Good morning Eurohubsters, Craig McGlashan here with the middle of the week Dealflow.
We’ve got not just one but two Deep Dives for you this morning, as I speak to Energy Capital Partners about the firm’s recent take-private of UK waste management company Biffa, while Nina Lindholm gets the inside story from Carlyle about its acquisition of French software provider Groupe Lacour. We also take a brief look at Platinum Equity closing a carve-out, DWS transferring a private equity business to Brookfield and Inflexion exiting a travel firm.
But first, a quick reminder.
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No time to waste. One of the biggest deals we’ve followed since launching back in the summer was Energy Capital Partners’ pursuit to take UK waste management company Biffa private, a deal that was completed last week.
I spoke to Andrew Gilbert, ECP partner, about the journey to take over Biffa, which involved adjustments to the offer price and the debt equity split, as well as his firm’s plans for Biffa’s debt pile.
“We had attractive proposals a year ago for more debt than we will end up with,” said Gilbert. “But we started with a relatively conservative capital structure, something that looks more like an investment grade business. Had we used a more aggressive LBO-type capital structure, I don’t think this deal would have happened.”
Biffa’s enterprise value in the sale was around £2.1 billion and its covenant basis net debt was £578.8 million according to its last annual report, in August. That represented 2.9x covenant basis EBITDA, giving “significant headroom” against its covenant limit of 4.5x, although its covenant limit is due to fall to 4.0x in September.
A plan to restructure Biffa’s debt “is in progress. The capital structure will largely involve participation from the existing lender group”, said Gilbert.
Check out the full interview to learn more about ECP’s plans for Biffa and its potential liabilities.
Deal mechanics. Next up, Nina Lindholm spoke to Cyril Bourdarot, managing director with Carlyle Europe Technology Partners (CETP), about his firm’s recent move to take a majority stake in Groupe Lacour, a software provider for the automotive after-sales value chain. The company’s products support vehicle repair and maintenance, including document management systems, costing solutions and parts databases.
Carlyle will enter new market segments and broaden Lacour’s product offering by utilising the “highly fragmented” automotive support software sector, Bourdarot told Nina.
“We will look at all options when it comes to growing the business – both organic and acquisitive,” Bourdarot said. “We believe Lacour’s specific sector – software support for the automotive sector – is highly fragmented across Europe and so we believe there may be an opportunity for growth there.”
Read the full interview to learn about Lacour’s likely geographic expansion as well as Carlyle’s other investments in this sector.
Hot deal. Platinum Equity has completed its acquisition of Imerys’ High Temperature Solutions (HTS) business, paying around €930 million. The firms had entered exclusive negotiations in July.
The company will operate under the Calderys brand. It works with industries operating in high temperature conditions and has more than 6,000 customers in the iron and steel, thermal and foundry markets. It had revenues of €981 million in 2022 and has 36 industrial sites in 16 countries.
Platinum also announced plans in December to acquire HarbisonWalker International, a supplier of refractory products and services in North America. After that deal closes, expected to be during the first half of this year, Platinum will combine Calderys and HarbisonWalker.
Handing over. DWS has agreed to transfer its Private Equity Solutions business to Brookfield Asset Management.
DWS established the unit in 2017, targeting mid-life businesses in existing sponsor-backed companies to support organic growth and M&A activities. As part of the transfer, DWS’s private equity team and its Private Equity Solutions I fund will move to Brookfield. The shift has the full support of investors, according to a statement, and DWS will remain as an investor in the fund.
“Alternatives remains a priority growth area for DWS and this transaction allows us to focus on and fund new initiatives in our key areas of strength, including our strong real assets franchise and growing private debt business,” said DWS CEO Stefan Hoops in the statement.
Bon voyage. Inflexion has sold its investment in Scott Dunn to Flight Centre Travel Group (FLT), a listed travel agency in Australia.
The completion of the acquisition is expected to be before February-end.
London-headquartered Scott Dunn is a luxury travel operator, with offices in San Diego, and Singapore.
Check out our full coverage to learn the enterprise value for the sale and more on the deal.
That’s it from me – I’ll speak to you again tomorrow.