0% and the bonus share class has increased by 12.2%.

The market value of the fund's assets at the end of July 2023 reached CZK 2.1 billion. Year-on-year sales growth in 2021 reached 42%. In the following year, 2022, this trend continued, and sales grew by 40% year-on-year. Within the EU member states, even by almost 60%. In the last two years, the defence industry has become the focus of interest of defence institutions, governments, and the private sector. Given the geopolitical situation, its growth can be expected for at least the next decade. AREX is successfully building its position as a global player in the defence industry. As part of its expansion into global markets, it is strengthening its activities in Southeast Asia and the American continent, and this is accompanied by active expansion of production.

AREX EXPANDS PRODUCTION

Due to the persistent high demand for cartridge belts, the company is eagerly awaiting the delivery of new machines from the German company Bihler, as well as related equipment for hardening and phosphating. The new machines should be delivered in October. However, the company's production facilities are already being modified and prepared so that full-scale production can be started quickly and smoothly after the machines are delivered. Preparations included, among other things, moving walls, changing the organization of the current cartridge belt production, strengthening the transformer, training new personnel, etc. The new technologies will have a positive impact not only on the realized volumes and the company's ability to meet demand, but also on profit margins due to lower energy consumption and fewer downtimes.

NEW ORDERS ON THE GLOBAL MARKET

AREX, although headquartered in Slovenia, continues to build its position as a global player and strengthens its activities in Southeast Asia. After the successful delivery of pistols to the police in Manila, Philippines, in 2022, the company concluded a service contract worth EUR 1.4 million for the armed forces of Singapore. This involves the modernization of part of the military equipment and, in the event of successful implementation by AREX, which the company is confident of, the management sees significant scope for expanding cooperation and increasing the volume of services in the coming years.

Arex is a key supplier to the Slovenian armed forces in its home country of Slovenia and is currently negotiating the final terms of delivery of 2.5 thousand pieces of protective vests with the possibility of expanding the order by another 3 thousand pieces. The result of the tender, in which AREX is the only bidder, should be known within a few weeks.

PARTICIPATION IN WORLD FAIRS

Most of the world's defence industry trade fairs have already taken place in the first half of this year. In the second half, Arex is ready to promote its products at the MSPO fair in Poland (September), Milipol in Paris (November), and its representatives have arranged very interesting meetings at the ADIHEX fair, which will be held in Abu Dhabi in September.

RSBC Defence Fund increased investor funds by a strong 7.7% in 2022

March 12, 2023

The fund's preferred share class achieved a total return of 7.7% from July to December 2022, and the bonus share class achieved a total return of 7.5%.

„The development of sales and expected long-term orders from the defence industry confirms to us that the new fund has a great investment story. Moreover, in the current tense geopolitical situation, it can actively contribute to good things,“ said Martin Vrecion, ex-member of the board of directors of RSBC Holding.

The unique RSBC Defence qualified investor fund focused on investments in the areas of defence industry, production and technology was established in July 2022. The initial main asset of the fund is the dynamically growing Slovenian company AREX, which produces training ammunition, cartridge belts, pistols, protective equipment and other products in the industry. The fund offers more experienced Czech investors two types of investment shares, priority and bonus. By March 2023, investors in the fund had entrusted their own funds worth over CZK 400 million. The market value of the fund's assets as of December 31, 2022 increased to CZK 1,990 million.

The fund's preferred shares bring an annual guaranteed return of 8% and bonus shares 9% per year. The fund attributes this appreciation to investors on a stable monthly basis. The returns are secured by the entire market value of RSBC Defence sro (own company AREX), which was invested in the fund by its founder, the RSBC group. Investors also have the chance to participate in up to 30% of the total annual appreciation that the fund achieves above the guaranteed return.

The priority and bonus share classes differ in the initial investment volume of 1 million and 10 million CZK, respectively. The differences in the actual achieved appreciation of both share classes in 2022 are due to the different bonus appreciation of both classes and the months in which clients sent their money to the fund.

New RSBC Defence fund successfully closes deals, new products help

December 7, 2022

How is the fund currently doing at the end of 2022? And what is happening with its main investment asset, the Slovenian defence manufacturing company AREX?

The AREX management relay race successfully crossed the finish line...

The main HR management task of the year was successfully completed. This was the handover of the company's management from the original founder of the Slovenian manufacturing company AREX, Ivan Kralj, and his close associates to the new CEO, Timo Castagne, and his expanded management team. Ivan Kralj, as the responsible former owner, continues to remain in the company in an advisory role. The new and old management together successfully communicated the management change to customers, authorities, and employees.

In the last quarter of this year, we also managed to fill the last key management positions with new employees. AREX has a new Chief Financial Officer and a Purchasing Manager, who have shown themselves in a very good light in their roles right from the start.

The change in management did not have an impact on business operations as expected. Sales for 2022 will reach or exceed the planned value of EUR 25 million, representing 40-50% year-on-year growth.

New contracts are helped by the contacts and experience of managers in the industry

AREX's new CEO, Tim Castagne, has been very actively involved in the search for new business opportunities. He is greatly helped by the business contacts he has built up over the course of 20 years of work in the industry. This year, the company has already signed a key long-term contract with a major foreign customer. With a very good profit margin, this will use Arex's production capacity in the production of pistols to almost 100% from 2024. We expect product deliveries to be launched in the 3rd quarter of 2023.

The production of cartridge belts is now running at 100%. The capacity for 2023 is already sold out and the company started accepting orders for 2024 in the middle of the year. The company is trying to use subcontractors and is also analyzing the possibility of investing in a significant increase in production capacity (return on investment of approximately 1.5-2.0 years).

Products of the future? Marking ammunition, pistols and protective equipment

With the current high growth in investment and working capital needs, caused by strong sales growth and rising prices of key inputs, the company is successfully managing the pressure on cash flow needs, despite the fading lower willingness of banks to finance this type of industrial production.

The certification process for tracer ammunition was completed in June 2022. The company has thus fully become one of only 3 global manufacturers of these products. In terms of margin, this is the company's most interesting product line and this product therefore has huge potential for the future.

In the first quarter, licensed production of pistols was launched in Brazil - although the ramp-up is starting more slowly than planned, the market potential remains high.

The company continues to actively work on launching new production lines, especially textile production (bulletproof vests, military backpacks, etc.), for which it has been registering very high demand for a long time. This production is expected to start in 2023

Investors subscribed a high volume of CZK 250 million to the new RSBC Defence fund in the summer months

September 15, 2022

The new qualified investor fund RSBC Defence*, intended for more experienced investors, has had a very successful launch.

Client interest in the new fund is shown by high sales volume

During the holiday months starting in July, investors purchased more than CZK 250 million in fund shares.

„The war that Russia has unleashed in Ukraine means that the debate about the need to meet existing commitments to defence spending in Europe and globally is over. Today, a period of investment and development is entering the production of equipment for the military and police forces. It is a coincidence that we owned a defence industry company in the group. Today, I believe that the new fund not only has a great investment story, but will also actively contribute to good things,“ said Martin Vrecion, member of the board of directors of RSBC Holding.

Starting from a value of CZK 1.8 billion

The new fund does not start at zero value, its total assets reach a market value of CZK 1.8 billion. The initial main asset of the fund is the company RSBC Defence sro, which was invested in it by its founder. This company owns 100% of the dynamically growing Slovenian company AREX. AREX is a manufacturing and trading company that originally grew on the domestic Slovenian market. It has a long-term focus on defence production with orders in NATO countries, the Middle East and South America.

The fund will credit clients with one-twelfth of the guaranteed annual income on a monthly basis, in parallel with the revaluation of net assets. ""A pleasant feature for investors is the fact that the value of their shares will continuously grow by this amount with each month. In addition, clients will participate in any annual excess income of the fund,"" said Miloš Filip, director of RSBC investment funds. The fund's income also accrues continuously from the management of entrusted assets. In December of each year, it may be increased by the market revaluation of the value of the main asset, RSBC Defence sro, depending on the current economic prospects

Investors' returns are secured by the entire market value of RSBC Defence sro invested in the fund. If the total return in any year does not reach the secured amount, the difference is covered by a reduction in the market value of the shares that the fund founder received in exchange for his initial equity investment.

The fund will begin to regularly value its assets and calculate NAV on a monthly basis.

During the three-month subscription period, investors purchased shares of the fund for CZK 1, in two investment classes, priority and bonus, differentiated by the volume of the initial investment at CZK 1 million and CZK 10 million respectively. The shares offer an annual guaranteed return of 8% and 9% respectively as a share in the fund's management. The price of shares in both classes will be determined for the first time in October 2022. The fund will credit investors with a share in its management for the past 4 months, i.e. at least 4/12 of the guaranteed annual return