June 25, 2012
British buyout firm Cinven Ltd. announced agreements Monday, June 25, to acquire French energy sector service provider Prezioso-Technilor SAS and Turkish security alarm company Pronet Güvenlik ve Danismanlik Hizmetleri AS from their existing investors.
The prices in each case were undisclosed, but sources close to the situation said both companies were acquired for enterprise values in the range of €300 million to €350 million ($374 million to $437 million) .
Prezioso is being sold by mezzanine and private equity investor Indigo Capital LLP, while Pronet’s sellers are institutional investors including Turkish private equity fund Turk Venture Partners Ltd., or Turkven, and Dutch development bank Netherlands Development Finance Co., or FMO.
Cinven’s swoop comes as it reportedly eyes a listing of its U.K. pension-annuities and home loans business, Partnership Group of Cos. — although an offering is one of several possible options and would not happen before the second half of next year. The Financial Times quoted an analyst’s tentative estimate of a possible market capitalization of the business at that time at £1 billion ($1.55 billion).
The London private equity house is also focused on an initial public offering for its Italian aerospace supplier Avio SpA, despite reports of private equity approaches. Market uncertainties may, however, eventually force it to reconsider. Bloomberg News recently reported that CVC Capital Partners and Italian buyout firm Clessidra SGR SpA had submitted a firm offer valuing the Milan-based manufacturer at more than €3 billion. French aerospace company Safran SA had also previously shown interest in Avio.
Prezioso, of Vienne, France, has a long history of attracting private equity investment. Bought out by Barclays Private Equity (now Equistone Partners Europe Ltd.) for €59 million in 2000, it was subsequently acquired for €170 million in 2002 by what was then PPM Ventures Ltd. (now Silverfleet Capital Partners LLP), with mezzanine finance provided by Indigo. PPM appears to have overpaid and eventually handed the investment over to Indigo. Indigo, in turn, came close to selling the company to 21 Centrale Partners in 2009, but withdrew from the deal at the depths of the post-Lehman crash.
Cinven’s investment comes in at about 1 time Prezioso’s 2011 sales of €320 million. The French company, which provides coating and insulation services for offshore oil and gas and for nuclear installations, has been growing at about 15% a year. Prezioso has identified significant growth opportunities in markets including Brazil, the Middle East and Northern Europe and fits well with Cinven’s strategy of looking for established European companies with growth opportunities in emerging markets.
Debt financing has been provided by a group of seven banks that are existing lenders to Prezioso and will roll over their commitments as part of the transaction.
Meanwhile, Pronet, of Istanbul — Cinven’s first acquisition in Turkey — has been growing at a rate of about 40% a year, as Turkey’s growing middle class becomes increasingly aware of household and business security. It expects to continue expansion in Turkey and the surrounding region.
Pronet CEO Alex McNutt will continue with the company under Cinven’s ownership.
Both transactions will be financed from Cinven’s fifth fund, the €5 billion fund the firm is currently raising. Cinven announced a €3 billion first closing in March and recently passed the €3.5 billion mark.
Cinven partner Guy Davison and associate Yalin Karadogan received advice on the Pronet deal from Citigroup Inc., with legal counsel from Freshfields Bruckhaus Deringer LLP and Pekin & Bayar. The sellers were advised by Goldman Sachs Group Inc. and law firms YükselKarkinKüçük Attorney Partnership and Van Campen Liem.
On Prezioso, Cinven was advised by Ludovic Tron of Leonardo & Co. and Jérôme Brunet of Bain & Co. Thomas Forschbach and Nathalie Alibert of Latham & Watkins LLP provided legal advice.