We open with a deep dive into Carlyle’s deal to acquire Czech optics company Meopta Optika, including how the private equity firm gained financing for the transaction.
Next, we delve into the debt financing and valuation on TowerBrook’s shifting of a French tech firm from its Fund IV to its Funds V and VI.
In take-private news, we have the latest on Rhône Capital’s move for part of RHI Magnesita and Triton’s regulatory approval progress in its bid for Caverion.
We then round up the latest deals, with PAI Partners investing in a fintech company formed by HG, Nordic Capital agreeing to take a majority share in a circular IT service provider and Perwyn acquiring Cruiseline in partnership with its management team.
Top of the stack today, I had a fascinating chat with Friedel Drees and Vladimir Lasocki of The Carlyle Group about the firm’s plans for Czechia’s Meopta Optika, a company with a long history but that is now working in the vanguard of semiconductor production.
Perhaps one of the most instructive parts of the interview however was about how Carlyle got the deal over the line, given the wider market problems that we’ve spoken about at length in the Dealflow, including the rising cost of debt.
“This deal is representative of what we’ve stood for in the last 25 years at Carlyle Europe,” said Lasocki. “Complex situations where we need to mobilise global sector views and deep local reach.”
Carlyle, which has $164 billion of AUM in its private equity strategy, has 29 offices across the world. That global presence, plus previous silicon chip investments, meant “we were hopefully able to look through the current volatility in the semiconductor market, which is characterised by very high secular long-term growth driven by several mega-trends but also has short term volatility that can make you nervous if you don’t understand what’s driving these trends”, said Drees.
“It’s hard to find these situations and to invest behind this mega-trend,” he added. “We were extremely lucky that we could get it done. It’s a very good case study of how to not only find an interesting asset in this space, but unlock a deal like this in the current market environment.”
The local knowledge meanwhile was useful as Carlyle faced what the entire private equity industry is dealing with – that the benign conditions of debt markets over the last 10 years, with low interest rates and plenty of liquidity, are over.
With the help of its London-based capital markets team, Carlyle created a financing package with local banks, an approach it felt was the most cost-competitive, flexible and quickest, as well as being with banks already familiar with Meopta.
That speed, coupled with the chance for the family to remain a partner, allowed Carlyle to win the deal ahead of large strategic players that were interested, Drees and Lasocki said.
Check out the full interview to learn about how there are potential synergies with another of Carlyle’s businesses, Tescan, and how the two companies could tackle one of the biggest challenges facing the sector, as well as why the future of the European semiconductor market looks particularly appealing.
For more on Carlyle’s debt tactics, have a read of this scoop by my colleague Carmela Mendoza over on Private Equity International about the firm securing a NAV financing loan against assets in one of its flagship Europe buyout funds.
Sticking with the debt side of deals, we have a bit of a deep look on a recent deal to report.
TowerBrook’s PE Fund V and PE Fund VI, alongside a group of institutional investors, the founder and management team, in late May agreed to invest in French tech company Infopro Digital, a portfolio company in Towerbrook’s PE Fund IV.
The proposed deal had an enterprise value of €2.3 billion, according to a note to LPs seen by PE Hub Europe, equivalent to 12.9x 2022 EBITDA of €178 million or 11.9x 2023B EBITA of €194 million. The note added that on 8 June, Infopro priced €975 million of senior secured high yield bonds, with the issue 4x oversubscribed and split between a €500 million fixed and €475 million floating tranche.
Infopro will now have net leverage of around 5.1x pro forma for the new financing, the note added. The bonds were set to settle on 15 June, and as of this week TowerBrook intends to issue equity drawdown notices, according to the note. The deal is expected to result in aggregate proceeds to TowerBrook PE Fund IV investors of $1.355 billion.
About two-thirds of the fresh equity in the deal – amounting to €1.3 billion – comes from new, third-party investors that had no prior relationship with Fund IV, PE Hub Europe understands. Fund IV invested in Infopro in 2016.
Bid for more
Private equity firm Rhône Capital is looking to take a little bit more of Vienna-based RHI Magnesita, a supplier of refractory products for high-temperature processes.
We reported in late May that Rhône had made an offer of £28.50 per share for 20 percent of the London-listed company. This morning, it upped its offer to 29.9 percent of the total share capital, while keeping the offer price the same.
The offer price was a premium of 39 percent to the company’s closing price on the last trading day before the announcement. It valued the company’s issued share capital at around £1.34 billion ($1.72 billion; €1.57 billion).
More take-private news now, and Triton Partners announced on Friday that it had received all necessary foreign direct investment control approvals for its tender offer for Finnish construction company Caverion, which has reached around 30 percent.
But Triton also has merger control clearance to deal with. That had been a big topic, with Bain Capital, which had made an earlier offer for Caverion, claiming at the start of 2023 that Triton’s ownership of Swedish company Assemblin could cause the deal to be held up in merger controls. You can read full coverage of that, as well as how M&A lawyers believe it could be a sign of things to come in private equity, in this article. Note – since that article, the Caverion board switched its support from Bain to Triton.
Fast-forwarding back to the here and now, and Triton has said that the European Commission has decided to refer the review of the Finnish part of the deal to the FCCA, the Finnish Competition and Consumer Authority. The FCCA will review the effects of the deal in accordance with Finnish rules, while the Commission will concentrate on the effects elsewhere.
Triton added that it “does not anticipate any material substantive issues with respect to obtaining merger control clearance” and expects to obtain clearance and complete the tender offer in the third or fourth quarter of this year.
PAI Partners will invest in Azets Group, a provider of business-critical accounting, tax, payroll, audit and advisory services to SMEs.
Azets, formed by Hg, has 189 offices in the Nordics, UK, and Ireland. The company generates revenues of around £700 million (€820.52 million; $896.89 million).
PAI will hold an equal and co-controlling stake in Azets alongside current owners Hg, following completion of the deal.
Azets, with this investment, will deepen its presence in new and existing markets across Europe via a combination of organic growth and further strategic M&A, according to a release.
For more fintech deals, check out this listicle by PE Hub Europe’s Irien Joseph.
Nordic Capital has signed an agreement to acquire a majority share in Foxway, a European provider of circular IT services.
Foxway is based in Stockholm, Sweden. The company reported over Skr7.6 billion (€651 million; $712 million) in gross revenue in 2022.
“With a focus on M&A, expansion, and further investments in operational excellence, Foxway will be in a strong position to help accelerate an industry-wide sustainable transformation,” said Joakim Andreasson, MD, Nordic Capital Advisors.
Perwyn, a European private equity investor, has acquired Cruiseline in partnership with its management team.
Monaco-based Cruiseline offers online sales of cruises in Mediterranean, North Sea, Latin America and the Caribbean. With approximately €200 million in annual revenues, Cruiseline transports more than 170,000 passengers per year.
Paris-headquartered Montefiore Investment acquired Cruiseline in 2017, in a deal that Tikehau Capital financed. Tikehau, also based in Paris, acquired a majority share in Cruiseline in 2021 during the covid pandemic, several outlets reported at the time. PE Hub Europe has asked Tikehau for comment.
With Perwyn’s support, Cruiseline intends to continue its expansion into new geographies to take advantage of the growing interest in cruises and the growth in online travel sales, according to a release.