Management Cases

Argos Wityu: integrating decarbonization in private equity decisions

The challenge

Argos Wityu is a private equity company founded in 1989, with offices in Brussels, Geneva, Luxemburg, Frankfurt, Milan, and Paris. Argos holds majority and minority shares in medium-sized European businesses that operate in a wide range of sectors and geographic areas; the investment strategy centers on improving operations and growing the companies in its portfolio. Argos also prioritizes sustainability and other environmental, social, and governance issues, and collaborates with these firms to improve their ESG performance.


In September 2022, Argos launched a new fund called Argos Climate Action that strives to generate lucrative financial yields while minimizing the carbon footprint of the companies it invests in. Simon Guichard became a partner in the newly-launched fund in late 2022, and prepared to present a potential deal to the Argos investment committee. The stakes couldn’t be higher: if his proposal turned out to be a bad investment, it could compromise the future of the fund.

The numbers


  • Argos targets companies with revenues of €20 million to €500 million, and has successfully completed 80 deals since it was founded.
  • With the Climate Action fund, Argos intends to act as principal or co-principal investor by providing funding ranging from €10 million to €50 million.
  • Argos Climate Action aims to slash the CO2 emissions produced by the companies in its portfolio by at least 7.5% per year.
  • Flame GmbH, the target company in this case, does business in over 40 countries. Its exports are on the rise, with an escalation of 23% in the sale of heating systems from 2018 to 2022.

The focus of Argos Climate Action goes beyond green technology start-ups, and companies that produce clean technologies and renewable infrastructures, where most capital has been allocated until now. The idea underpinning current strategy is to make existing companies greener.


The target company that Simon Guichard had been studying in the weeks leading up to the presentation to the investment committee is Flame GmbH, a Group that pays close attention to the quality of its green products, but that has not yet begun to prioritize environmental concerns. The objective of Argos is to cut carbon emissions in Flame’s products and operations and implement circular economy practices and measures.


More about the target company: Flame GmbH is an Austrian enterprise that manufactures biomass heating systems for the home, both wood-burning and pellet-fueled. The company also has a smaller production of cast iron pots and pans that are “Made in Austria.” Capital Harmonie (a French PE firm) bought into the share capital of Flame GmbH in 2013, and now acts as majority shareholder along with the managers of the Group.


Flame GmbH operates primarily in Europe; the only products with a global market are its cast iron kitchenware, with most sales in Australia, Austria, France, South Korea and the US. The Group has five recognized brands – FireStoke, MGC, Fersinea Stufe, Belville and JägerKamerad – some of which are well-established and enjoy high brand recognition. The biggest portion of sales revenues comes from the DACH region (i.e. Germany, Austria, and Switzerland) as well as Italy, and exports are growing.


The Group sells its products through a multi-channel network which includes the do-it-yourself (DIY) segment, and the professional segment (installers and retailers). As for pricing, most of Flame GmbH’s products straddle the low to mid-range (specifically, from the high end of the low-price range to the low end of the mid-price range).


Flame GmbH has three industrial sites; at all three production saw a sizeable upsurge during the four-year period from 2018 to 2021. The Group has a diversified portfolio of suppliers, located primarily in the DACH region and in Italy.


In the next few years, Flame GmbH is expected to profit from positive trends such as an increase in energy prices and a shift toward green energy. The company should be able to leverage its strengths, such as its market presence, its technological competencies and its production capacity, to expand its commercial offering.


By continually upgrading product performance, Flame could gain a competitive advantage. What’s more, it could attempt to diversify the use of its foundry, for example, to produce components for renewable energy apparatus such as solar panels and wind turbines. As far as decarbonization, Flame will continue to invest in R&D to improve the environmental performance of its products in terms of fine particulate matter and greenhouse gas emissions. The company will also promote the integration of digital functions such as connectivity and predictive maintenance, which will improve product management for end users and optimize product utilization.

The takeaways

Argos aims to support the transition of the target company toward a more sustainable business model by actioning a series of measures such as raising prices for more eco-friendly products, expanding the use of recycled cast iron, and hiring experts in environmental issues.


The following financial and non-financial factors should be considered in the final investment decision:


  • The need to fully incorporate sustainability into the business strategy.
  • The need to set clear, measurable and achievable sustainability goals that align with this business strategy.
  • The need to measure and report regularly on sustainability performance to ensure progress and accountability.
  • The essential effort to engage stakeholders such as employees, suppliers, and shareholders in the transformation process to become sustainable.
  • The adoption of sustainable practices in managing the supply chain, including purchasing materials from sustainable suppliers and reducing waste.