Online printing is on the investor radar

Phil Adams looks at a peripheral sector beyond the channel and suggests it might be worth a punt

Online printing – that is, services that allow businesses to order their printing online – is a high-growth sector and is expected to continue to grow rapidly and globally through the next few years, capturing yet more market share from the offline segment.

Despite the ubiquity of online marketing, companies still value physical, printed materials.

Think of the last industry event you went to. You were probably handed high-quality brochures or business cards. Online printing offers this collateral at often significantly cheaper prices than traditional printers.

Despite migration online, the printing industry remains a significant presence in Europe. In Germany alone, it is worth €20bn (£17.2bn), with €500m online printing, and growing.

In the next decade, we expect the share of online printing to rise dramatically as the sector matures.

Earlier this year we advised on a deal that clearly demonstrates the opportunities in the sector, where Germany's Onlineprinters was acquired by private equity firm TA Associates.

Online printing businesses generally have scalability as well. With an online presence, customers can be based almost anywhere, and the firms offer purchasing time frames that compare favourably to domestic delivery.

The scale and immaturity of the online printing sector suits private equity, where rapid capital investment can be used to accelerate growth.

Of course, some will remain sceptical about these opportunities, given its ties to the mature printing industry.

Yet the appetite among businesses, particularly SMBs, for cheap printing is strong. Online printers are essentially e-commerce companies with growth rates to match.

Moreover, online printing is enjoying growth across Europe and is not simply concentrated in a handful of printing strongholds such as Germany, the UK or France.

From an investment point of view, we expect online printing to enjoy a buoyant decade ahead.

Growth rates have exceeded 10 per cent year on year in Germany and risen by up to 50 per cent elsewhere in Europe. More online printing businesses will prosper as they move to satisfy demand, creating investment opportunities for private equity.

Long term, of course, consolidation is inevitable. This will concentrate the online printing sub-sector into a small number of "champion" players.

The stakes, therefore, are high and an early entry into online printing should pay considerable dividends.

And as TA has shown with its investment in Onlineprinters, private equity is in pole position to reap the rewards.

Phil Adams is group chief executive of Altium