Advent bakes in plans for IRCA expansion; Financial sector flurry; IPO exit latest

IRCA is a producer of speciality ingredients for artisanal pastries, cakes and gelatos.

Good morning Eurohubsters, Craig McGlashan here with the Dealflow.

The newsletter is bursting at the seams this morning. We open with Nina Lindholm’s interview with Advent International about its portfolio company IRCA’s plan to take over Kerry Group’s Sweet Ingredients Portfolio, then take a look at financial services, with news on AnaCap merging two French firms, Apollo rumoured to be interested in Credit Suisse’s investment bank and Altor agreeing a stake in Kommunalkredit.

We then see how the IPOs of two firms with private equity backing are faring, check out some figures on M&A in the IT and business services sector and round things out with a healthcare deal by Ardian and a manufacturing deal by Investindustrial.

Phew… got all that? Then let’s dive in.

Sweet deal. Industry consolidation and growth in the US market are at the top of Advent International’s menu for portfolio company IRCA, managing director Francesco Casiraghi told PE Hub Europe’s Nina Lindholm.

IRCA entered talks to acquire Kerry Group’s Sweet Ingredients Portfolio for €500 million, comprising an initial cash consideration of €375 million and a €125 million interest-bearing vendor loan note, in mid-January.

Based in Gallarate in northern Italy, IRCA is a producer of speciality ingredients for artisanal pastries, cakes and gelatos. The company distributes its products across more than 100 countries and runs 13 production facilities in Italy, the US, Belgium and Vietnam.

“Historically, the space is incredibly fragmented, with a lot of family-owned businesses in Italy, France or Germany,” Casiraghi said. “These businesses are lacking sufficient scale, and there’s a lot of merit in driving consolidation in this space.”

Check out the full article to learn more about the firm’s sales numbers in the US and how Advent expects to grow it further.

Financial sector. Now we have quite a few deals in financial services to report.

AnaCap Financial Partners announced that its portfolio firm Milleis Banque Privée, the third largest independent French wealth manager according to AnaCap, has completed its merger with Cholet Dupont-Oudart Group, an independent private bank based in Paris.

Cholet Dupont was founded in the 18th century and has nearly €4 billion of assets under management.

AnaCap acquired Milleis in 2017. It has around €9 billion of assets under management. Since AnaCap took over, the firm’s AuM has grown by 16 percent per annum with new inflows of 25 percent per annum.

Swiss finance. Apollo Global Management is in talks to take a stake in Credit Suisse Group’s investment bank, people familiar with the matter told the Wall Street Journal.

Swiss banking giant Credit Suisse last year secured the rights to the name First Boston – that of a Wall Street investment bank it bought in the 1980s – for its investment banking division, in an effort to market and eventually spin-off what will be dubbed CS First Boston.

Apollo declined to comment when approached by PE Hub Europe.

Green finance. Altor Equity Partners has agreed to acquire an 80 percent majority stake in Kommunalkredit Austria and will partner with the current owners and the bank’s management.

Kommunalkredit is a provider of financing products to infrastructure and energy projects across Europe. The firm is headquartered in Vienna, Austria. The firm is expected to deliver over €120 million in net interest income in 2022 and has had a compound annual growth rate over 50 percent during the last few years.

“Kommunalkredit has a unique position as financing partner to some of the most prominent green transition ventures and we believe that we jointly can build the European champion within sustainable infrastructure financing,” said Paal Weberg, co-managing partner at Altor, in a statement.

Read more about Altor’s plans for Kommunalkredit here.

IPOs. Yesterday we wrote about a pair of companies with private equity backing braving the IPO market, an exit route that struggled last year amid wider market volatility.

German web hosting company IONOS, in which private equity firm Warburg Pincus has a minority shareholding, priced its IPO yesterday at €18.50, at the bottom of its €18.50-€22.50 range. It then opened on the Frankfurt Stock Exchange this morning at €18.40 and the price at time of writing had fallen to €18.05.

Italian industrial firm EuroGroup Laminations, which has backing from private equity company Tikehau Capital, looked to have done a little better pricewise. It had offered a €5-€6 range and is expected to price its deal in the middle at €5.5 per share, according to sources spoken to by Reuters.

Plugging in. There has been some good news for trade exits, in the tech sector at least. IT and business services M&A performed strongly last year, according to a report by M&A and corporate finance advisory firm Hampleton Partners, auguring well for private equity firms in the sector.

The firm, which works with tech companies, found that sector transaction volume last year increased by 37 percent year-on-year, to 1,310 recorded deals. The median valuation multiples were stable at 1.3x EV/revenue and 9.4x EV/EBITDA.

While a buoyant M&A market in the wider sector is good news for tech investors in private equity, there were particularly positive signs for managers looking to exit their IT investments. There was evidence that “strategic buyers are choosing to pay higher multiples for desirable assets as they look to reshape their revenue streams, add new products and services and improve online customer experiences”, according to a note accompanying the report.

“For many enterprises, inflation, delivery uncertainty, and geopolitical risk accelerated the transition from IT ownership to IT service sourcing, meaning more spending on managed services and cloud than on on-premise capabilities,” said Miro Parizek, founder and principal partner at Hampleton, in a note.

“In the face of growing cyber risk and often underdeveloped security measures in-house many of the larger players are acquiring cybersecurity service providers to cater to these needs. Also, demand for specialist IT consultancies has flourished, as ecosystems around specific software tools, like Salesforce, continue to develop.”

Health. Ardian has partnered with UI Investissement to acquire a stake in Théradial, a French company in the dialysis sector targeting high value-add segments in medical devices, drugs, and healthcare software.

Théradial, established in 1998, is headquartered near Nantes and has 90 employees across France and Italy.

Ardian’s growth team will assist the firm in maintaining its market position, strengthening its medicinal products businesses, and increasing the market penetration of its digital division, according to a release.

Read more on the deal here.

Precision deal. An investment company indirectly held by Investindustrial has entered a definitive agreement to buy Procon’s European and North American businesses from the Specialty Solutions Group of Standex International, at an enterprise value of $75 million.

Procon is a provider of custom fluid solutions and is headquartered in Smyrna, Tennessee, and has light manufacturing and assembly facilities in Nogales, Mexico and Mountmellick, Ireland. It made revenue of around $35 million in 2022.

That’s it from me – I’m going to give my fingers a rest. I should be recovered in time to write to you again tomorrow.