Good morning Eurohubsters, it’s Craig McGlashan with today’s Dealflow.
As central banks the world over try to hold back inflation – the Bank of England is in action this week and is mulling its biggest rate rise in more than a quarter century – the cost of debt in private equity deals keeps going up. I found out from Stefano Ferraresi, partner at BC Partners, how his firm’s recent deal to take joint ownership of Italy’s Fedrigoni with Bain Capital highlighted the changes in the dealmaking backdrop.
Packaged deal. Headquartered in Milan, Fedrigoni specialises in the production of special papers for packaging, graphics, print and art, and in the conversion of paper and other materials into self-adhesive products.
A large part of its business is making packaging for high-end designer goods – a sector less likely to take a hit from the cost-of-living crisis affecting many major economies worldwide, said Ferraresi, as well as offering an attractive investment proposition during any part of the economic cycle.
“Luxury packaging is generally more insulated from recessions than many other packaging segments,” Ferraresi, who is head of the industrial sector in Europe and the Italian market for BC Partners, told me. “And the self-adhesive label businesses supply products for applications in personal care, wine labels, pharma, among others, that tend to be rather stable during soft economic periods.”
On top of those benefits, several features of the deal allowed it to get over the line.
“The company has a very good level of cash conversion compared to players in the broader packaging sector, which is another element that we really liked,” said Ferraresi. “It’s definitely one of the reasons why we were able to put together the financing for this deal in the current environment.
“We had to adjust the capital structure of the deal to take into account the more difficult environment. To put together the best possible financing and capital structure for the deal at this stage would have been difficult if it was just a straight sale. Being able to cooperate with Bain Capital meant we were able to put together something we are happy with. We did have to factor in a higher cost of debt than we would have had a year ago.”
You can read the full interview here.
Exit. Ontario Teachers’ Pension Plan Board (Ontario Teachers’) on Monday agreed to the sale of Spanish funeral services group Mémora Group. Spanish insurance group Grupo Catalana Occidente has bought the company at an enterprise value of approximately €600 million.
Mémora is a provider for funeral services, funeral parlours and crematoriums in Spain and Portugal. The company is based in Barcelona and owns and operates 139 funeral parlours, 39 crematoriums and 19 cemeteries. It employs over 1,500 people.
“We are proud to have worked with the Mémora team over the last five years and to have helped it reinforce its position as a leading funeral services company in the Iberian Peninsula,” said Jean-Charles Douin, senior managing director, EMEA, private capital, at Ontario Teachers’. “Having delivered on our investment plan for Mémora, we now feel that it is the right time to leave it in good hands. We look forward to watching the business continue to flourish under the stewardship of Grupo Catalana Occidente.”
Do the locomotive. Caisse de dépôt et placement du Québec (CDPQ) on Monday announced that it has entered exclusive negotiations with Akiem shareholders SNCF and DWS over the proposed purchase of the company.
Akiem is a French provider of freight locomotive leasing services headquartered in Saint Ouen. It had revenues of €200 million and an EBITDA of around €150 million as of 2021.
“CDPQ is thrilled to acquire Akiem, a major European player in the rail sector, and is looking forward to working with its team to bring the company to the next stage of its growth,” said Emmanuel Jaclot, executive vice president and head of infrastructure at CDPQ. “Akiem’s size and positioning across the entire value chain, including maintenance, give it a significant competitive edge to benefit from the expected growth in the locomotive leasing market across Europe. With three quarters of its fleet already operating on electricity, Akiem offers a sustainable response to the challenges of decarbonising transport – a solution that appealed to us from the start.”
Work to be done. The women’s football European Championships came to a close at the weekend, winning plaudits for raising the profile of the women’s game, with record attendances at the matches.
But just as the tournament finished on Sunday, a report by not-for-profit organisation on Level20 a day later showed that the private equity industry still has improvements to make in terms of female representation.
My colleague Toby Mitchenall over at New Private Markets wrote that while female representation in private equity and venture capital investment roles may be moving in the right direction, there is a still a long way to go.
The figures gathered by Level20, which exists to improve diversity in private equity, show that 38 percent of private equity and venture capital firms in Europe have all-male investment teams.
The sample size is substantial, with data gathered from more than 1,000 firms with more than 9,000 investment professionals on staff.
You can read Toby’s full story here.
What do you make of the report? We’d love to hear about that, as well as what your firm is doing to boost diversity.
Drop me a note at craig.m@peimedia.com
That’s it for now – speak to you tomorrow.
Cheers,
Craig
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