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Private Equity Spotlight: Ufenau plans two exits in the next 12-18 months, has more capital to deploy

  • Yet to decide on Ufenau IV exit candidate to follow Intelligent Repair Solutions sale
  • Ufenau IV with dry powder for bolt-ons and half of Ufenau V for new investments
  • Next fundraising at least 18-24 months away

For an overview of Ufenau’s private equity portfolio, please click here.

Ufenau Capital Partners will exit its investment in the car repair and painting services business Intelligent Repair Solutions and plans one more exit from its fund, Ufenau IV, in the next 12-18 months, Managing Partner Ralf Flore said.

Ufenau hired Sancovia Corporate Finance to sell Intelligent Repair Solutions, this news service reported earlier in February. Flore declined to comment on the mandate, but said that generally, it hires external advisors for exits. Flore said it has yet to decide which investment to exit next from Ufenau IV.

It still holds a 70% share in a railway services company Trans Europa Express, an 85% stake in claim management and handling services Fair Damage Control and owns over 90% in medical practices group Doktorhuus. Ufenau still has another four to six years for buy and build as well as asset improvement, Flore added.

The first closing of the Ufenau IV was in 2013, so it has some time to realise the fund and about EUR 30m of dry powder for bolt-on buys, Flore said. It has held Doktorhuus for one-and-a-half years, Fair Damage Control for two years and Trans Europa Express for over two-and-a-half years.

Ufenau sold fire protection specialist Roth Group to Equistone and building services specialist NRW Building Technology to Bregal Capital. The fund has already achieved a return with these two exits, Flore said. NRW Building Technology returned 6x its investment, he added.

The internal rate of return for the fully realised fund Ufenau III was over 60%, Flore said. It achieved a 3.5x return in 30 months, he added. Ufenau IV is moving towards a “similar” IRR and has already returned more capital than invested, he added. It doesn’t have a target IRR for Fund V, he said. Ufenau’s hurdle rate is 8% and standard market terms apply to its funds for management fees and carry interest, he noted.

Ufenau V closed in 4Q16 and only launched with its first investment in January 2017 and has a 10-year time horizon for investments with an extension of two years, Flore said. It has made five investments plus add-ons and still has 50% of the EUR 227m it raised available for another two to three investments in the next 12-24 months, he added.

The Swiss private equity plans a new fundraising round in 18-24 months but is “not quite there yet.” It could raise slightly more than Ufenau V, he added.

Ufenau invests in service-based companies with sales between EUR 10m and EUR 150m. These companies operate in fragmented niche markets and are family-owned or closely held. It then uses a buy and build strategy to grow these businesses into market leaders before an exit.

It typically takes a majority stake and management co-invests with a 30%-40% share in the business. It has made 66 investments, including add-ons, since 2011. It completed over 20 bolt-on acquisitions for Intelligent Repair Solutions alone to take the company from under EUR 40m in sales and EUR 4m EBITDA to EUR 150m in sales and EUR 20m EBITDA today, Flore said.

The fund's investment focus is Germany, Austria and Switzerland, but depending on the business it makes add-on acquisitions across Europe, he said. It will use dry powder and company debt to finance bolt-ons and uses a debt-to-equity ratio of 50/50 across new and bolt-on buys, Flore said. Ufenau’s funds are separated so it won’t move investments from one fund to another, he added.

It acquired IT-security and IT-infrastructure services Swiss IT Security, Swiss Mexican restaurant chain RC Restaurant Concepts, the German equestrian clinic group Altano, German dermatology practices group Corius and Swiss sewer servicing company Kanalservice Holding for Ufenau V. Terms of these deals were not disclosed.

Its placement agent for Ufenau IV and V was Axon Partners. It handled Ufenau III in-house. Its lawyer is Arendt & Medernach.

The Swiss fund manages investments from universities, foundations and family offices. In Ufenau V roughly 50 investors are entrepreneurs and over 90% of the investors from Ufenau IV invested in Ufenau V, he said. A majority of its investors come from the US but also from Germany, Austria, Switzerland and Scandinavia, he said.

Ufenau Capital Partners is based in Pfäffikon near Lake Zurich.

by Johannes Koch in Berlin, with analytics by Silvia Paparello

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