Riverside exits rum biz to Platinum Equity after doubling EBITDA

Bluegem on pros of strategic sales.

We’re taking a deep dive into exits today, with a focus on luxury. While the wider consumer sector has had to deal with the headwinds of high inflation and rising mortgage rates eating into their spending money, the luxury sub-sector has proved pretty resilient.

First we have a new deal that might not be fun reading for anyone doing Dry January as the Riverside Company sells rum company E&A Scheer and its subsidiary the Main Rum Company to Platinum Equity.

Next we look at why a still-tough M&A environment means strategic sales are the preferred option for some private equity firms as we speak to Bluegem Capital Partners’ Emilio Di Spiezio Sardo about his firm’s recent exit from luxury home fragrance company Dr Vranjes Firenze to L’Occitane Group.

Switching to take-privates, we have the latest on Goldman Sachs Asset Management’s pursuit of edutainment company Kahoot before we finish with a London hire by investment bank Harris Williams.

Scheer delight

My holiday reading was a pretty incredible true story about a pirate expedition in the late 1600s, so I spent a lot of the last few weeks thinking about rum.

It seems I wasn’t the only one, because the Riverside Company has just sold rum producer E&A Scheer and its subsidiary the Main Rum Company to Platinum Equity.

E&A is the largest global blender and vendor of premium rum in bulk, according to Riverside. The Amsterdam-based company has origins going back to 1712 – meaning some of the protagonists in my holiday book could have sampled a few of their tipples.

Riverside invested in E&A a little later – in February 2019 – and since then focused on growing and internationalising the company’s customer base and “improving profitability through an increased focus on ultra-premium rum categories such as rare and aged casks”, said Damien Gaudin, partner at Riverside Europe, in a press release.

“As a result, the company more than doubled its EBITDA during Riverside’s ownership. In addition to the strong sales generated from the EMEA region, the company has strengthened its presence in North America, laying the foundations for future growth.”

Strategic strategy

While Riverside sold E&A Scheer to another private equity firm, many of the exits we’ve seen so far this year have been strategic sales.

Such deals offer an exit route amid an “M&A environment that remains extremely challenging”, Emilio Di Spiezio Sardo, founding partner at Bluegem Capital Partners, told me. Last week Bluegem announced the sale of luxury home fragrance company Dr Vranjes Firenze to L’Occitane Group.

Bluegem sold Dr Vranjes for €150 million, according to sources close to the matter. The company had delivered 25 percent CAGR since Bluegem’s initial investment in 2017, said Di Spiezio Sardo.

Those numbers came despite an M&A backdrop that has not improved since last year and still suffers from “expensive financing and a lack of risk appetite”, said Di Spiezio Sardo. Alongside Dr Vranjes being a “resilient” business – by appealing to a loyal and affluent customer base less affected by inflation – Bluegem made the exit by “running a process tailored to trade buyers who are less affected by the expensive financing and with a higher confidence in the business given their long-term horizon”, said Di Spiezio Sardo.

Selling to a corporation like French luxury retailer L’Occitane was in keeping with several other private equity firms’ tactics in the last few weeks, including Bridges Fund Management’s sale of home energy efficiency business AgilityEco to M Group Services and PAI Partners’ proposed exit from in-vitro diagnostic company ELITech Group to Bruker Corporation.

More such deals are likely as strategic buyers “take advantage of improved valuations to purchase quality companies, many of which owned by PE firms looking for exits to provide liquidity for their LPs”, Searchlight Capital Partners founding partner Oliver Haarmann told PE Hub Europe last week as part of our outlook 2024 series. Riverside Europe managing partner Karsten Langer also expected a return of strategic buyers as part of the same series.

Find out more about the Dr Vranjes sale in the full interview.

Finishing line

Goldman Sachs Asset Management has completed its tender offer for Norwegian game-based learning company Kahoot, securing just shy of 95 percent of the company’s shares. The private equity firm will now run a compulsory acquisition of the rest.

GSAM, alongside co-investors General Atlantic, KIRKBI Invest, Glitrafjord and others, made a NKr35 per share offer for Kahoot – valuing the total equity at NKr17.2 billion ($1.66 billion; €1.52 billion) – in July, which the Kahoot board recommended.

London calling

Harris Williams, an investment bank focusing on M&A and private capital advisory services, has hired Jonathan Abecassis to join its London office as managing director in the private capital advisory group. Abecassis will focus on primary and secondary advisory for clients in Europe.

Abecassis was most recently managing director and head of capital solutions and GP advisory for EMEA and APAC at Credit Suisse.

“Jonathan brings nearly two decades of experience advising a range of clients across the spectrum of GP-led structures, LP fund interests, and direct minority and control investments,” said Eric Zoller, managing director and head of private capital advisory, in a release. “With significant dry powder in the global secondary market, Jonathan is joining Harris Williams at an ideal time to capitalise on opportunities throughout EMEA.”