Riverside’s Gaudin: Increased health focus drives demand for nutraceuticals manufacturing

The Riverside Company is looking for add-ons for “both sides” of the business of its new portfolio firm BioDue while aiming for pan-European expansion, Damien Gaudin, partner, told PE Hub Europe.

New York-headquartered Riverside, a lower mid-market-focused private equity company, announced in mid-November that it had signed a definitive agreement to acquire a controlling stake in BioDue, an Italian company that develops, manufactures and commercialises food supplements, medical devices and cosmetics.

BioDue, based in Sambuca, provides customers with a full-service offering, ranging from raw material sourcing development and formulation, through production, packaging and regulatory affairs, to commercialisation.

“Italy is at the forefront of the industry in Europe,” Gaudin said. “It has the highest consumption per capita of nutraceuticals in Europe. Therefore, it’s no surprise that you have some significant players in terms of size and technology active in the sector, BioDue being one of them.”

The nutraceuticals industry has proven to be resilient, according to Gaudin, as it is fuelled by demographic tailwinds such as growing populations and ageing populations, as well as some diseases becoming more prominent. That has led to an increasing focus by consumers on health and wellness, “therefore driving demand for new nutraceutical products that need to be manufactured”, Gaudin explained.

As healthcare and consumer are two of Riverside’s core sectors, BioDue fits well in the firm’s portfolio. “Nutraceuticals are at the crossroad between consumer and healthcare,” Gaudin said.

BioDue has “two legs” to its business – manufacturing products as a contract development and manufacturing organisation for third parties, and manufacturing a range of products distributed as its own brands. “We are looking at add-ons on both sides of the business, in order to expand the company’s footprint; the geographic and the product portfolio,” Gaudin said. Some of these potential add-ons have already been identified, and Riverside has “several” under evaluation.

Geographic growth for BioDue will primarily be pan-European, according to Gaudin. No specific countries will be targeted, as opportunities will be assessed one by one as they come. “Our focus is on internationalising ‘little leaders’, as we like to say. BioDue is a leader in their space in Italy, but also sells a lot of their products outside of Italy.”

ESG is an “important workstream”, and Riverside has set an action plan to improve the BioDue’s ESG profile. This includes making its energy consumption more sustainable.

Consolidation

The financial community has shown “high interest” in the nutraceuticals sector, according to Gaudin. “It’s a multibillion industry that has been growing steadily over the years at about mid to high single digit rate,” he said.

Riverside has noted many PE-backed businesses in Europe, alongside some “very large” industrial players. “We see consolidation happening on the brand side, and we see the emergence of fast-scaling digital brands that are popping up more and more,” Gaudin explained. “These players need the manufacturing partners even more than traditionally vertically integrated players.”

All that made Gaudin confident in a future exit from BioDue. “By the time we would exit, we would present a very attractive player for both financial sponsors who want to continue the buy and build strategy, as well as trade buyers that would perceive BioDue to be of strategic interest for them.”