Njord Partners’ Arvid Trolle: AI a ‘key part’ of operational improvements

Njord Partners is leaning into artificial intelligence to improve operations at its portfolio companies, including applying the technology in supply chains to improve demand forecasting and inventory management, Arvid Trolle, co-founder and partner, told PE Hub.

London-headquartered Njord invests in European mid-market companies with enterprise values of €40 million-€500 million and capital needs of €20 million-€75 million. It invests across capital structures in industrials, chemicals, consumer goods, communication, energy, materials, transportation and infrastructure. The company tends to invest in companies faced with complex situations.

PE Hub caught up with Trolle about the firm’s investment strategy, the state of the exit market and more in the latest of our ongoing Q&A series with private equity thought leaders.

Give us a sense of your investment approach across strategies.

Our special situations approach is always about identifying companies and assets that have a strong reason to exist but at the same time have a lot of improvement and value creation potential.

This doesn’t differ between a consumer-focused company and a B2B business. The approach for any consumer-focused business is maximizing customer satisfaction with the product or experience on offer – we track this closely through multiple KPIs from day one, with the aim of making these companies best-in-class in their sector. Ambassador Cruise Line is a good example: since we launched it in 2021, it’s picked up more than a dozen awards, including Cruise Critic’s Best Value for Money award and the British Travel Award for Best No-Fly Cruise Line. That’s KPI discipline translating directly into a genuinely industry-leading customer experience.

There has to be potential for both growth, including through customer acquisition, and overall efficiency improvements on the cost side.

Both are key, and we always have a strong ambition for accomplishing both, but we rarely build an investment case around customer acquisition alone. We have a conservative approach to underwriting and every deal has to deliver even if we don’t see significant top-line growth.

Do you prioritize businesses with strong direct-to-consumer models or those with omnichannel strategies? 

We don’t prioritize either model but we certainly aim to develop as much omnichannel as possible to make sure customers are aware of the products and also receive a seamless, best-in-class service.

What are some of your key investments over the last year or two, and what made them attractive acquisitions?

Red Funnel is a recent addition to the portfolio that was in a stressed state due to historical over-leverage and lack of strategic direction. It’s a critical infrastructure asset which serves the population of the Isle of Wight and tourists visiting the island. Part of the appeal was the entry valuation, which is obviously always important, but the bigger draw was the potential to run the operations more efficiently. It’s a vital part of the island’s economy that simply needed better management, plus a liquidity injection to catch up on capital investments and working capital.

How does the scalability opportunity for Red Funnel compare with some of your other investments, like Ambassador, Valiant Pub Company or Italian apparel business Il Lanificio?

Red Funnel is slightly different from the other examples as it is a critical infrastructure asset, connecting the Isle of Wight to the mainland, and while there was significant improvement potential, the volumes are fairly stable and predictable.

Ambassador and Valiant sit in large sectors that are deeply rooted in UK consumer culture, so there’s real scope if we get the offering right. Our job is to sharpen the customer experience and scale it by delivering something better than the competition.

And quality builds brand. Marketing and positioning matter enormously for raising awareness, but they only work if there’s a genuinely good offering behind them.

How has AI changed the types of assets you’d consider for investment?

AI has become a natural part of how we operate across the board. We use it to maximize both customer acquisition and retention, processing large volumes of customer data, spotting behavioral patterns, and building predictive models that allow us to target customers more precisely through tailored messages and personalized offers (Ambassador is a good example of this).

AI enables us to have better tools to reach the right customers and grow at a faster pace, but we don’t build an investment case on the assumption that AI alone will deliver step-change growth in acquisition.

We look for companies with strong underlying potential that have been run inefficiently, and we implement a lean approach across all areas. AI is one of the tools we use to achieve this.

In supply chain, that means better demand forecasting and inventory management, cutting working capital and stockouts (Il Lanificio is a good example). In customer service, it means faster response times and a more proactive service for our customers that increases customer satisfaction (eg Ambassador).

We don’t underwrite deals on the assumption that AI will deliver these gains, but once we are involved in the business, AI is a key part of how we drive the operational improvement that’s core to our investment thesis.

What does a typical exit look like for Njord, and how strong is the exit market more generally?

The best way to position for exit is to have a well-run company with strong operations and good prospects. In special situations, we’re often looking at businesses with real potential that have been overlooked, mismanaged or misunderstood. Improving how they are run creates attractive, profitable companies, which in turn attracts buyers.

Well-run companies with good prospects will always attract interest from serious buyers, whether strategic or financial – this is the same across all sectors, not just consumer businesses. We have seen resilience in the value segment and this is reflected in the exit market as well, where more defensively positioned companies are attracting interest even when M&A activity generally is muted.

Editor’s note: This story is part of PE Hub’s ongoing series of Q&As with PE thought leaders. For more, see: