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Dealspeak: April's acquisition by CVC sheds light on French Financial Services, European take private trend

Private equity’s love affair with the French Financial Services sector is growing year-on-year, and as deals begin to pile up, Dealspeak digs around to unearth details beneath the data

On 28 January, one of the most high-profile private equity auctions of 4Q18 came to an end. April [EPA:APR] and suitor CVC announced the signature of a purchasing agreement, valuing the French listed insurance group at roughly EUR 900m. Pending regulatory approvals, the company’s founder’s investment vehicle, Evolem, will sell its 65.13% stake to the private equity firm before a simplified public tender offer for the remainder of April shares is made in the coming months.

That very same day, Bridgepoint reportedly hired JPMorgan and Rothschild to exit French asset management company Primonial. The target, eyed by BC Partners, KKR, CVC and Eurazeo, could be sold for a resounding EUR 2bn.

Last year, France saw a total of 21 buy-outs in the financial services sectors, twice as much as the year prior, according to Mergermarket data. The insurance brokerage sector, with its high profitability levels and potential for consolidation, is particularly attractive to private equity sponsors. Among other insurance related buy-outs last year, Siaci Saint Honoré was acquired  by  Charterhouse and Odealimwas acquired by TA Associates.

Take private deals on the rise

But CVC’s acquisition of April also sheds light on a wider trend: the rise of take private transactions across Europe.

Private equity firms in Europe alone raised EUR 439bn between January 2017 and December 2018, according to Unquote, leading to record amounts of dry powder. And private markets do not have the capacity to absorb these volumes overnight.

As cumbersome as delisting a company might seem, it is quite an effective way to deploy a significant chunk of capital in just one transaction.

In 2017, CVC set a record for the European PE industry, by raising a total of EUR 16bn for its latest vehicle. Its decision to take both April and Swedish construction products supplier Ahlsell [STO: AHSL] - via its portfolio company Quimper - private in the last two months, therefore, does not really come as a surprise.

Several other European listed companies have recently been rumoured to attract the interest of private equity players for potenitial delistings. As such, on 31 January Canada-based Brookfield Asset Management Inc. [TSE:BAM.A] was reportedly pondering an offer for Dutch telecom player Royal KPN [AMS:KPN]. Late last year, Carlyle [NASDAQ: CG] was reportedly considering making an offer to take German lighting manufacturer Osram [ETR:OSR] private. 

Some other situations might pave the way for potential take-private transactions. Swiss packaging business SIG Combibloc's [SWX:SIGN] underwater IPO might lead various funds to formulate takeover offers. CVC, Bain Capital, BC Partners, Partners Group  and PAG all considered the asset when it was put up for sale by New Zealand-based group Rank in 2014, as reported. Similarly, UK-based spread betting company CMC Markets's [LON:CMCX] recent share plunge could put the company in the takeover spotlight, as reported.

Other take-private attempts recently proved unfortunate. A few weeks ago, German Scout24 [ETR:G24] rejected an offer by Hellman & Friedman and Blackstone. Last December, talks between the UK-based industrial control and process instrument manufacturer Spectris [LON:SXS] and suitors Advent International and Bain Capital collapsed over Brexit uncertainty.

Could other sponsors decide to give them a try?

Last year, Europe saw a total of 26 Take Private deals, which is two more than the previous year, and just one short of the 27 that took place in 2016, the highest record year since the financial crisis, according to Mergermarket data. But these deals represented a total value of EUR 28.5bn last year, or almost four times the amount that such transactions represented back in 2016 (EUR 7.5bn).

US investors were responsible for almost half of the European take private deals struck last year, for a total value of EUR 16.6bn.

by Alexandre Rajbhandari, with analytics by Mate Taczman. 

Selection of take private deals in Europe since 2018

Announced DateTarget CompanyTarget Dominant SectorBidder CompanyDeal Value
07-Dec-18Amer Sports Oyj (98.6% Stake)
ConsumerConsortium led by ANTA Sports Products Limited
5,414Revenue: 2x
EBITDA: 23.1x
23-Jan-19RPC Group Plc
(United Kingdom)
Industrials & ChemicalsApollo Global Management, LLC
5,133Revenue: 1.2x
EBITDA: 7.6x
10-Dec-18Travelport Worldwide Limited (95% Stake)
(United Kingdom)
TechnologySiris-Elliott consortium
3,478Revenue: 1.7x
EBITDA: 8.2x
11-May-18ZPG Plc
(United Kingdom)
Business ServicesSilver Lake Partners
2,884Revenue: 10.4x
EBITDA: 31.9x
17-Sep-18Testa Residencial
Real EstateBlackstone Group LP
2,526Revenue: 47.7x
11-Dec-19Ahlsell AB (74.88% Stake)
Business ServicesCVC Capital Partners Limited
(United Kingdom)
2,523Revenue: 1.1x
EBITDA: 11.9x
16-Jul-18VTG AG (41.62% Stake)
TransportMorgan Stanley Infrastructure Inc
2,351Revenue: 3.2x
EBITDA: 9.4x
01-Oct-18STADA Arzneimittel AG (35% Stake)
Pharma, Medical & BiotechCinven-Bain consortium
1,775Revenue: 2.7x
EBITDA: 17.1x
14-Aug-18esure Group Holdings Ltd
(United Kingdom)
Financial ServicesBain Capital, LP
1,315Earnings: 14.7x
Book Value: 4.2x
01-Mar-18Laird Plc
(United Kingdom)
Industrials & ChemicalsAdvent International Corporation
1,311Revenue: 1.2x
EBITDA: 9.5x

* Defined as Enterprise Value / Revenue and/or EBITDA figures as of year ending 31/12/2017

Source: Mergermarket, an Acuris company

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