HS 2009 reduit

EACH MONTH • LE JOURNAL DES PROFESSIONNELS DU CAPITAL INVESTISSEMENT

Christine Lagarde, Francefinance minister, oversaw

a lot of public initiatives to support investment

such as FSI.

Special Issue • ENGLISH EDITIONP

C A R E E R S

D E A L S T O R I E S

Infrastructure funds now become the new drink of choice for investors. Its stable profitability combined with its social benefits make it a much valued asset class. > p. 22

The current crisis might change the private equity model, with a knock-oneffect on the profile of teams within the sector. Will this strategic shift bemade with the same people? > p. 16

World Freight Company, Micromania,Buffalo Grill, METabolic EXplorer. > p. 26

I N F R A S T R U C T U R E

L’ÉTAT,the Almighty

French Small & Mid Cap LBO Specialist

4 years, 9 LBOs, 3 exits. CIC LBO Partners’ team is pleasedto announce the successful launch of CIC LBO Fund II bringing fundsunder management to over 300 M€.

Manufacturing of privatelabel savoury snacks

Investment : September 2006Divestment : January 2009

IT Services

Sales123 M€

July 2007

Polymer distribution

Sales243 M€

July 2007

Call center

Sales90 M€

September 2007

Design and distributionof women clothing

Sales72 M€

July 2007

Design and distributionof household linen

Investment : May 2005Divestment : October 2007

Manufacturing and distributionof concrete moulding equipment and

safety platforms for building sites

Investment : October 2005Divestment : September 2007

DIY Products Distribution

Sales61 M€

January 2006

Human ResourcesCommunication Agency

Sales40 M€

October 2008

IKO

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ÉL.:

01

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30

54)-AOÛT

2009

AP_CIC_LBO_235X310_08-09_GB_V2 31/08/09 17:38 Page 1

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3| Special Issue | August 2009 | PRIVATE EQUITY MAGAZINE

SARL Lipari Presse - 100, boulevard de Sébastopol 75003 Paris - FRANCE - Phone: 33 (0)1 40 33 71 93 - Fax: 33 (0)1 40 33 71 90

PUBLISHING DIRECTOR: Armelle Escoffier ([email protected]) - EDITORIAL: Editor in chief: Franck Caron ([email protected])JOURNALISTS: François-Xavier Chapelle ([email protected]), Houda El Boudrari ([email protected]), Benjamin L’Hoir([email protected]) - CONTRIBUTORS: Emmanuel Rubin - TRANSLATION: TecTrad - MANAGING EDITOR : Alexandra Blin-Thibal([email protected]) - ART DIRECTOR : Philippe Abellard (ETIK-PRESSE)MARKETING ET SALES EXECUTIVE : Jean Renard ([email protected]) - 01 40 33 86 12PRINTING: Tanghe Printing, B-7780, Comines, BelgiumADVERTISING: contact Coralie Legrand at 33 (0)1 40 33 79 81, or [email protected]: contact Clotilde Saint-Bauzel at 33 (0)1 40 33 71 93, or [email protected]© Photo de couverture : Sebastiao Moreira/epa/Corbis - Illustration page 18 : © Christian Roux - Photo page 22 : ©Martial Couderette

A Plus Finance 40

Abenex Capital 39

Afic 6, 18

AGF PE 5, 40

Altamir Amboise 6

Alvedis 16

Alven Capital 4, 40

Antin Infrastructure 24

Apax Partners 6, 38

Arsène Taxand 16

AtriA 16

Axa Infrastructure 23

Axa PE 5,19

Azulis Capital 34

Banexi CP 38

Barclays PE 38

BNPP Développement 38

Campbell Luytens 22

CAPE 4

Capzanine 38, 40

CDC Innovation 38

CDC 19, 38

Céréa Mezzanine 39

CIC Mezzanine 5

Colony Capital 30

Crédit Agricole PE 32, 40

CT Partners 16

Cube Infrastructure 22

Equalis Capitam 19

Eurazeo 4

Evolem 38

FSI 8

Gide Loyrette Nouel 24

GIMV 38

Global PE 22

Grant Thorton 24

IDI 6

Innoven 40

Investors in PE 7

IPE 26

iXEN 38

Korn Ferry 16

L Capital 28, 39

LBO Managers 20

Linklaters 23

Mayer Brown 24

MBO Partnenaires 38

Méridiam 22

Natixis PE 4

OFI AM 23

Ophiliam 6

OTC AM 40

PAI 5

Permira 16

Pragma Capital 38

Seventure 40

Société Générale CIB 6

Sofimac 5

Sofinnova Partners 40

Tim 4

UFG PE 38

UI Gestion 4

Yam Invest 4

Franck Caron, Editor.

Dépôt légal à parution - N° de commission paritaire: 0210K85732 - N° ISSN: 1771-3706 - Private Equity Magazine est édité par SARL Lipari Presse, RCS Paris B 478 182 710 - Prix au numéro: 150 euros, 10 numéros par an + hors-séries - Ce numéro est un supplément hors-série du numéro 47 daté de Juillet/Août 2009.

M.

Ost

i

TALKINGA B O U TS

TIMES, THEY ARE CHANG-ING… Are they really? Admittedly, theera of recaps, debt multiple above 7 andexits after 16 months with splendid returnsis over. But despite numerous talks aboutthings being different in the future and thebusiness of finance radically transformed,it is less than certain that a revolution is onits way. Indeed, the crisis has brought backthe governements at the frontstage all overthe world. In France, it never really leftit… But faced with the scale of the crisis, ittook numerous initiatives to provide newcapital and financing to struggling compa-

nies. It also took a strongposition on new regula-tions if necessary… Asfar as the private equityindustry is concerned,the horn was not yetsounded to hound thefunds out although a

clear distinction was made by some offi-cials between the “good”private equity,namely venture and expansion capitaland the bad Lbo. And the issue of Lbodebt is seen by some political leaders as thenext “subprime”. So far, the various actorsinvolved managed to find some solutionsto avoid any large bankruptcy that wouldmake the headlines of newspapers.Uncertainty is the key word. But as soon asthe first signs of recovery will be seen, themarket will reopen. Changed completely?It remains to be seen…

4 NEWS FROM FRANCE AXA Private Equity committed to responsibleinvestment

7 PORTRAIT Philippe Nguyen, a career hitting all the right notes

8 INTERVIEW The strategic investment fund, an “informed investor”

10 FRENCH MARKETAll the Private Equity Magazine league tables for 2008

16 TRENDCareers: profiles transformed

18 FOCUSSharing of value: who actually benefits from LBOs?Infrastructures funds: building their future

26 DEAL’S STORYWorldfreight a particularly rapid build-upL Capital plays to win with MicromaniaColony putting real estate on the menu for Buffalo GrillMETabolic EXplorer shakes up the chemicals world

34 strategyClear horizon for Azulis Capital

36 FUNDRAISINGS, DEALS AND EXITS TABLES

A selection of the main fundraisings (current), deals or exits in France.

42 BUSINESS RESTAURANTS

TABLE OF CONTENTS | EDITORIAL

www.pemagazine.fr

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10

18

22

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NEWS FROM FRANCEA

PRIVATE EQUITY MAGAZINE | August 2009 | Special Issue | 4

Tikehau Investment Management(TIM) has been accredited by theFrench securities regulator (AMF)for managing securitisation vehicles(FCT) and contractual UCITS, allowing it to acquire bank debt. With this newvehicle, which is targeting around 100 million euros, TIM is adopting an opportunistic approach aimed atidentifying pricing imbalances on thecorporate debt or senior LBO debtmarket, while steering clear of distresseddebt.In addition, Tikehau InvestmentMezzanine closed its mezzanine fund in

February this year for 60 M€.

Eurazeo’s revenuesdropped 8% over thefirst half of 2009, at1 811 M€. The results, a netloss of 120,9 M€, wereimpacted by the absence ofcapital gains, the loss of valuein investment properties andthe negative impact of theeconomic environment onEuropcar and the decline inresults of equity affiliates,Rexel and Accor.

Crédit Agricole PrivateEquity is launching itsLBO and developmentbusiness in Italy with thearrival of Stefano Zavattaro,the former managingdirector of Sigefi ItaliaPrivate Equity (SiparexGroup). Operational in2009, with an investmentcapacity of 100 millioneuros, this activity will

take up majority or minority interests inthe capital of Italian companies (LBOs,OBOs, development capital deals, etc.) in the middle market segment.

Yam Invest, an investmentcompany grouping various familyoffices together, is launching TIMEinvestors, which is intended to take upinterests in mid-size Europeanbusinesses in the Telecoms, Internet,Media and Entertainment sectors. TheTIME team is led by Henri de Bodinat,former vice-chairman of Arthur D.Little.The strategy will involve investing intickets from 5 to 20 million euros, aloneor on a co-investment basis toaccompany, as the majority shareholder,growth projects for businesses withrevenues of between 5 and 100 M€, on its areas of expertise.

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Launched in autumn 2008,M.I 5, UI Gestion’s fifth

fund dédicated to small andmidcaps deals, has raised 50 million in commitmentsfor its first closing. The finaltarget is still 100 millioneuros. Eligible for the“France Investissement”label like M.I 4, the fund hasbeen subscribed for by CDCEntreprises for 11 millionand Dahlia Partners (backedby Natixis PE) for 5 million.Other institutional players,such as Predica and CréditMutuel, which were alreadyon board for the previousvehicle, have once again confirmed their confidence.Around 20% of the total is also made up of commit-ments by individual investors,

“including the previous busi-ness leaders who sold offtheir company or have beenbacked by UI Gestion andwant to continue in the busi-ness”, explains Aymeric Bal-mont, UI Gestion’s company

secretary. M.I 5’s investmentstrategy is the same as itspredecessors: developmentcapital deals and small han-dovers in SMEs withbetween 10 and 60 million in revenues and an averageEBIT of 1.5 million. Onminority or majority dealsalongside business owners, itaims to carry out around five

operations a year, with anaverage ticket of 5 millioneuros, invested in businessesthat generally have ambitionsfor external growth. Witharound 85% invested, M.I 4(86 million euros raised in2006), has already carriedout two trade exits on Trialisand Euroflash, generating anIRR of 40%.

Aymeric Balmont, UI Gestion

JUNE. NO.46

First closing of the “FCPR fund” M.I 5at 50 million euros

With its 100 million eurofund, Alven III, raised

at the cycle high at end 2007,only 10 million of whichwere invested in 2008, AlvenCapital is still well armed tocapitalise on opportunitiestriggered by the crisis. Theventure capital mutual funddoes not intend to departfrom the good performancesachieved on the previousfunds. Alven II, maturing in

2012, currently has an IRR of20% thanks in particular tomultiples of over 20 on Sel-oger and Webhelp, offset-ting the drop in valuationsfor 12 lines still in the port-folio (affected by the fairmarket value). True to itspreferred sectors, e-com-merce and mobility, themanagement company cre-ated in 2000 by GuillaumeAubin and Charles Le-tourneur sets aside 5% of itsfund for a seed section,which detects gems as soonas they are created. “At theheight of the crisis in 2001,we saw major web leadersemerge, such as Meetic orVentes Privées. Today, weare trying to spot the suc-cesses for after the crisis”,highlights Charles Le-tourneur. Even if this meanslooking outside of France, asfor eBoutic.ch, the Swissclone of Ventes Privées.

JUNE. NO.46

Alven Capital focusedon e-commerce and mobility

Charles Letourneur, Alven Capital

APRIL. NO.44

Natixis PrivateEquity: sharp drop in earnings for 2008Natixis Private Equity has

painted a subdued pic-ture of its business for 2008.Despite the clear improve-ment in the amount of capi-tal gains realised (disposalsof Maisons du Monde, Ae-rocan, Fondis Electronic,Melvita, Vista-print, etc.), upto 272 M€ from the 189 mil-lion euros recorded in 2007,consolidated net income hascontracted sharply, droppingfrom 253 M€ to 12 M€,with the combined impact ofprovisions and the reductionin the stock of unrealisedcapital gains. The decline inbusiness on certain equity in-terests, particularly markedduring the fourth quarter,led NPE to increase the levelof its provisions sevenfoldfrom 2007 to 2008, from 21to 142 million euros. The vic-tims include the lingeriecompany Barbara, which hasfiled for bankruptcy, and thepackaging bag manufacturerEmballys Alplast, in re-ceivership, two investmentsmade by Providente, thededicated turnaround sub-sidiary which NPE an-nounced it was shuttingdown. As far as unrealisedcapital gains are concerned,after climbing 182 millioneuros in 2007, they con-tracted by 70 million euros

in 2008, dropping from 345to 267 million euros, repre-senting 21% of the net bookvalue, they have droppedfrom 345 to 267 million eu-

ros, at 21% of the net valueof the capital invested. “Wehave adopted a very conser-vative valuation of our equityinterests, with an averageEBITDA multiple of 6.3”,explains Pierre Hervé, com-pany secretary. Who high-lights the limited impact ofthe crisis at the end of 2008on Natixis Private Equity’sportfolio in France, withonly 13% of it affected, inthe automotive, real estate,textiles and mass retail sec-tors. In any case, the investoronce again recorded a goodlevel of business in 2008: 778million euros invested in 190businesses, representing anincrease of 26% comparedwith 2008, higher than thelevel of capital managed.

Pierre Hervé, Natixis PE

5

NEWS FROM FRANCE B

By signing up for the UnitedNations Principles for Re-

sponsible Investment, AXAPrivate Equity is sending outa strong message to the indus-try. With this step, the investoris joining the ranks of the 33private equity firms (includingfive French companies) whichhad taken this step at the endof June 2009. “We are com-mitted to implementing the actions required in relation to our staff, our investors andthe companies in our portfo-lio, not only for ethical rea-sons, but also because we be-lieve that this will have apositive impact on the growthof the companies in which weare shareholders”, confirmsDominique Senequier, chair-

man of AXA Private Equity’smanagement board at the re-sponsible investment and pri-vate equity conference held onJuly 7, 2009 with Novethic.

This also represented an opportunity to present a studycarried out with 300 Frenchmanagement companies onthis issue, revealing a gap be-tween the industry's declaredinterest in environmental, social and governance (ESG)criteria and their weak imple-mentation in practice. Whiletwo thirds of those polled saidthat they take ESG criteriainto consideration, the toolsfor setting up extra-financialanalysis are still very undevel-oped. Without any structuredinformation or tools, 86% ofmanagers give priority to di-rect dialogue with the busi-nesses on these subjects. 47%of them only use this type ofmethod.

JULY-AUGUST. NO.47

AXA Private Equity committedto responsible investment

Dominique Senequier, Axa PE

MAY. NO.45

CIC Mezzanine: closing above target CIC Mezzanine has an-

nounced the closing of itssecond fund at 107 million eu-ros. The team led by FrançoisPetit has come in comfortablyhigher than the 100 millioneuro target it had set itselfwhen the fund was launchedat the start of last year. CICis performing its role as asponsor, contributing onethird of allocations, with thebalance subscribed for byfunds of funds, insurancecompany banks and even fam-ily offices, all exclusivelyFrench. CIC Mezzanine 2 hasalready been invested for 40million euros on around 10deals, with target stakes rang-ing from 3 to 15 million euros,on SMEs valued at between 20 and 100 million. The agri-

food company Martine Spé-cialités, the property and ca-sualty insurance expert Texaand the artificial hip and kneespecialist Amplitude representsome of the latest deals carriedout by the mezzanine fund.“Despite a deal flow that hasbeen halved on leveraged buy-out deals for handovers, weare continuing to be highly se-lective”, explains François Pe-tit. “We are also looking intocorporate deals, in connectionwith acquisitions, as well asthe strengthening of workingcapital, even if we are lessspontaneously aligned with is-suers on certain constraints,such as liquidity or due dili-gence, than on LBO deals”,concludes François Petit.

François Petit, CEO of CIC Mezzanine

KPMG has just certifiedAGF PE’s valuations and

performances as compliantwith the CFA Institute’sGlobal Investment Perform-ance Standards (GIPS) at De-cember 31, 2008. For the fifthyear running, the investor hashad its track record certified.This year, AGF PE has taken

a further step forwards ontransparency, getting itselfbenchmarked against all Eu-ropean private equity funds:for each year of investment,each portfolio managed byAGF PE is compared againstall of its peers. KPMG’s cer-tification focuses first of all onthe performance on all the in-

vestments made in Europesince 2001, with a net annualIRR of 19% at December 31,2008: 22.8% annual IRR forthe APEH III Europe, in-vested in midmarket buyoutfunds launched in 2002 and6.5% for the APEH IV Eu-rope launched in 2005. “AGFPrivate Equity’s fund of funds

strategy is outperformingmany conventional direct in-vestment funds”, confirms thedelighted subsidiary of theGerman insurer Allianz,which invests primarily in lo-cal midmarket funds in Eu-rope, with a high proportionof direct co-investments andsecondary deals.

JULY-AUGUST. NO.47

AGF Private Equity ensures transparency on its performances

Sofimac: a new venturecapital fund

Backed by CDC Entreprises, itslong-standing sponsor, Sofi-

mac Partners is launching Tech-nologies et Santé 1, a dedicatedventure capital “FCPR fund” foryoung biomedical technologyfirms. The vehicle, targeting40 M€ , will invest an averageticket of 1.5 M€ in five Frenchand Italian companies each year.Indeed, Sofimac’s presence innorthern Italy since 2007 has en-abled it to develop local marketexpertise and relations with Ital-ian institutional players. In thisway, an Italian investor close toLombardy’s Italian banks hassubscribed for the new venturecapital mutual fund. The finalclosing is expected for the endof the year. Technologies etSanté 1 has already made a firstinvestment in ImmunID, with a2.4 M€ pool also involvingVizille Capital Innovation andCEA Investissement. The Greno-ble-based company is specialisedin immune repertoire diagnosis,with this technology making itpossible to very rapidly measurea patient's level of infectious riskor the impact of medicine.

| Special Issue | August 2009 | PRIVATE EQUITY MAGAZINE

JUNE. NO.46

Monier: PAI hands the keys back to the lendersPAI is finally going to sell off

its 65% stake in Monier(formerly Lafarge Roofing) tothe group's lenders. The com-mittee representing the vari-ous creditors (including BNP,GE Capital, RBS and SociétéGénérale) rejected the invest-ment fund's proposal toplough 150 million euros backinto the business and keep40% of the capital. In thewake of this, the steering com-mittee had to present a plan to

all 140 lenders aimed at cut-ting Monier’s Debt (1.9 billioneuros) by around 50%, takingit down to nearly one billioneuros, and planning to awardit 150 million euros in newcredit lines in return for the al-location of the capital to theinstitutions holding the maindebt, prorated to their inter-est. In a statement released tothe French news agency, PAIannounced that its loss inMonier came to 250 million

euros, representing 2% of itscapital. The group, which hasnot yet officially breached itscovenants, is unable to honourthe interest payments on itsLBO debt due on June 30. Hitby the real estate and buildingcrisis, Monier is still one of theleaders on its market, with1.35 billion euros in revenuesand EBITDA expected toreach 110 million in 2009,compared with 190 million in2008.

NEWS FROM FRANCEA


As requested by its shareholders,Apax Partners and AltamirAmboise, Financière Hélios has beenput into insolvency by the Paris tradecourt. This holding company, whichowns 43.1% of the listed groupSéchilienne Sidec, is in this way seekingshelter from its creditor banks for a six-month period. Apax Partners set up thisclassic leveraged holding structure in2005 to take over the block held by AirLiquide in the specialist in building andoperating electrical plants and steamproduction units.

Société GénéraleCorporate & InvestmentBanking is announcingthe creation of an advisoryactivity on debt restructuringand financing, within itsmergers and acquisitionsteam. Headed up byGuillaume Dovillers, thisbusiness will draw on theexpertise of the mergers and acquisitions, leveragefinancing and customerrelationship teams with thebank's private equity funds.

Ophiliam, themanagement companycreated by XavierThoumieux and ThierryGisserot, has just beenaccredited to manage debtfunds (FCT securitisationvehicles). These securitisationvehicles make it possible to acquire French bank debttaken out in connection

with LBO deals in particular, inaccordance with the banking monopolyprovisions. The founders are looking toraise tens of millions of euros to invest in buying back large cap LBO debt with a buy-and-hold approach, as well as tocombine debt buyback and “new equity”on small and mid cap LBO restructurings.

91% of the French SME businessleaders polled for a GrantThornton study had no plans to selloff their companies within the next 3 years. However, almost half of themare looking to develop their businessesthrough external growth operations,compared with 36% last year, withFrance still one of the few countrieswhere the proportion is significantlyincreasing from one year to the next(with Poland, +29 points).

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Record collection levels forthe major buyout funds

and record investments forthe development capitalfunds. This is how we couldsum up the year for Afic’s(French Private Equity Asso-ciation) activity in this sector,carried out in partnership

with Grant Thornton thisyear. In this way, capital col-lection reached 12.7 billioneuros, a strong increase com-pared with 2007 (10 billioneuros), driven by several sig-nificant fundraisings, most ofwhich began in 2007 andwere closed during the first

half of 2008. Eight vehiclesover 200 M€ share a total of8 billion euros, comparedwith 4.5 last year. With closeto 1.2 billion euros collected,the investment vehicles linkedto the ISF systems (FIP andFCPI) raised as much capitalin 2008 as in 2007. However,this stability masks the 50%increase in funds raised onFIPs, at the expense ofFCPIs, on which the amountraised in 2008 (617 M€) con-tracted by more than 20%.To no great surprise, invest-ments dropped 20% over theyear in 2008, coming in at 10billion euros. A downturnthat would have been 34% if

it had not been offset by therecognition, for the first time,of investments in businesseson the CAC 40 (1.8 M€ in2008). Development capitalhas taken its revenge onLBOs, with the number ofbusinesses financed climbing27% and the amounts in-vested up 26%. Venture hasalso seen growth, with an in-crease in the number of busi-nesses accompanied and theamount of investments rising3% and 12% respectively.Lastly, LBOs are down interms of the number of busi-nesses (388, i.e. -16%) andthe amount (7.4 billion euros,i.e. -28%).

APRIL. NO.44

12.7 billion euros collected and 10 billioninvested in 2008

T he French Government iscurrently setting up an in-

vestment fund to support un-dercapitalised SMEs. Armedwith 300 million euros, withone third coming from thestrategic investment fund(Fonds Stratégique d’In-vestissement), it will aim toprovide capital for “SMEswith the potential to developbut entering a difficult pe-riod, with bank paymentsthat are too high, and whosecapital needs to be restruc-tured”, explains René Ricol,credit mediator. The ticketsinvested, always on a minor-ity basis, could range from500,000 to 15 million eurosas soon as the fund is opera-tional, probably betweennow and the end of June. In-deed, an agreement stillneeds to be reached on a sim-ilar public-private partner-ship to that set up with theFrance Investissement pro-gramme. While it seems to betaken for granted that thegovernment's strategic in-vestment fund (FSI) and theCaisse des Dépôts, headed byAugustin de Romanet, willcontribute at least 100 mil-lion euros to the fund, thebalance will need to be pro-vided by private investors,particularly insurance firms.However, the sourcing is notexpected to pose any prob-lems: there is no shortage of

files, whether from the creditmediator or the interministe-rial committee for industrialrestructuring.

MAY. NO.45

French Governmentcreates an investmentfund for SMEs

The listed group’s NAVdropped 29.3% in 2008

to 27.94 euros per share,compared with 40.61 eurosat the end of 2007. A changeseen “virtually exclusively inthe second quarter”, stressesthe investor, which recordedits first net loss since it floatedin 1991. Despite 9.2 M€ innet capital gains generated onthe disposals of Horosmart,Armor and Cnim, net income(group share) came to -60.5 M€, with 25 M€ inlosses on disposals in the al-ternative management funds,

a business that IDI withdrewfrom almost entirely during2008, with the balance due tothe decline in the “fair value”of unlisted interests. In termsof investments, 45.8 millioneuros have been invested inprivate equity, with 35.3 mil-lion euros in France, in equity(World Freight Company,Hi-Média) and mezzanine(World Freight Company,Armatis, Almaviva, Bali-trand), and 10.5 million eu-ros in emerging countries, di-rectly and through IdiEmerging Markets. At the

end of 2008, equity capital(group share) represented216.1 million euros, down bynearly 100 million euros overone year, bucking the trendfor net cash, up from -22.3million euros to +35 millioneuros. Following a first quar-ter during which IDIrecorded 41 million euros infund inflows thanks to ongo-ing moves to sell off its alter-native management fundportfolio, the group consid-ers that it is “well positionedto capitalise on new invest-ment opportunities”.

Augustin de Romanet, CDC

MAY. N°45

Sharp drop in NAV for IDI in 2008

LBUs save the year in 2008The number of deals increased by 2.2% in 2008 compared with

2007. However, it is down 9% if we exclude leveraged build-up deals. Just a few years ago, investment funds did not neces-sarily see the benefit of reporting acquisitions made by compa-nies from their portfolio in their business statistics. “We felt that theteams were looking to communicate on this subject”, acknowledgesStanislas Gaillard from Barclays Private Equity. Since the second halfof 2008, the LBO Net results, which is soon expected to seal its in-dependence from the British bank, reflects the emergence of LBUs.This trend, which can be seen since 2005, led to 76 deals last year.To some extent, it accounts for why funds are looking to furtherstrengthen the ability to generate cash as well as the profitabilityor capital on their equity interests. Other winners in 2008, smalldeals were also overrepresented, particularly during the second halfof the year. However, the number of deals over 500 M€ in revenueshalved over the last six months of the year.


PORTRAIT B

Behind the restraint of the former senior civil servant we might not expect to finda music lover who is so passionate about it that he has even devoted a museumto his favourite instrument. But when the piano collector becomes an investor inluxury craftsmanship, the two sides come together.

SUCCESS COLLECTOR

No showiness or false modestyHis quest for new challenges took him tothe Caisse des Dépôts et Consignations,where he tackled CDC Participations in1994 in order to bring about changes in thisorganisation, evolving from proprietarymanagement to third-party management.He then chose to sell listed shares (Accor,Crédit Lyonnais, etc.), and to create the firstmajor French private equity operator: firstin development capital, then from 1995 ven-ture capital and from 1997 buy-outs, withthe company in the end achieving profits ofover 90 million euros in 2000. Then on tothe next challenge! It was Crédit Lyonnaisthat came looking for him in order to drivethe dynamic development of CLAM PE.However, he did not stick around for long,since he felt that the captive model was

already outdated, preferring to go inde-pendent together with his team. This led tothe creation of Investors in Private Equity in2002 with his alter ego François Nicoly. Intotal discretion, Philippe Nguyen built asuccessful business founded on the modelthat had proven its value at CDC: as a long-term industrial investor. In six years, thecompany raised and invested more than

400 million euros, arranging deals for over600 million euros in equity, managing a port-folio with a total enterprise value in excess of3 billion euros. Ermewa (rail logistics), WorldFreight Company (airfreight)…IPE hasbeen creating leaders on complex markets.An original builder strategy that has paidoff, with the first exits generating IRRs ofover 25%. Enough to make PhilippeNguyen arrogant or boastful? This is not thecompany way. IPE’s founding chairman hasnever been attracted by the star-spangledside of success: a sense of modesty and apersonality more inclined to restraint.Which does not in any way mean that he isnot aware of his value, avoiding the pitfallsof false modesty: “I only do what others can-not do”. In an ego-dominated business, hisis not one of the least developed.

Investor in extremely luxuriouscraftsmanshipExcesses that are also reflected in his inter-ests: Philippe Nguyen is a piano collector!While he refuses to disclose the number ofpieces he has built up with his “lifetime project”, he makes it known that he has oneof the world’s largest collections (fromFlügel’s tangent to Liszt’s piano andNapoleon’s piano), from the early 18th cen-tury through to today. A slightly dominatingpassion that led him to buy an abbey inAisne (Abbaye de Val Chrétien) in order tocreate the European piano museum: PianoForte Museum. Which is due to open itsdoors to the public in five years, justenough time to restore the 12th centuryabbey and the pianos from the 18th and19th centuries, which calls for know-howand expertise that is virtually non-existenttoday (no more than five renowned restorersin Europe). It is surely this desire to safe-guard unique craftsmanship and a certainEuropean lifestyle that led him to createCELT (Compagnie Européenne de Luxe etde Tradition) at the end of 2007, an ISFholding that invests in European SMEs spe-cialised in extremely luxurious craftsman-ship. With Odiot, the oldest French gold andsilversmiths founded in 1690 and Cristal etBronze, a specialist in luxury taps, PhilippeNguyen has assembled the first two parts ofa structure that is expected to have 100 mil-lion euros in revenues within three years. Wecan have confidence in the man's passionand the investor’s intuition to once again pulloff a masterstroke! ■ Houda el Boudrari

o start off, he graduated from Cen-trale and ENA. A family history. Because the Nguyens like to blend

scientific rigour with a genuine sense of pub-lic interest. The grandfather set the exampleand others have followed. However, less pre-dictable was this young Centrale graduate’sprecocious interest in finance, to which hededicated his three engineering dissertations.It is amusing to remember the report on hisinternship with the Treasury Department onthe international appeal of Paris’ financialmarket, presented in May 1981, which wentstraight to the dustbin! His experience ofthe political and economic world went muchmore successfully after he left ENA andfound himself at the directorate general forindustry midway through the 1980s, work-ing within the modernisation industrial fund,

the strategic investment fund of its time, onthe redevelopment of stricken areas (notablythe NORMED boatyards). Then came a“great period” when, alongside Jean-ClaudeTrichet at the head of the Treasury, heworked on setting up bilateral financialagreements across all continents. During thistime, he certainly honed his fine sense of eco-nomic cycles and austerity.

DR

Philippe Nguyen, a career hitting all the right notes

T

LANDMARKS> 1958: born in Saint-Maur-des-Fossés (Val-de-Marne)

> 1986: graduatedfrom ENA (DenisDiderot year group)

> 1987: head of thefinance office in theFrench ministry ofindustry’s directorategeneral

> 1990: senior civilservant in the FrenchTreasury division

> 1992: firm directorin CDC’s banking business branch

> 1994: company secretary and chieffinancial officer at CDCParticipations

> 2000: chairman ofthe management boardof CLAM Private Equity(Crédit Lyonnais)

> 2002: creation ofInvestors in PrivateEquity

HE HAS ONE

OF THE

WORLD’S

LARGEST

PIANO’S

COLLECTIONS,

FROM FLÜGEL

TO LISZT.

INTERVIEWA


N°46 - JUNE 2009

The strategic investment fund, an “informed investor”

Thomas Devedjian is a director and member of the executive committee of the French strategic investment fund. Private EquityMagazine looks back over the organisation and means of action of this French sovereignfund, created in December 2008.

How is the FSI fund structured?The FSI fund has a streamlined governancestructure around a board of directorschaired by Augustin de Romanet and an in-vestment committee chaired by PatriciaBarbizet. Gilles Michel, the fund’s CEO,heads the executive committee which ismade up of five members. Approximately10 investment directors and 12 businessmanagers have been recruited from varioussectors, from merchant banking to invest-ment funds, industry and auditing, as wellas from our shareholders, the state and theCDC. 20 billion euros in assets have beencontributed to us, with the following break-down: 6 billion euros in cash from ourshareholders, 51% for the CDC and 49%for the State, and 14 billion euros in secu-rities and equity interests, contributed inequal portions by these two parties. TheState has already specified its contributions:a fraction of its interest in Aéroport de Paris

and France Telecom, as well as its entirestake in Chantiers de l’Atlantique. In termsof the CDC, its contributions will be ef-fective in July, but Augustin de Romanethas already made it clear that they will notbe the CDC’s majority interests.

What would be your initial assessment?The FSI fund has made six direct invest-ments*, representing around 300 millioneuros. In this way, some 500 million euroshave already been invested if we includethe 200 allocated to the FMEA**. By theend of 2009, 1.5 billion euros should havebeen invested, with an annual cruisingspeed rate of between 2 and 3 billion eu-ros. We currently have 24 active files, fromall sectors and all sizes of businesses (seechart), on which we are at a more or lessadvanced review phase. Three quarters ofthem come to us from the company man-agers themselves or intermediaries suchas merchant banks; the rest comes from theCDC’s regional network, the public au-thorities in the broadest sense (includingelected officials) or the FSI fund itself,which has a proactive role with businessesthrough its regular contacts with the teamsof René Ricol, credit mediator, and theFrench innovation agency (Oséo).

What is the FSI fund’s investment philosophy?Our goal is to support French businesseswith projects strengthening the competi-

tiveness of the country’s economy, in termsof knowledge, brands or technology. TheFSI aims to have a structuring action forthese businesses, providing them with cap-ital in order to enable them to take their de-velopment up to the next level at a timewhen financing is growing increasinglyscarce. We always operate on a minority ba-sis, but we ensure that our rights are respected by taking part in the company’sgovernance and determining the conditionsfor our exit as soon as investments are madewith the other shareholders. We are notlooking to compete against other investors,but want to act as a catalyst and attract theinterest of investors, who may, if they wish,co-invest with us. With this in mind, theFSI fund signed up to a partnership in Maywith Abu Dhabi’s sovereign fund, Muda-bala. As far as the investment horizon isconcerned, the FSI fund can be definedas a long-term investor, with an averagehorizon of five to seven years, which maybe extended if required by the project. Inany case, we will ensure that our exit is car-ried out in the best interests of the businessconcerned and our shareholders, with theflexibility that our evergreen status givesus, which means that we do not have to re-turn the funds at a given time. To sum up,the FSI will act as an “informed” investorin terms of the choice of its investments andthe target yield, which must be compara-ble to a private investor***.

What is the scope for the FSI fund?Our ticket will be able to vary from 10(minimum threshold above which we takeover from CDC Entreprises) to several hun-dred million. Which means that the FSI islooking at strongly growing SMEs as wellas very large listed companies. Our missionsinclude strengthening the capital of an in-ternational business likely to play a role inits sector's consolidation, as well as the cap-ital of a company whose shareholding struc-ture needs to be stabilised, in order to re-store the climate of trust needed for it todevelop. In terms of sectors, we only ex-clude financial services and real estate.

Why are you launching a biotech fund?The FSI fund has announced a series ofbiotech initiatives, aimed at promoting theemergence of young high potentialbiotechnology businesses and including

FONDS STRATÉGIQUE D’INVESTISSEMENT

Direct acquisition

of equity

Sectorial Initiatives (examples : FMEA, wood chain, etc.)

France Investissement & others PME funds

(management authority given to CDC Entreprises)

6 billion euros cash-assets14 billion euros in securities and equity interests

State49%

CDC51%

FSI : MEANS OF ACTION AND INVESTMENT©

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setting up a dedicated investment fundspecialised in this sector. This biotechfund, which has been set up following thegovernment's review and consultationwith healthcare businesses, will be sub-scribed for one third by the FSI and therest by French pharmaceutical laborato-ries. We have already received very seri-ous expressions of interest from some ofthem. The vehicle, which will be based onan FCPR venture capital fund, will have100 to 150 million euros and its fundrais-ing should be completed by the end ofJuly. Through this fund, up to 10 millioneuros may be invested for each project, ona co-investment basis with funds on themarket. Projects requiring a larger con-tribution will be looked at directly by theFSI. A dozen files have already been sub-mitted to us, and will be examined by ourdedicated investment team, currently be-ing recruited, and our scientific commit-tee. Also to further strengthen the helpgiven to this high growth potential sector,CDC Entreprises will be stepping up thepace of its investments in funds of fundsin biotechnologies, with a budget of 75million euros over two years.

Could the FSI fund invest in struggling LBOs?This is not being ruled out, but our in-volvement would be dependent on the vi-ability of the company's operations, and therestoration of a sustainable financial struc-ture. Some companies under LBOs havea level of debt that is unsustainable com-pared with their cash generation, but if theirbusiness is intrinsically viable, we are will-ing to take a look at them and accompanythem in order to emerge from this situation.Provided that the shareholders and exist-ing lenders have done their work, since theFSI is not intended to consolidate or rein-force a situation that is not stabilised.

Where do things stand with Heuliez?The team which is managing the case isworking on analysing the project and look-ing for co-investors. The investment re-quirements for the electric vehicle projectthat we could invest in have been put at be-tween 40 and 50 million euros, with a 10million commitment for the FSI, and 5 mil-lion for the Poitou-Charentes Region.

Why would you want to join the FSI fund

when you come from the world of investment funds?Paradoxically, the crisis affecting financeand the world of LBO funds has opened upan outstanding opportunity for us and wehave received applications from very highquality candidates. Compensation for mem-bers of the FSI is primarily fixed, althoughwith a performance component, but notas a carried interest. As far as I am con-cerned, after being in the public sector withthe French government shareholdingagency (APE), then a technical advisor atthe French ministry of economy, particu-larly on operations opening up the capitalof public companies, then in the private sec-tor, as investment manager at Eurazeo, I sawthe possibility to combine these two expe-riences within the FSI fund. ■ F-X Chapelle

* Daher, Valeo, Farinia, Led To Lite, 3S Photonicsand Gemalto

** The automotive equipment manufacturer mod-ernisation fund (FMEA) is subscribed for one thirdby the FSI and two thirds by Renault and PSA Peu-geot Citroën.

*** On June 4, Gilles Michel indicated to Reutersthat 10% was “a good target”

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From left to right, thefive members of theFSI executive comittee:Agnès Pannier-Runacher, JérômeGallot, Gilles Michel,Thomas Devedjian etHervé Guyot.

FRENCH MARKET


A

PRIVATE EQUITYMAGAZINE 2008 LEAGUE TABLES…Private Equity Magazine has ranked the most active fundsin France in 2008, according to the value of the companiesthey invested in.

70%collapse in global LBOactivity in value terms,drying up of bank cred-it on large caps, 2008

can truly be qualified as an Annus Horribilis on manylevels for investment capital. While France has ofcourse been hit by the fallout from the financial cri-sis, investment capital funds have held up very well,except for the large caps, as shown by this fourth edi-tion of the Private Equity Magazine’s league tables.While business has plunged in terms of value, thenumber of deals is only around 10% lower than 2007,notably on account of the good performance by ven-ture, expansion capital and small caps LBOs.

Venture capital does not yet seem to have beenaffected by the economic turmoil. Despite the dropin tech company valuations on the stock market, thissegment has benefited from the success of the varioustax optimisation tools for individuals, boosted by theFrench labour, employment and purchasing powerlaw (Loi TEPA). While Sofinnova Partners is conti-nuing to invest through its venture capital funds(FCPR), investments through high-tech mutualfunds (FCPI) still account for the majority of themost active venture funds, including Truffle Capital,Sgam AI PE (25 investments out of 26) and OTCAsset Management. The latter has also dethronedSofinnova in just two years in the rankings.

The small cap range has not only maintained itsappeal, but has performed admirably. The 20 mostactive investment funds have invested an average tic-ket of 3.75 million euros in 215 businesses with avalue of under 30 million for a total volume of 805million euros. This compares with the 541 millioninvested in 2007. In this area, Naxicap Partnersclearly stands out. However, Demeter Partners,which wrapped up its second themed venture capi-tal fund at 125 million euros in September, has sha-ken up the hierarchy this year. The funds polled havealso expressed their satisfaction at seeing develop-ment capital deals and small LBOs included in therankings. Indeed, many deals combine an equityinterest with a slight leverage effect.

Mid caps subdued Quite a mixed bunch of protagonists can once again

be seen on the midmarket’s lower range, which par-adoxically explains why activity levels have beenkept relatively high compared with the larger seg-ments. In this way, some managers have chosen tolook at lower enterprise values in order to carry outLBOs with a reasonable leverage effect. This isnotably the case for Barclays Private Equity andEdmond de Rothshild Capital Partners, which is hoton the heels of LBO France at the top of the rank-ings with an enterprise value of 30-75 million euros.Other players such as Banexi Capital Partenaires,which had maintained a high rate of investment in2006 and 2007, have capitalised on the economicenvironment to manage their equity interests androll out a few external growth operations.

For deals valued over 200 million euros, 2008saw three clearly distinct periods, in view of the avai-lability of debt. An active first half of the year, fol-lowing on from 2007, with Carlyle acquiring a 35%stake in Numéricable, But’s acquisition by GoldmanSachs CP, Colony Capital and Merchant EquityPartners from the industrial firm Kesa Electricals, orthe acquisition of Maisons du Monde by LBO Fran-ce and Apax from Barclays Private Equity and IxenPartners. A still dynamic third quarter and start tothe fourth quarter, notably with several outstandingdeals that began before the summer and were closed,such as Converteam, bought out by LBO France,Labco by 3i, CEPL by Arcapita and Cegelec byQatari Diar, and an end to the fourth quarter thatwas sluggish to say the least, with the supply of bankcredit drying up completely, although with the signi-ficant exception of Socotec’s takeover by CDC Capi-tal Investissement, completed in December.

LBO France the most activeIf we now look at business, all tranches combined,for the various structures that took part in the rank-ings (or for which we have been able to measure thelevel of equity invested in 2008), LBO France standsout as one of the most dynamic structures on themarket, with 1.3 billion euros of equity investmentsdeclared. It is followed by the direct, captive andsemi-captive funds of French banking groups.Natixis as a whole, including Seventure, NaxicapPartners, Initiative & Finance, Actem Partners, EPF

Partners, NI Partners and Ixen, has maintained itslevel of activity from one year to the next, with morethan 317 million euros of investments. The CDCvehicles, CDC Innovation, CDC Entreprises andCDC Capital Investissement, although encompass-ing totally different investment issues, are justbehind, with 312 million euros. CIC Finance, CICBanque de Vizille, CM-CIC Capital Privé, CIC LBOPartners and IPO represent a combined total of267.35 million euros. Lastly, Crédit Agricole PrivateEquity comes in with 141 million euros, includingthe business of Vauban Partenaires and ParticipexGestion, virtually identical to the volume of itsinvestments in 2007.

DEBT: LBO DEBT STRICKEN Disappearance of financing requiring more thanone billion euros of debt.As expected, the overall amount of senior and mezza-nine debt has been divided by 10 compared with 2007,dropping from nearly 56 to 5.7 billion euros. Only Con-verteam put together debt in excess of one billion. Caly-on, Natixis and SG are the new top three lenders, pres-ent on co-syndication on 2008’s biggest deals(Converteam, Maisons du Monde, Labco and Etanco).On a European LBO financing market that has shrunkfrom 300 to 15 players, the trend for a return to clubdeals, with banks working with one another and shar-ing deals, looks set to continue.

MEZZANINE: LESS BUOYANT MARKET THAN IN 2007 : The overall capacity on the mez-zanine market has been halved.The mezzanine market, which was very buoyant in2007, saw a very marked downturn in 2008, contract-ing by nearly 45% in terms of the amounts invested byits top 15 players. ICG still dominates, but with 120million euros (estimate), its level of mezzanine lendingis considerably lower than the 400 million euros seen in2007. Nevertheless, the pan-European fund has con-tinued to lead the way, with two deals reported: Lab-co and CEPL (10 in 2007). ICG is just ahead of AXAMezzanine, European Capital and Euromezzanine,which have also seen a sharp drop in their investmentsdespite a higher number of deals. ■

11Special Issue | August 2009 | PRIVATE EQUITY MAGAZINE

venture 0-30 M¤ enterprise value 30-75 M¤ enterprise value

* In million euros * In million euros * In million euros

AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP

1 OTC Asset Management 55,7 41 36,52 Sofinnova Partners 53,9 20 63,53 CDC Entreprises 40 7 5,04 Seventure 37,2 24 30,25 Truffle Capital 33,5 14 13,36 Innovacom 27,8 6 15,27 Sgam AI PE 26,5 26 24,18 AGF Private Equity 25,1 11 38,69 A Plus Finance 22,3 9 9,510 Auriga Partners 22,2 19 15,011 Crédit Agricole PE 21,2 16 26,312 CDC Innovation 18,2 17 23,813 CM-CIC Capital Privé 17,5 14 17,914 Ventech 15,5 10 17,215 I Source Gestion 15 8 4,5TOTAL 431,6 242 389,8

1 Naxicap Partners 72,3 39 53,02 Demeter Partners 56,3 10 19,63 CIC Banque de Vizille 44,9 10 45,24 Turenne Capital Partenaires 42,8 12 12,35 UFG PE 36,7 16 10,46 LFPI-FPG 33,1 5 21,07 Crédit Agricole PE 31,7 9 11,88 BNP Paribas Développement 30,7 30 17,09 CDC Entreprises 27 6 12,610 IPO 23,6 14 27,311 CM-CIC Capital Privé 23,6 15 15,912 Initiative & Finance 23,4 8 20,113 Perfectis PE 20,1 4 22,114 EPF Partners 18,5 4 31,715 Midi Capital 18,3 18 5,5TOTAL 503 185 455,1

1 LBO France 83 3 302 EdR CP 50 3 -3 IPO 42,3 8 254 Cognetas 40 1 -5 OFI PE Capital 39 4 106 21 Centrale Partners 36 3 197 CIC Finance 31,7 6 398 Acto Capital 30,5 2 -9 Activa Capital 30 2 810 Barclays PE 30 2 1811 CDC Entreprises 30 1 -12 Crédit Agricole PE 19 3 5813 Naxicap Partners 18,9 10 5914 MBO Partenaires 18,3 415 Abénex 18 1 20TOTAL 516,7 49 659

200-500 M¤ enterprise value > 500 M¤ enterprise value

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AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP

75-200 M¤ enterprise value

1 LBO France** 140 22 AtriA Capital Partenaires 66 4 303 AXA PE 61 2 284 Alpha Private Equity Fund** 50 15 3i** 47 16 21 Centrale Partners 45 2 727 Naxicap Partners 39 6 358 Barclays PE 38 2 589 Butler Capital** 38 110 IFP Investissements** 35 111 Crédit Agricole PE 34 3 4612 Somfy Participations** 34 113 Weinberg Capital Partners** 25 1 3214 LFPi-FPG 21 1 10215 Chequers Capital** 20 1TOTAL 693 29 809

* In million euros **Not confirmed - source PEM

AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP

1 Advent International** 193 3 902 CDC Capital Investissement ** 177 1 1563 Astorg Partners 120 2 1344 IK Investment Partners** 106 1 355 Gores Technology** 104 1 156 Financière Agache PE 100 17 Abenex / ABN Amro Capital ** 96 18 Duke Street Capital ** 81 19 LBO France ** 65 1 20010 Apax Partners 59 1 17711 iXEN Partners 50 2 5712 NI Partners 30 2 3013 CIC Finance 10 1 514 Céréa Gestion 8 115 CM CIC Capital Privé 1 1 5TOTAL 1200 20 1427

* In million euros **Not confirmed - source PEM * In million euros **Not confirmed - source PEM

1 Carlyle 1 100 1 4502 Eurazeo 561 1 4393 Qatari Diar** 544 1 -4 Colony Capital ** 500 3 -5 PAI Partners 411 1 11006 LBO France ** 328 1 3007 Barclays PE 316 2 728 3i ** 140 1 09 Apax Partners 115 1 2110 Arcapita** 99 1 -11 Goldman Sachs CP** 79 1 -12 TCR Capital** 40 1 -13 CIC Finance 26 3 1014 NI Partners 20 1 015 Crédit Agricole PE 10 1 0TOTAL 4289 20 5081

LBO DEBT (>100M¤ enterprise value)methodology MEZZANINE (in M¤)

AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERBANK AMOUNT

2008*AMOUNT

2007*DEALS

NUMBERGP

1 CALYON 1 100 6 98112 Natixis 897 8 33423 SG 735 7 28754 RBS 651 5 104215 CIC 450 4 7666 ING 321 3 47 BNP Paribas** 233 4 90568 HSBC 230 1 16809 Palatine 211 1 -10 Goldman Sachs** 179 1 189011 Crédit Suisse** 179 1 113712 Crédit Mutuel*** 170 8 -13 UniCrédit*** 167 9 -14 CADIF 124 5 -15 IKB Deutsche Industrie Bank*** 93 10 -TOTAL 5561 73 55990

* In million euros **Not confirmed - source PEM

1 ICG** 120 2 4002 Axa Mezzanine 111 5 1923 European Capital 107 6 3454 Euromezzanine 102 7 2165 Capzanine 64 8 766 LFPI Mezzanine 64 11 207 Paris Orléans 57 6 768 IFE Conseil 44 6 949 Mezzanis 41 6 2210 Tikehau Investment Mgt 40 811 OFI 37 412 Acto Mezzanine 36 4 6013 Cerea Mezzanine 35 6 1314 CIC Mezzanine 24 5 4315 Indigo Capital 20 2 74TOTAL 902 86 1631

* In million euros **Not confirmed - source PEM*** Source : Thomson-Reuters

-Once again this year, the rankings only factor in equityinvestments carried out in 2008 (closing date) on French targets,even if we have had to show some leeway with the applicationof this concept on certain deals.

-Another indulgence: taking listed investments intoconsideration in a ranking that is supposed to present privateequity deals. Indeed, it is difficult to ignore this trend thatemerged in 2007 as bank credit became increasingly scarce andthat is expected to become more marked on account of thecarnage seen on stock market values. The ranking thereforeincludes the equity interests acquired by Eurazeo in Accor, PAIPartners in Atos Origin and Apax Partners in Altran.

-The venture fund rankings reflect the investments and follow-ons carried out for start-ups created in France (which havegenerally existed for less than five years). For tranches with anenterprise value of between 0 and 500 million euros, some ofthe investments taken into consideration are build-ups with anew equity contribution. In addition, some incorporate theinvestments made at the time of capital restructurings into their figures.

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13Special Issue | August 2009 | PRIVATE EQUITY MAGAZINE

FRENCH MARKETA

a detailed look at the findings, one initial assessmentstands out: while the “qualitative” indication usedin previous years has been removed, the quality andclarity of the answers given by the firms to the ques-tionnaires still varies considerably. The downsidewith the ranking in terms of the number of deals foreach enterprise valuation range is that it includespure M&A deals, international deals on which theFrench team's role does not appear to be well defi-ned, or even small-cap LBOs added to the mid orlarge-cap list.

A tendency to swell the figures that is even moretempting this year since certain firms have workedon cross-border deals thanks to their Europeanteams. However, the numerical approach is still par-ticularly relevant for the “lending advisory”, “mana-ger advisory” and “structuring advisory” categories,since it makes it possible to highlight the firms thathave been most active, whatever the amounts.

Venture and developmentIn the end, while the 2008 rankings reveal a few sur-prises at the top of the table, on the whole we canfind the leading players from previous years again.Development and venture capital funds, less affec-ted by the crisis, are still more than ever the mainsources of deals for specialised firms: Jones Day,Gide Loyrette and, this year, UGGC. Still very acti-ve compared with mid and large caps, small deals

have as usual involved the two firms that are some-way ahead of the others: HPML and LamartineConseil. Mid caps have seen a realignment of firmsmore used to mega buy-outs, such as Latham &Watkins and Mayer Brown, while the teams thathave distinguished themselves over the past fewyears have limited the damage sustained (De Par-dieu, Clifford Chance, Ayache Salama).

Large caps bleakThe sharp downturn on large-cap LBOs hasmechanically triggered a significant drop in businessfor the flagship corporate teams that distinguishedthemselves during the period from 2005 to 2007. Itis therefore difficult to decide between the adviserswhen each one of them is claiming a decisive role inthe few deals on the market. Mayer Brown has cer-tainly been the most visible. ■

VENTURE / EXPANSION

*Not confirmed - source PEM

1 Jones Day 24 133 272 UGGC 21 85 103 Gide Loyrette Nouel 20 82 204 Pinot De Villechenon 20 51 105 Chammas & Marcheteau 18 98 156 Joffe & Associés 14 26 117 Alerion 13 95 128 Orsay 12 103 189 Valluet-Achache 11 13 1310 SJ Berwin 10 287 1611 Reinhart Marville Torre 10 38 212 Lefèvre Pelletier & Associés 10 29 513 Fidal Société d’Avocats* 9 25 -14 Lamartine Conseil* 8 16 315 Brunswick Société d'Avocats 7 50 3

AMOUNT

M€DEALS NBR.

2007RANK LAW FIRM DEALS

NBR.


1 HPML 32 404 402 Lamartine Conseil 25 236 363 CMS Bureau Francis Lefebvre 12 317 44 Lefèvre Pelletier & Associés 12 112 125 Mayer Brown 11 212 86 De Pardieu Brocas Maffei 11 195 97 SJ Berwin 9 237 98 Denton Wilde Sapte 9 156 -9 Fidal Société D'Avocats 8 80 510 UGGC 8 79 611 Redlink 8 23 -12 Baker & McKenzie 7 141 513 Orsay 6 126 414 Salans 6 126 415 Gatienne Brault & Associés 6 35 7

AMOUNT

M€DEALS NBR.


NBR.


*Not confirmed

1 Mayer Brown 14 2087 122 SJ Berwin 12 1932 233 Latham & Watkins* 7 1210 94 Sarrau Thomas Couderc 6 875 45 De Pardieu Brocas Maffei 6 770 86 Clifford Chance 5 868 57 Ayache Salama & Associés 5 793 68 Hoche* 5 705 49 Lefèvre Pelletier & Associés 5 575 410 Baker & McKenzie 4 638 311 Field Fisher Waterhouse 4 450 -12 Paul Hastings 4 288 513 August & Debouzy* 3 863 114 Freshfields Bruckhaus Deringer 3 775 215 CMS Bureau Francis Lefebvre 3 534 6

AMOUNT

M€DEALS NBR.


NBR.

> 500 M¤ enterprise value

*Not confirmed

1 Mayer Brown 4 6700 82 Weil Gotshal & Manges* 4 2188 63 Clifford Chance 2 3750 44 Freshfields Bruckhaus Deringer 2 3368 85 Linklaters 2 3000 66 Ashurst 2 2900 87 SJ Berwin 2 2728 48 Willkie Farr & Gallagher 2 1576 59 CMS Bureau Francis Lefebvre* 2 1090 -10 Latham & Watkins* 2 400 911 Franklin 1 2460 112 Jeantet Associés 1 2460 413 Baker & McKenzie 1 1700 114 Darrois Villey 1 1700 415 Gide Loyrette Nouel 1 1026 2

AMOUNT

M€DEALS NBR.


NBR.

2008 LEAGUE TABLES OFLEGAL ADVISORS

On LBOs alone (all valuation tranches com-bined), the top 20 firms provided advicefor 303 deals on French targets, comparedwith just under 500 in 2007. This repre-

sents one of the lessons drawn from this third ran-king for private equity law firms, analysing 150responses out of the 240 firms polled. Before taking

Our 2008 league tables once again highlight the numberof private equity deals advised by legal advisors in Franceas the first benchmark of ranking.

methodology These tables rank Legal advisors for private equity transactionsin France in 2008 (closing date) including Venture/expansion andLBO on companies (whose main business activities were inFrance) in the range of value displayed as follows : under 50million euros, from 50 to 500 million d’euros and above 500million euros. Some significant sales and build-ups wereincluded in the figures.


This third edition of the most active financial advisors ranking in France in 2008 for private equity transactionspoints out the dramatic drop of activity.

The PE Mag third annual ranking shows signi-ficant impacts of the massive decrease of dealnumbers experienced in 2008. LBO Marketdropped 60% from 2007 in France, accor-

ding to Dealogic and fell by 82% from Q3 to Q4. Apatent collapse reflected in our league tables cate-

gorized by number of deals as the first benchmark ofranking.

Rothschild dominates the marketHaving said that, the year of 2008 remains favorableto Rothschild & Cie which stands at the top of the

three segments of LBO deals. The team led by Lau-rent Baril and Richard Thil has proved for the past8 years to be a noted experienced financial advisormandated by investment funds. Only venture andexpansion funds are not trusted by them. On thissegment, Aelios Finance, Chausson Finance andBryan Garnier are the undisputed leaders of a lessintermediated market. Newcomers on the mid mar-ket ranking (from 50 to 500 M€) such as NatixisFinance should also be mentioned, as the Big Fourare stepping out of it.

The long march of the large capAdvising one of the 13 large cap operations on com-panies valued over 500 million euros was enough toenter our ranking. It was thus decided for the firsttime to consider acquisitions of listed companies sta-kes over 15%, which benefited to three major advi-sors : Lehman Brothers team (now Nomura) whoadvised Wendel on a 5 billion deal to acquire a21,5% stake of Saint Gobain, Morgan Stanley on the500 M€ operation by PAI to buy 17,9% of AtosOrigin, and finally Wagram Finance’s mandate toadvise Axa Private Equity on the 15% stake acqui-sition of Carbone Lorraine valued at about 105 M€.

Lack of economic visibility within forthcomingmonths, persistant valuation gap from buyers to sel-lers side and shortage of LBO financing are numerousgrounds for M&A activity level to stay low in 2009. ■

VENTURE / EXPANSION

*Not confirmed

1 2 Aelios Finance 13 792 7 Chausson Finance 9 253 1 Bryan Garnier 8 814 3 Clipperton Finance 6 52 185 20 Financière de Cambon 4 3 386 10 Lorentz Deschamps & Assos.* 3 147 13 Linkers 3 7 98 6 Close Brothers 2 329 9 Sagax* 2 1710 19 ML Capital* 2 411 4 Lazard Frères* 1 3512 5 LCF Edmond de Rothschild* 1 3513 8 RBC* 1 2114 11 Long Term Partners* 1 1115 12 Eurocapital* 1 8

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-The table venture/expansion includes advisors (banks or firms)appointed in 2008 (closing date) to raise venture anddevelopment capital for French businesses. Exits have beentaken into consideration except for the case of LBO exits.

-LBO advisors for an enterprise value from 0-50 and 50-500million euros: These tables rank the advisors (banks or firms) appointed in2008 (closing), for acquisitions or sales, to advise and negotiateacquisitions or exits on LBOs. The target companies must beFrench, except for build-ups. For LBOs in which the funds have aminority position, we have recorded the block corresponding tothe fund's equity interests.

-In the tranche for > 500 million euros, the amount awarded forLBOs on multinationals is proportional either to the percentageof capital considered to be French before the deal, or to thepercentage of business estimated to be in France (as a % ofrevenues). Lastly, we have taken into account PIPEs by recordingblocks over 15% for listed businesses acquired by funds.

RANK /M€DEALS

AMOUNT

M€EXIT

VALUE

M€

RANK /DEALS

NBR.

BANKS /M&AADVISOR

DEALS

NBR.


1 2 Rothschild & Cie 12 3112 4 Aforge Finance 9 2103 10 Bryan Garnier 9 1194 1 UBS WM 8 3505 6 Sodica 8 1466 7 Wagram Corporate Finance 8 1447 15 Societex 8 638 5 Grant Thornton CF 7 1879 3 Aelios Finance 6 23010 26 MK Finance 6 1611 8 Close Brothers 5 14212 11 PricewaterhouseCoopers CF 5 10713 9 KPMG Corporate Finance 4 12314 13 CIC Finance 4 8515 14 Ernst & Young CF 4 80

RANK /M€DEALS

AMOUNT

M€RANK /DEALS

NBR.

BANKS /M&AADVISOR

DEALS

NBR.


1 1 Rothschild & Cie 17 32462 2 Close Brothers 6 10833 6 Aforge Finance 6 6874 3 BNP Paribas 5 9555 8 SG CIB 5 5766 4 Natixis Finance 4 9387 5 Lazard Freres* 4 7088 9 Hawkpoint 3 5539 11 HSBC 3 47110 13 Wagram CF 3 45211 7 Calyon CIB* 2 61012 12 ABN AMRO/ RBS* 2 46713 15 UBS IB 2 42314 18 Societex 2 29115 20 Sodica 2 159

RANK /M€DEALS

AMOUNT

M€RANK /DEALS

NBR.

BANKS /M&AADVISOR

DEALS

NBR.

> 500 M¤ enterprise value

*Not confirmed

1 2 Rothschild & Cie 7 78392 1 Nomura- Lehman Brothers 4 86363 8 UBS IB 4 28884 3 BNP Paribas 3 43335 4 Goldman Sachs 3 38576 5 Morgan Stanley 3 35277 7 HSBC 3 31478 6 Hawkpoint 2 35009 16 Wagram CF 2 43310 9 RBC* 1 245711 10 Goetzpartners CF* 1 187612 11 Merrill Lynch* 1 170013 12 Calyon CIB* 1 102614 13 ABN AMRO/RBS* 1 85015 14 Lazard Frères* 1 550

RANK /M€DEALS

AMOUNT

M€RANK /DEALS

NBR.

BANKS /M&AADVISOR

DEALS

NBR.

2008 LEAGUE TABLES OFM&A ADVISERS

FRENCH MARKETA

*Not confirmed

METHODOLOGY

AYAC H E , SA L A M A

A S S O C I É S&

Ayache, Salama & Associés is a French independent law firm and a key player in the

Private Equity market. Being involved in small-cap, mid-cap and large-cap deals, our expertise

really comes into its own when dealing with mid-cap transactions. Our expertise covers:

• Structuring and implementation of transactions, representing sponsors and sellers,

• Senior debt,

• Mezzanine,

• Management package.

The 35 lawyers of the firm are organised in several practice groups:

/ Mergers & Acquisitions – Private Equity / Banking and Finance / Litigation /

/ Employee share incentive and saving schemes / Competition and distribution /

/ Contracts and Business Law / Taxation /

For more information on our values that set us apart

www.ayache-salama.com

47 Avenue Hoche - 75008 PARIS - France - Telephone: + 33 1 58 05 38 05 - Fax: + 33 1 58 05 38 00

Annonces_GB:Mise en page 1 01/09/09 11:39 Page1

TRENDA


N°41 - DEC./JANUARY 2009

Careers: profiles transformedThe current crisis might change the private equity model, with a knock-on effect onthe profile of teams within the sector: experts in financial engineering will now needto take on an operational role. Will this strategic shift be made with the same people?

own 20% at American Capital,15% at 3i, 10% at Carlyle, 7%at Blackstone… most of themain LBO funds ended the

year announcing layoffs. The drying up ofcredit sources triggered a drop in businessby more than 70% in 2008, with no largedeals seen at all since the summer 2008.Faced with this sluggishness, which maywell continue, the funds have had to“adapt their resources to the market condi-tions and optimise their costs”, based on atime-honoured approach. And yet, theywere said to be safe from the carnageamong finance professions, these teams of ahappy few people who had to buckle downand hold out until the end of the crisis befo-re resuming their activities with renewedsuccess. “There is no miracle”, sighs DianeSegalen, vice-chairman of the Americanrecruitment firm CT Partners. “The largefunds had recruited a lot over the last fewyears to support the rate of their invest-ments. The freeze on deals since the second

half of the year has inevitably led to astreamlining of the workforce”.

Getting their hands dirty“These slimming treatments are howeveronly affecting large-cap funds, which hadrecruited masses of analysts to set updeals”, adds Thibaut Roussey, from thespecialised recruitment firm Alvedis.“Small and mid-cap funds are being lessaffected by the slowdown in activity andhave smaller teams”. And while they maywell be doing fewer deals, they are notshort of work by any means. “During thecrisis, we are strengthening due diligenceon our investments, providing managerswith the active support they may need toremain at the helm during stormy wea-ther”, sums up Dominique Oger, chairmanof Atria, who, alongside the team of pro-fessionals, is driving his entrepreneursclub forward at full speed, involving themin the strategies of portfolio companies.“Thanks to this specific approach, we have

not had to recruit any operating partners orsenior advisers”, confirms DominiqueOger, alluding to the recent passion for the-se rare pearls among his peers. Indeed, while certain large funds have alwayssought to surround themselves with leadingindustrial players (LBO France, notablywith Noël Goutard, previously from Valeo,and Bernard Kastriel, previously fromLafarge), others have focused on profileswho knew how to put deals in place, butnot actually manage the risks involved inthe investments. Now that they are unableto sell off companies acquired at the top ofthe cycle, which have been hit hard by theeconomic slowdown, the funds are effecti-vely being obliged to get their hands dirty.“For this, the team of investors must havean operational player with knowledge ofthe company that is not purely concep-tual”, points out Didier Vuchot, chairmanof the recruitment consultancy Korn Ferry.

Hunting entrepreneursWhere can these rare pearls be found?“Funds often prefer to turn directly to themanagers of companies under LBOs, who-se entrepreneurial qualities have alreadybeen proven”, highlights Diane Segalen.This is the approach opted for by CVCPartners, which has taken on the expertiseof Patrick Verschelde (formerly Adisseo)”.Over the past few months, the hunt for the“old sleuths” of entrepreneurship has inten-sified. In October, Apax appointed the for-mer chairman and founder of Atos Origin,Bernard Bourigeaud, as a senior adviser.Even rarer in a world marked by an excessof qualifications, Perfectis has taken on theservices of a self-taught entrepreneur: Jean-Pierre Champeau, who took over the reinsof the family business of the same name in1975. He then led three buy-outs on thiswooden structure manufacturer, between2002 and 2006. Same approach, differentstyles: after taking on Jean-Paul Vettier (for-mer member of Total’s executive commit-tee) as a senior adviser, Sagard simplybrought in a restructuring professional. InFebruary this year, Régis Rivière joined thefund’s mid-cap team as an operational direc-tor. Previously Yoplait’s chief financial offi-cer, he has led many missions to turn busi-

D

On a forced march, hesitating between regulationand code of good conduct, the publicauthorities are setting out a new order for

executive compensation. The measures announced hadpreviously been limited to compensation for managersof listed companies. However, this regulatory“tsunami” was bound to overtake this sector. In theFrench Senate, with quite a new approach, through anamendment to the 2009 finance bill, Senator JeanArthuis revived the already established practice ofFrench-style carried interests.The amendment had been on the cards for some time,but the current climate certainly paved the way for itsrapid adoption. Proof being that it was approvedalmost in full by the government, which saw it as a

way of regulating practices within the industry. It has to be saidthat until then, the tax system for carried interests was still notperfect since it was based simply on an administrative directivepublished on March 28, 2002. This was a delicate operationsince it aimed to protect the system by legalising it. But thisalso came at the price of a realignment, probably in order toavoid a certain level of drift and to link entitlement to thesystem to an entrepreneurial risk on a “sufficient level”, withan increasingly clear tax approach: salary = function =performance / capital gain = investment = entrepreneurial risk.When the regulations come into force, they should apply tofund creations and share issues in carried interests as ofJanuary 1, 2009. As such, past and outstanding allocationsshould not be affected, unless this amendment involves a strengthening of the tax authorities’ position on the

application of their directive. Looking ahead, it seems highly likely that newcomers to carriedinterests will be most exposed, with newsubscription conditions no doubt seeming morecomplex than before. Watch this space…both for the past and the future.

From left to right: Laurent Partouche, DenisAndrès, François Lugand - Legal advisorsassociates Arsene Taxand

DR

EXPE

RT IN

SIG

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nesses around (including Photo Services)within the consultancy Alvarez & Marsal. Away of preparing for the worst…Evenyoung structures have to strengthen theirranks with valiant people from the field.Fondations Capital, the LBO fund createdin 2007 by three former members of Eura-zeo, has brought on board the valuableexpertise of the former chairman of Elis(which has seen three LBOs), Philippe Ber-nard, as operating partner.

Defectors from the financial sector The current economic climate has also ledto new vocations among bankers andM&A professionals: CVC Partners hasrecruited Charles-Henri Philippi (formerlyHSBC) as a senior adviser, and the mid-capLBO fund Duke Street is taking on the ser-vices of a new operating partner, Jean Gar-bois, who used to head up Fortis’ privatebanking business in France. After 25 yearsdevoted to the development of Close Bro-thers, Olivier Dousset has just left the mer-chant bank to join LBO France as a partnerand management board member. And thatis not all...Gaël de Roquefeuil, the partnerin charge of research for investor teams atKorn Ferry, predicts that “following thehedge fund crisis, opportunities are goingto be created for private equity to increaseits range of products within alternative

management (hedge funds / private equity/ real estate), which will make it possible torecruit different backgrounds. Difficultiesraising funds are also expected to create a need for capital market specialists”. “Weare looking at the recruitment opportu-nities with interest, but people with a good reputation are by definition not verymobile”, adds Philippe Robert, a partnerwith Permira, which has just offered itsinvestors a way out from its Permira IVfund, with 11.1 billion euros raised in 2006and half invested. However, this offer isbeing made if investors agree to waive25% of the fund’s profits,with management feeskept at their initial rate,ruling out the possi-bility of any job cutsin the 90-strongteam (24 invest-ments in the port-folio). “On thecontrary, we planto further streng-then our presencein France and wehave just structu-red two dedicatedteams for thehealthcare andfinancial services

sectors in order to be ready to capitalize onthe opportunities resulting from the crisis”,explains Philippe Robert. Indeed, thespectacular drop in valuations in the finan-cial sector is certainly attracting the funds.In this way, Cognetas has just recruited asenior adviser, David Pusinelli (formerlyClose Brothers), to track opportunities inthis sector. Which has not prevented itfrom offloading six people, representing12% of its workforce at its four Europeanoffices (two less in London, two less inFrankfurt and one less in Paris and Milan).“Reluctantly, to adapt to the slowdown inactivity”, according to Edward Koopman,who has taken over from Jean Ducroux atthe helm of the fund together with PatrickEisenchteter. ■ Houda el Boudrari

“During the crisis, we are

strengthening due diligence

on our investments,

providing managers with

the active support

they may need”,

Dominique Oger (Atria)

DR

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PRIVATE EQUITY MAGAZINE | August 2009 | Special Issue |18

SHARING OF VALUE While the downturnin the economic environment is mechanically fuelling the bitterness of employees under LBOs who are being excludedfrom sharing in the capital gains seen during the prosperousperiod, the few jackpot cases which have been widely coveredin the media on summer 2008 have also tarnished the sector's image. Enough to trigger a response by the industry,which, by calling for self-regulation, is also looking to anticipate any more coercive measures. (N°43. MARCH 2009)

f we have got to this(1), it is because we havebeen too focused on profits”. The mea culpaof Henry Kravis, chairman of KKR, at theDavos Forum, acknowledging the responsi-bility of LBOs in the current crisis, sounds

like a scathing denial for the industry. It is not sure thatthis hint at sincerity has been appreciated by his peers,who have been working over the last few months tochange the sector's reputation for greed to a sociallyresponsible image. As soon as he took over at the headof the French private equity association (Afic) in June2008, Pierre de Fouquet made this his hobbyhorse, put-ting in place a charter advocating among other thingssocial dialogue and the sharing of value. The presidentof the Afic is also pleading for “part of the capital gainsto be able to be transferred to staff, taxed up until nowunder the capital gains system rather than as wages.Aware that “in a difficult economic climate, tensionssurrounding the sharing of capital gains might intensi-fy”, Pierre de Fouquet never gets tired of demonstratingthe caricature-like view of LBOs as destroying jobs.Moreover, the Afic tackled this issue back in 2007, com-missioning a study into the social impact of LBOs with

WHO ACTUALLY

BENEFITS FRO

I“


feast. This summer, the 37 million euros pocketed by Editis’ management started toheat things up when the jackpot for Converteam’s managers, estimated at 700 millioneuros, left the Paris market dumbfounded and beat all records…of “indecency”. “Thiscase could have had a far more disastrous media effect, but fortunately it was eclipsedby the many events elsewhere”, confirms a fund manager, irritated like many of hispeers by practices assimilating the sector with a “giant casino”.

Sharing the cakeIndeed, the financial crisis with its succession of bad news stories and sensational scan-dals has overshadowed the unions’ condemnation for businesses under LBOs. Variousemergency measures adopted have also helped calm things down. An exceptional1,000 euro bonus has been proposed to staff at Editis. At Converteam, 38 millioneuros have been set aside from the 1.8 billion in capital gains to provide all membersof staff with a bonus equivalent to two months wages, while opening up 5% of thecapital to employees, combined with a top-up contribution by the company. Howe-ver, the threat is still there. “It is just a brief respite, with the downturn in the economicenvironment fuelling the bitterness of employees under LBOs who have not had theirshare of the cake during the prosperous period”, points out a consultant close tovarious funds. And when the masses complain, the state legislates. This is what indus-try professionals are afraid of. They know that the legislator has them in its sights. TheFrench economic analysis council, through its recent report on “French capitalism andprivate equity”, recommends raising taxes on fund managers if they do not share thevalue from their deals with allstaff. In this way, carried interestswould no longer be subject to theadvantageous capital gains taxsystem, but rather income tax, ifgains are not reasonably sharedwith employees.

Similarly, Dominique Séné-quier, chairman of AXA PrivateEquity, made a recommendationa few months ago in a letter to theeditor of the French daily LeMonde to set aside 5% of capi-tal gains on LBOs for staff, evenif employees are not investing inthe takeover.

Democratising shareholdingWithout waiting to be forced to do so, certain funds have already rolled out employeeshareholding mechanisms, if only to ensure the consistency of the sacrosanct “align-ment of interests”. With the financial leveraging effect coming through the current dif-ficult period, value will need to be created primarily on an operational level. Whichmore than ever makes it necessary to ensure the buy-in and motivation of staff. Thisis how the company mutual fund has become part of the fund landscape. Since theFrench law of December 31, 2006, company mutual funds (FCPE) have been able tobenefit from a simplified system and be associated, through a shareholder agreement,with LBO funds. A way of "democratising" employee shareholding and savingsmechanisms for non-listed businesses…

The snag is that setting up a company mutual fund requires accreditation from theFrench securities regulator (AMF), as well as negotiations with employee representa-tive partners. As a result, even simplified, the mechanism is deemed to be complex,expensive and time-consuming for mid-size businesses. Another constraint: liquidity.“This system is combined with a new liquidity mechanism that allows the FCPE fundto be fully invested in securities in the takeover holding structure if the latter under-takes to buy back its securities, for up to 10% of its share capital”, explains Jean-Phi-lippe Debas, who has just set up a management company, Equalis Capital, to providebusinesses with support on setting up company mutual funds. In this way, businesseshave to call on a valuation expert once a year in order to enable staff to exercise theirearly exit rights. “This would be equivalent to giving a severance bonus to staff whoresign before the LBO is wrapped up” according to one manager who has refused toput an FCPE fund in place primarily for this reason. However, looking beyond the too-l's constraints and lack of flexibility, there is also an issue with the actual philosophyof employee shareholding. “Not all staff are destined to become shareholders”, pointsout Michel Pic (2), head of Frans Bonhomme, the French plastic pipe and joint mar-ket leader, who came through his fifth LBO in 2005 with Cinven. The number ofemployees involved in the successive operations grew from four for the first LBO to

LLY

ROM LBOS?“We are against this ecumenism,

which wants everyone to become

shareholders.” René Maury, chairman

of CDC Capital Investissement.

the consultancy Constantin. The findings show that thefunds are very sharing, with “20% of businesses ope-ning their capital up to non-executive staff, and 61%opening it up to their executives”.

Social impactEven better, LBOs actually create jobs: “the average rateof growth for the workforce in businesses under LBOsin France is 4.1%, with 78% corresponding to net jobcreations”. Other analyses reveal slightly more nuanceswhen it comes to this impeccable social performance. Inthis way, a European study by Ernst & Young in 2006revealed that “40% of companies under LBOs findthemselves, when they are sold off, with a lower level ofjobs than at the time of their acquisition”. The debatesurrounding the social impact and sharing of value onLBOs could have gone on for ever between specialists inthe elegant and luxurious drawing rooms of the eightharrondissement in Paris, if a number of highly mediati-sed cases had not brought the stratospheric capital gainsof certain funds and highly select circles of LBO mana-gers into the public spotlight. As well as the fury of otheremployees who were left with just a few crumbs from the

FOCUSA


100, 400 then 700 out of 2,000, with the creation of acompany of employees negotiated with the AMF.

Risk associated?“During the third LBO, we saw a high level of demand:some staff even wanted to invest 10 years wages!”, reflectsthe chairman of Frans Bonhomme, who had to set strictrules to curb their interest and above all highlight therisks associated with shareholding. Indeed, the leverageeffect works both ways, and a downturn in the economicenvironment can take a company mutual fund's valuedown to zero and employees' savings to ashes. That iswhy the unions balk at approving this tool, which invol-ves a risk on two levels for staff: in terms of their jobs andtheir assets. “We are against this ecumenism, which wantseveryone to become shareholders”, sets out René Maury,chairman of CDC Capital Investissement. “In ourinvestments, we have always sought to open up the circleof shareholders to all members of the board of directorsand managers of the different business units, but not togeneral staff, for whom other forms of profit-sharing aremore appropriate”. A rule that has seen one exceptionthis summer with the LBO on Socotec, the buildinginspection services company which was fully owned by

some of its staff. In this case, keeping employee share-holding at a minimum of 25% of the capital was a condi-tion “sine qua non” for the deal. “However, the AMF hascalled for the previous FCPE fund to be wound up anda new one created, which is going to take six months!”,explains the outraged René Maury.

Opening up the capital to allmembers of staff as of thefirst LBO is not a commonevent. Even less so when thisis instigated by the manager.But this is because the mana-ger in question, Alain deMendonça, is not your usualmanager. Indeed, the founderof the Karavel-Promovacan-ces group at the beginning ofthe 2000s “was left with abitter taste from its sale toOpodo in 2005, because onlya dozen or so executivemanagers actually benefitedfrom this sale”. To some extent, the MBO ledby Barclays PE at the end of2007 offered him an oppor-

tunity for redemption. “Iwanted the young peoplewho take the train to com-mute in every morning to beable to invest 500 euros andhope to gain 20,000”, confi-des, not sanctimoniously inany way, the head of Karavel-Promovacances, who admitsthat he is not very at easewith the negative view ofLBOs in the collective imagi-nation. So there we have the“noble” intentions, but in theharsh reality of the crisis, isthere not a risk of misleadingstaff about illusory gains?“Naturally, we organisedinformation meetings inorder to clearly set out the

dangers of shareholding tostaff”, retorts Alain de Men-donça, who above all doesnot want to embark his staffon a hazardous venture. “TheLBO is very reasonably leve-raged and 2007 was alreadyseeing the end of the fabu-lous valuations. So, whenBarclays exits in four or fiveyears’ time, it can only logi-cally be in a more favourableeconomic environment”.

KARAVEL-PROMOVACANCES: MANAGERREFUSING TO SET SAIL WITHOUT HIS STAFF

Alain de Mendonça, Karavel-Promovacances

“The flood of manage-ment packages is nea-ring an end”, confirms

the delighted Benoît Bassi. Thechairman of Bridgepoint hasalways denounced the drift inpractices encouraged by some ofhis peers who try to win overmanagers at any cost in order toseal the deal. While the balanceof power has been in favour ofmanagers for the last few years:“the scope continues to beinfluenced by the competitionbetween funds and it will alwaysbe dominated by two elements:

1) the managers must be givenclear incentives, which representsa guarantee of success; 2) theyhave a form of nuclear deterrencesince if they are not happy, thebanks do not lend. While actualuse of this nuclear weapon istheoretical, since it is mutuallydestructive, its possibility doesinfluence negotiations”, sums upHervé Thibaut de Maisières, co-founder of LBO Managers. Thereis not strictly speaking one singlemanagement package model, butexperience show that “practicesare tending to become standardi-

sed” according to Hervé Couffin,co-founder of Callisto and mana-gement package consulting spe-cialist. In a primary buy-out,managers invest between oneand two years of net wages aftertax to hold an average stake ofaround 10%. In a secondary LBO,they plough back between 40%and 70% of their net capitalgains to sometimes acquire up to30% of the capital. Managersaccess a fraction of the capitalgains generated by the fund, pro-vided that the fund achieves theinternal rate of return (IRR) or

investment multiple (ratchet)expected. In this way for instance,a fund may decide to award addi-tional compensation as soon asthe IRR exceeds 15% or 20%.But these thresholds still need tobe passed. “The thresholds selec-ted for triggering the ratchet upuntil recently were raisingconcerns”, points out Hervé Thi-baut de Maisières. “We are star-ting to see arbitrages in favour ofrevising thresholds downwards,compared with a smoother retro-cession rate”. The downturn inthe economic environment has

also resulted in longer holdingperiods, and therefore lower exitIRRs, which is encouraging mana-gers to index the ratchet againstthe multiple rather than the IRRas was previously the case.

Shareholding culture In certain sectors, such as building and civil engineering, the employee shareholdingculture has been around long before the funds’ came on the scene. “When employeeswho earn barely more than the minimum wage invest 1,000 euros in their company,this is a very strong symbol of confidence, trust and identification”, explains Xavierdu Boÿs, chairman of the management board of Kiloutou, in which some 200 mem-bers of staff already held nearly 7% before the arrival of Sagard in 2005. In connec-tion with the LBO, the equipment rental firm expanded its shareholding to includeone quarter of its workforce (450) through a project called Puissance 3. “Rather thana top-up company contribution, we preferred to set up a system with advance finan-cing on profit-sharing, which is more in line with the shareholding spirit”, adds Xavierdu Boÿs. The 1.25 million euro tranche was oversubscribed, but the company did notwant to take it any further in order to avoid having to carry out public offering pro-ceedings. This much talked-about company mutual fund would also benefit frombeing simplified again, to avoid giving further arguments for the funds and managersthat are not particularly inclined to sharing. ■ Houda El Boudrari

(1) Source: article from Les Échos “Davos ou la fin des certitudes”, February 2, 2009(2) Roundtable organised by Premier Cercle and sponsored by Skill Capital on “LBO, sharing value” on December 16, 2008.

Thibaut de Maisières, LBO Managers.

MANAGEMENT PACKAGES, MOVING TOWARDS A REALIGNMENT OF INTERESTS?DR

DR

“Part of the capital gains should be able to be transferred to staff, taxed up until now under the capital gains system rather than as wages. In a difficult economic climate, tensions surrounding the sharing of capital gains might intensify” Pierre de Fouquet (Afic)

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our investment capacity”, observes Patrick Petit, chair-man of the placement agent Global Private Equity.Whereas according to Preqin, 43% of institutionalstoday treat infrastructure as an allocation class in its ownright, separate from real estate or private equity. Howe-ver, the first funds have tended to present the asset classto LPs based on a similar profile to private equity. Andyet, its risk-return ratio has proven to be more complex.“This initial model has been a mistake from the start”,explains the placement agent John Campbell (CampbellLutyens), who is regularly in close contact with morethan 500 institutional players around the world.

Differentiated profilesStarting off from this assessment, industry professionalshave differentiated between two markets. The long-term“greenfield” market (new infrastructures, PPPs, socialinfrastructures), on which capital gains are achieved asthe level of risk decreases. “We are not thinking somuch in terms of EBITDA and exits, but more valuecreation and continuous cash flow over the long term”,explains Thierry Déau, who is in charge of the green-

ho can fail to have been sur-prised to see the Australiangroup Macquarie suddenlyappear on the French lands-cape to take up a majority sta-

ke in the French Paris-Rhine-Rhone motorway networkalongside Eiffage. The French State, which had pavedthe way for private investors to come on boardthrough the private-public partnership (PPP) followingthe privatisations in 2004, found itself faced with theignominious conclusion that there were not any Frenchplayers on infrastructures. The main French banksimmediately launched dedicated funds.However, outside of France, Anglo-Saxons had notbeen waiting for French privatisations to seize theopportunities opened up by this new asset class. On theone hand, the World Bank puts global infrastructurefinancing requirements at some 53 thousand billion dol-lars, while governments, paralysed by their budgetaryconstraints, are turning more than ever to the privatesector. On the other hand, this asset class is defined byits stable and predictable EBITDA, strong entrance bar-rier and major investments. In this way, Goldman Sachs,JP Morgan, HSBC, Crédit Suisse and Deutsche Bankvery quickly followed in Macquarie’s footsteps to struc-ture funds of several billion. This interest then spread toprivate equity funds, able to raise high global commit-ments: KKR, Carlyle, Blackstone, CVC Partners, andeven 3i. In total, 200 vehicles had already raised onehundred billion dollars between 2006 and 2008, accor-ding to Preqin.

Appeal of long-term LPsCertain institutionals like pension funds, retirementfunds and insurance companies have realised the rele-vance of aligning their investments on their profiles forlong-term commitments. “Long-term LPs are willing toinvest with IRRs that are not as high as on LBOs, butprovided that there are still stable and predictablereturns”, highlights Renaud de Matharel, who heads upthe Cube Infrastructure fund. A sign of the times, Part-ners Group has published a memo(1) setting out themerits of infrastructure’s defensive nature. In this way,the portfolio of five Australian funds investing in matu-re assets is outperforming the bond market by 500 bp,with net annual IRRs of 12 and 11.7% over the last fiveand 10 years. Which more or less gives this asset class itsprofile, with some investors talking more of a range bet-ween 10 and 13%. Partners Group concludes “that aninfrastructure portfolio represents a good strategy forbalancing the overall portfolio set against a backdrop oflimited visibility”. On average in Europe, the allocationof LPs in infrastructure stands at 2% today. However,French institutional players such as CDC, CNP andCrédit Mutuel still seem to be reluctant to make a com-mitment. “The French market represents barely 15% of

WInfrastructure fund


field fund Méridiam. “Not to mention the multiple, thereturn is calculated over 30 years for PPPs”. The othermarket is known as “brownfield” (acquisition of exis-ting assets, privatisation, concession), characterised byquicker returns on investment, and therefore closer tothe spirit of LBOs.

In France, the generation of players that has emer-ged since 2004 has specialised on a still small and emer-ging market. On Greenfield operations, the two pio-neers have been FIDEPPP (200 million euros),launched by Natixis-Caisse d’Épargne, and Meridiam(600 million euros). The latter, coming from CréditAgricole Private Equity, has specialised on the niche forlong-term PPPs (25 years) with consistent risk profilesand inflated cash flow over the long term. Barclays PEhas also taken up a position very early on in the UK,then, from 2005 in France and Continental Europe, onsocial infrastructures and renewable energies (2 billioneuros in assets under management). On the brownfieldmarket, we can see players like AXA Infrastructure (1.3billion euros), AXA Private Equity’s dedicated fund,Cube Infrastructure (targeting 1 billion, with 250million injected by Natixis) and more recently AntinInfrastructure (target: 1 billion euros), which has alrea-dy received 300 million from its sponsor BNP Paribas.“Typically, brownfield operations take place when the-re is no longer any construction risk and part of the traf-fic risk has stabilised”, summarises Paul Lignières, apartner in the firm Linklaters.

French market still green “France is a very attractive country, the market is dyna-mic and the public concessionaire is committed. Twoyears ago, there were not enough projects. Today, it isthe other way round”, rejoices Vincent Levita, head ofInfravia, OFI AM’s dedicated fund. Around 15 PPPsare said to be in the pipeline, with seven or eight overthe one billion mark: Reunion Tram-Train, Tours-Bor-deaux TGV high-speed train line (7.5 billion), Seine-North Europe Canal, Pays du Nord-Brittany TGVhigh-speed train lines, and more. However, since it is atthe start of the cycle, the French PPP market is notbrown enough for creating opportunities for acquisi-tions. Nevertheless, a trend seems to be taking shape:European utilities, driven by community regulations,could embark on programmes to sell off their assets.AXA Infrastructure, joining forces with the Italian fundF2i, signed an agreement in May to acquire 80% ofEnel Rete Gas, valued at 600 million euros, from theEnel Group. “This deal sends out several positivesignals to the market: the return of debt (over onebillion), the possibility for a cross-border operation,

building their future

Previously in the LBO’s shadow, has unlisted infrastructure now become the new drink of choice for investors? Because it is good form to move away from the idea of short-term capitalism today, its stable profitability combined with its social benefits make it virtually an overvalued asset class. In any case, the ball is open. It is now up to the debutants to earn their stripes. (N°46. JUNE 2009)ds


PAR BENJAMIN L’HOIR

FOCUSA


and the fact that industrial operators are willing totransfer a majority of their capital over to institutionalplayers”, outlines Mathias Burghardt (AXA Infra).“Today, there are fewer active funds and competition isless intense. Investors are virtually able to choose theiracquisition operations”, he adds. Is the development ofsuch secondary opportunities going to whet the appe-tite of LBO funds?

Window of opportunity for LBO funds? For Thomas Courtel, a partner in the firm Gide Loy-rette Nouel, “the modest size of equity tickets and thelow level of profitability still represent natural and struc-tural barriers that have held back private equity funds.In the UK, the authorities have integrated the idea ofreturns for private investment with attractive IRRs. It isstill badly perceived in the French public arena”. Today,in view of the French stimulus plan and calls for tenderson projects for over one billion, equity tickets are goingto be higher. “In September, we will see whether foreignprivate equity funds will dare take up positions”, won-ders Thomas Courtel. On historically more mature mar-kets, funds such as TPG Capital, Carlyle and GIP (Cré-dit Suisse) have been competing over the past few yearsfor major acquisitions abroad.

But this appetite could be fuelled by the economicenvironment. Since the start of the crisis, “the generalambitions for raising funds have been revised downsignificantly for more reasonable objectives” ackno-wledges Patrick Petit. Even in the US, where the Oba-ma plan has led to unlisted enthusiasm for “infra”, KKRhas had to content itself with 4 billion for a vehicle thatwas initially announced at 14 billion dollars.

Resilience put to the testOn the financing side, the impact of the credit crunchhas been felt slightly later than for LBOs. “The per-centage of debt awarded by lenders is tending to beco-me less, increasing the size of consortiums and makingnegotiations more difficult”, observes a specialist. Andmechanically, pricing for debt has climbed, rangingfrom 100 to nearly 300 bp.

“Today, the level of equity demanded has increased,even for PPPs, guaranteed over the long term, reaching12%”, confirms Wilfrid Aoustin de Grant Thorntorn.“And operations that also have a demand or occupan-

cy risk, the ratio's definition will be even more cautious”, adds Alain Grandel. Howe-ver, the specific issue with infrastructure does not necessarily come from the debt itself,but rather its maturity. “On the whole, the projects move forward more slowly, butare not called into question”, seeks to reassure Daniel Benquis (EY TS). And yet, debtlines from 25 to 30 years have melted away like snow in the sun, while PPPs are tryingmore than ever to be the catalyst for the economic recovery. “The trend is for mini-term financing, between three and five years on the brownfield market, while lookingfor financing over seven years on greenfield”, specifies a banker. In its context, theaction by the public authorities should be decisive in terms of freeing up financing.The EIB would be willing to increase its allocation by 6 billion a year. In France, thestimulus plan provides for 26 billion euros, including 10 billion in State guaranteesfor 80% of a project company’s debt. For the time being, there are not any projectsabout to be released. But according to Partners Group, project financing should beamong the first to start up again once the credit market stabilises. ■

“Since the public autho-rities are naturallyfocused on the conti-

nuity of public services, a pureinvestor position, with an exitfrom the project company overa relatively short horizon com-pared with the term of thecontract, entail a risk of arou-sing their mistrust”, warnsMatthieu de Varax, a lawyer atMayer Brown. Indeed, thepublic authorities' frame ofreference is very different fromthat of the private sector,according to most of the priva-te investors already accusto-med to the practice. Under apublic-private partnership,“value creation also involvesestablishing a trust-based rela-

tionship with the local contrac-ting authority, which is aboveall interested in the quality ofthe public service operations”,confirms Renaud de Matharel,head of the Cube Infrastructurefund. The public authorities arestill attached to an operationaloperator image. Especiallywhen it comes to revising ratesand rental charges for conces-sions. And yet, since the1970s, certain motorwayconcession agreements havebeen renegotiated more than adozen times. As such, it is vitalto ensure that there is not anybreak in the continuity of theservice provided…The politicaland national dimension canalso be fatal for candidates

who have not chosen to forman alliance with a local player.The most obvious example isstill Saur’s takeover. Macquarie,after announcing an exclusivedeal, was in the end not cho-sen faced with the efforts ofmany officials who wereagainst the Australian's acqui-sition. In this way, the CDC-AXA IM consortium ended upacquiring the company fromPAI. “We have developedstrong ties at local level, whe-ther with the authorities orother investors and industrialplayers on club deals”, retortsArthur Rakowski, the Europeanhead of Macquarie, which iswell aware of what is at stakewith cultural issues. ■

"Competition is less intense as there isstill few proactive funds. Investors canalmost select their deal flow". Mathias Burghardt, Head of Axa Infrastructure

"At the time we launched Antin infrastructure, a one billion dollars target fund was considered as a mid-market one". Alain Rauscher, CEO of Antin Infrastructure

Certain institutionals, such as North Americanpension funds, particu-

larly attracted by infrastructu-res, have gradually decided todevelop a direct approach andare no longer hesitating tokeep infrastructure assets for30 years. OMERS was one ofthe first to set up a dedicatedstructure, Borealis, representingsome 8 billion Canadian dol-lars, in order to invest in infras-tructure assets. First on thiscontinent, then in Europe,where an office has been ope-ned in London. Highly opportu-nistic, the Canadian pensionfund is notably part of aconsortium of other pensionfunds bidding to take over Gat-wick airport in London, estima-ted at over two billion euros.The seller, British AirportsAuthority, is itself partly owned

by the Caisse des Dépôts duQuebec. “Certain large institu-tionals are no longer even loo-king at funds, but investingdirectly”, observes PatrickPetit, head of the placementagent Global Private Equity.Elsewhere, sovereign fundsfrom Scandinavia (ABF, APT),the Middle East (Adia) or eventhe government of Singaporeand more cautiously Dutchinstitutionals have also startedinvesting directly in their owncountries. “Some have done soin response to the manage-ment costs of certain privateequity funds that were consi-dered to be excessive”, stres-ses the placement specialistJohn Campbell. “This attitudeis making it more necessary formanagement companies to setout their independence in rela-tion to the merchant banks

they came from”, insists Alain Rauscher, CEO of AntinInfrastructure Partners, primarily owned by its mana-gers. In this way, Leo de Bae-ver, the head of AIMCo, one of the major Canadian institu-tionals, has called on his peersto choose this path if they“have the capacity to organisethemselves”. However, “certaininstitutionals, particularlyCanadian ones, have experien-ced some disappointments and have already made a turnaround”, highlights a specialist. “Our argumentinvolves showing them thatinvesting in a fund enablesthem to have privileged accessto deals that they would nothave had otherwise”, indicatesPatrick Petit. And for the timebeing, these players seem tobe receptive. ■

DOMESTICATING THE PUBLIC AUTHORITIES

INSTITUTIONALS, COMPETITORS OR PARTNERS?

THE STORYA

rouping dozens of small grocerystores together and making a su-permarket chain out of them”.With this prosaic approach,

François Nicoly, the managing partner incharge of LBO activities at Investors in Pri-vate Equity (IPE), describes the creation ofthe World Freight Company (WFC) group,the leading general sales and services agent(GSSA), selling freight cargo for airlines.Starting off from a fragmented sector andconsolidating it through build-ups repre-sents a tried and tested recipe for invest-ment capital. But when this consolidationspans 20 countries, with around 40 legalentities taken over in record time, this be-comes a very delicate operation. Thetightrope walker in this story is called PierreBrunet and this was not his first time.

Back in 1998, this former advertisingexecutive (he made his debut with theExpress Group in 1984), transformed intoa serial entrepreneur, had already broughtthis still “cottage-industry” activity out ofthe cargo hold and made it a genuineindustry. At the time, he created ECS(European Cargo Services) based on theactivities of the French firms Globe Air and

Aéro Cargo, before rapidly floating it onParis’ Nouveau Marché in December of thesame year. However, the ambitious entre-preneur did not hang around too long atthe helm of ECS, and sold off his shares(52%) in 2000, believing that the marketwas not mature enough for the large-scaleconsolidation he had been dreaming of. “Itwas too early, we were just at the beginningof the deregulation of the aviation market,Air France had not been privatised, and theeuro had not yet been introduced”.

An incredible melting potBut his plans had only been on standby.Three years later, Pierre Brunet tried again,bringing the team from Investors in PrivateEquity on board, won over by his visionarytalent and his knowledge of the business.December 2003: the agreement was signed.The aim: creating a global group, nothingless. “The idea was to start off with a largestructure that would make it possible to ag-gregate small units, in order to save time”,recalls François Nicoly. Except that struc-tured companies in this sector were few andfar between. Barely a few “minimarkets” toget stuck into to take up IPE’s managing

FRET CARGO

In three years, World Freight Company, which sells cargo hold capacityfor airlines, has become the global market leader. The story of aconsolidation that has been like microsurgery. (N°40. NOVEMBER 2008)


G landmarks > 2003Agreement signed between IPE and Pierre Brunet to create WFC.

> 2004Mirrair Group (Zurich)and TAS (Roissy)acquired.

> 2006 Air Logistic (19 legalentities) acquired andcarve-out on twothirds of the group.

> 2007Air Support, Weco and Airborne Zygeneacquired.

> 2008Exit from IPE in a secondary LBO for Acto Mezzanine, Idi and AXA PE.

partner’s “grocery store” metaphor: “In Eu-rope, out of the 100 or so companies thatcould be identified within the sector, onlyfour of five had revenues of over 30 millioneuros”. The team therefore decided to killtwo birds with one stone by setting its sightson two targets in June 2004: the Swiss-Ger-man Mirrair, which had revenues of around60 million euros under its commercial brandATC, and the French firm TAS (TransportAssistance Services), with just 10 million eu-ros. Enough to create the framework for theliner, but the hardest was still to come. Withno time to bind the two acquisitions to-gether, it was already necessary to moveonto the next targets. And once again, sort-ing through them proved to be hard work.

Bringing highflying managers onboardMain difficulty: finding manages capableof tracking, detecting opportunities withreal potential and looking to spread theirwings, and steering clear of fearful profilesattached to their small grocery stores andwary of any change. “This criterion was es-pecially crucial at the beginning, since themajor build-up operation was already com-plicated on its own, without adding furtherrestructuring operations”, explainsFrançois Nicoly, who ensured that profit-sharing mechanisms were put in place forthe management teams. A basic precautionif you want to ensure buy-in among teamsspread across three continents.

World Freight Company, a particularly rapid build-up

“

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etc.), the transplant can be complicated byany amputations required beforehand. Andthat is what happened on a large scale withthe Air-Logistic operation in 2006: a groupwhich had around 20 legal entities spreadacross 15 countries, with two thirds requir-ing a carve-out. A real can of worms! “Theaccounts were inextricable, it took us morethan six months to make the split”, explainsFrançois Nicoly. “The takeover processtook a year and cost just short of half a mil-lion euros in various costs, for a total valu-ation of…3.5 million!” Begging the ques-tion of whether the costs and complicationsassociated with this amorphous carve-outdo not mean that creations from scratchrepresent a more interesting option? “Thetakeover has benefits on two levels, retortsOlivier Poncelet, IPE’s chief investmentofficer. On the one hand, we are able toinherit a base of already captive customerairlines which want nothing more than tofocus on a single provider for all airports.But also and above all, the takeover enablesus to take on teams that are trained andoperational, rather than having fun withrecruitments in Finland or Hungary”.

Moving up to cruising speedSince Pierre Brunet is the only one leadingthe dance, although closely supported byhis financial partners, who put 10 millioneuros in equity in the pot to finance the ac-quisitions, the final bill rose to 35 millioneuros. The debt was raised as needs arose,and included a 7.5 million euro vendorloan. Nothing less was needed to consoli-date this huge patchwork of acquisitions,connect up the IT, centralise cash man-agement, standardise reporting systems,etc. The upside is that while the patchworkmay well represent an eclectic ensemble,the world of its customers is extremely stan-dard and consistent. Airlines are all gov-erned by IATA standards, which impliesthe same contract model, the same paymentsystem, and so on, from Switzerland to Aus-tralia and Russia, enabling profits to soar.In 2008, the group recorded around 400million in pro forma consolidated revenues,with some 10 million in EBITDA.

The turbulence has passed The group is not planning to slow downwith its growth and Pierre Brunet still hasmany build-ups in sight. But it is time tochange co-pilots, switching from aerial ac-robats to financiers who are better suited to cruising speed. IPE sold its staketo Acto Mezzanine, Idi, AXA Private Eq-uity and Pierre Brunet, who took this op-portunity to increase his interest in hisgroup to 70%, with management owning10%. The valuation for the secondary LBOwas nearly 100 million euros. For an initialinvestment of less than 10 million, Investorsin Private Equity pocketed a multiple of 3.5and an IRR of over 50%. Quite a successful landing. ■ Houda El Boudrari

F. N.: Over and above the congenital mistrust of entre-preneurs towards financiers, this breakdown was alsojustified by the benefit of only one individual entrepre-neur appearing to be involved in negotiations to takeover targets, while if it was too obvious that financierswere involved, this could have pushed the prices up.

Pierre Brunet (WFC) and François Nicoly (IPE) look back over thesuccess of World Freight Company.

F. N.: The chief financial officer simply skipped shipwithout any warning. The IPE team, and notably OlivierPoncelet, the chief investment officer and “true finan-cier”, had to work extra hard to stand in and build thelinks between the group’s main two components: theSwiss-German Mirrair and the French TAS. Fortunately,our bankers understood that in this type of project, youhave to accept that there is going to be a brief fluid peri-od, without reporting, without indicators, and so on.

P. B.: Because I wanted to keep control over my proj-ect and I wanted to maintain the flexibility for tak-ing decisions that comes with a majority position.And my experience has also taught me that entre-preneurs and financiers do not share the same con-ception of social burden or the issue of debt.

P. B.: We invested a lot on the first business, which had the advantage of already being structured and gave the impression of being verywell managed. The three partners were thereforeassigned to head up financial aspects for one, commercial development for the second, and the major German market for the third. Except that we had a few bad surprises.

P. B.: I have been working closely with private equity profes-sionals for 20 years, so Idid not have any credi-bility issues when facedwith the financiers. How-ever, I was also a victimof my image as a serialentrepreneur and not along-term business man-

ager. To set up such an ambitious project, I needed tofind financiers with a lot of imagination. Quite a rare quality that I found with IPE.

PRIVATE EQUITY MAGAZINE : Why did you choose a 49-51 breakdown of shares the (before theconversion of convertible bonds) in favour of Pierre Brunet?

F. N.: We knew oneanother from other dealsand we immediatelyidentified Pierre Brunet’spotential for building up businesses. The preliminaries lastedthree years (the team was still at CréditLyonnais, since IPE had not yet been created),

between the desire to build this project and the manycommitments of the different stakeholders, whichdelayed its launch.

Another difficulty: pre-acquisitionaudits are complex, time-consuming andvery expensive. “Whether the company isworth one million or one hundred, the workis more or less the same”, sighs FrançoisNicoly. When the companies targeted onlyhave a GSSA business, that is not too bad,but when they have other related logisticactivities (buying warehousing solutions,securement, pre/post-routing, handling,

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“Whether the targetcompany is worth

one million or one hundred, the pre-

aquisition audits are just as complex”.

WFC, created through build-ups in 2003, has rapidlyestablished itself as the leader in its sector. The team successfully brought around 40 legal entitiesacross 20 countries together in record time. An exploit at the time, a success today.

THE STORYA

y selling off Micromania for 480million euros to the global videogames leader GameStop, LCapital achieved the only out-

standing exit during the second half of2008. However, success is modest and glorydiscreet for the fund sponsored by LVMH.It may well be part of the world of luxurygoods, but there is nothing bling about LCapital. No IRR announcement, no mul-tiple publication, barely a whisper aboutthe SME’s valuation three years ago: 220million euros.

While they may not be particularlycommunicative when it comes to the fig-ures, Philippe Franchet and Eduardo Velas-co can go on forever about the businessitself. Which is natural, since the duoembarked on this adventure back in…2001.Well before the Wii and other gaming god-desses were greeted with the mass hysteriawe can see today. At the time, the brand for“PC enthusiasts” had 80 sales outlets andrevenues of 115 million euros. “It wasalready a fine “nugget”, which had man-aged to stand out from its rivals thanks to itspositioning built around advice, as well as

its pioneering loyalty building policy”,explains Daniel Piette, chairman of L Cap-ital. Recruiting sales teams who were pas-sionate about their products, setting up aloyalty card system to track all the transac-tions, tailoring the offering to each cus-tomer's profile, giving priority to newreleases and blockbusters when sourcing,organising a show to bring the gaming com-munity together (Micromania GameShow)…the brand’s success owes a lot tothe marketing talents of its founder, AlbertLoridan. Who was inspired primarily by theapproaches adopted in the home computersector, where he started out in the 80s,before embarking on the distribution ofgames in 1983 with a mail order catalogueoffering 26 titles.

Expanding the targetThe opening of a first store in 1990, in theForum des Halles shopping centre in Paris,marked the brand's true start. In 10 years,Albert Loridan managed to take the brandup to fourth place in the sector, behind thetwo mass retail giants Carrefour andAuchan, and hot on the heels of the other

HIGH-TECH

Back in 2001, L Capital speculated on the rapid development of a booming video gamesmarket by joining forces with Micromania, which is now the French market leader. After seven fascinating years, the investor has been able to choose its buyer calmly, at the height of all the financial turmoil. (N°41. DEC./JANUARY 2009)


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B pure player Score Games. However, thefive to 10 stores being opened up each yearwere not enough to achieve critical mass,so Micromania’s founder decided to stepup a gear, bringing on board L Capital,which acquired 35% of the retailer's sharesin 2001. “In a market in which the con-centration of suppliers was enabling themto capitalise on the scarcity aspect, it wasvital to become the leader as quickly as pos-sible”, adds Philippe Franchet. The rate ofopenings was multiplied by four, while thebase of video gaming enthusiasts was grow-ing exponentially. “The target was previ-ously concentrated around male customersaged 15 to 25”, indicates Eduardo Velasco.“This age bracket has become much wider,with a growing focus on women”. The of-fering has been enhanced. More intelligent,less warlike games have arrived in the cat-alogues, while the equipment itself offersmore user-friendly techniques, designs andcolours.

The arrival of Microsoft's Xbox, Sony’sPlayStation 2 and Nintendo’s GameCubefuelled strong demand for new releases.Which was good news for Micromania,

L Capital plays to winwith Micromania

Setting a strong pace,with 40 points of sale

opening each year.

The arrival of the newNintendo and Sonyconsoles opened up a new customer basefor the brand, with booming sales.

landmarks > 1983 : Micromania created byAlbert Loridan, with avideo games mail orderdistribution business.

> 1990 : First store opened inthe Forum des Hallesshopping centre (Paris)

> 2001 : L Capital acquires a 35%stake. Micromania gen-erates 115 million eurosin revenues, with 80points of sale

> 2005 : L Capital takes over,founder Albert Loridanousted, replaced by theco-founder of PhoneHouse, Pierre Cuilleret.

> 2007 : Dock Games networkacquired: 49 stores.First build-up.

> Oct. 2008 : Sold to GameStop, theglobal video gamesmarket leader, for 480million euros.

which became the leading games distrib-utor in 2005, with 225 points of sale, 300million euros in revenues and a 25% mar-ket share, twice that of its challenger ScoreGames.

TakeoverFor the minority shareholder, this was theideal time to float on the stock market. Butnot for Albert Loridan, who refused to ac-cept this way out for his investor, even if itmeant leaving the company himself. Indeed,the contract sealed with L Capital stipulatedthat if the company was not floated on thestock market or sold off by March 31, 2005,the investment fund could buy out the restof the shares. Which it did. So, out went thecharismatic business leader, swiftly replacedby another…charismatic business leader.Pierre Cuilleret, who co-founded PhoneHouse in 1996, was a perfect fit for the po-sition. The video games sector was at thesame stage of development as the mobilephone business 10 years earlier, and thepoints in common with Phone House didnot end there. “In both cases, there is a fo-cus on the service delivered to customers,the two companies are number one on theirmarkets, growing very strongly, both em-ploying sales advisers who are passionateabout their profession”, recounts PierreCuilleret. Not to mention the virtually iden-tical specialised retail structures, ultra-con-centrated suppliers and the importance oftechnological innovation. And above all,“opening a new store every week and dou-bling our size in three years, that was some-thing I knew how to do”, adds the dash-ing 40-year-old. All the same, he was carefulto ensure that he did not arrive with thearrogance of a serial entrepreneur so as notto upset the team in place “who were al-ready doing a very good job”. His motto:“no revolution, just small evolutions”.Which all the same ended up shifting thefocus for the company's strategy.

A new era First change: the strengthening of the brandin town and city centres, moving away from

P. C.: This was my first contact with the world of privateequity. While we may well have agreed on the strategy, I still felt that I was being put to the test for the first six months. By the end of that, trust had been estab-lished and our work together went perfectly smoothly. I do not know what their attitude might have been if I had not delivered, but I prefer not knowing…

Philippe Franchet (L Capital) and Pierre Cuilleret (Micromania)reveal the secret of their successful marriage.

P. C.: For us, it was essential to have a shareholderwho respected the brand and who shared our desirefor international development. We did notnecessarily have any preferred scenario as such,but in the end, joining the global market leader wasthe best thing that could have happened forMicromania.

P. F.: In addition to our presence on the Board of Directors, we had interactions with themanagement team, primarily Pierre Cuilleret and the CFO, virtually every day. We rolled out a specific financial reporting system for debt, and Pierre’s arrival enabled us to develop ouroperational reporting.

P. F.: We would have gladly stayed together longer,but after seven years, we had come to the end ofour holding period. We looked into severalpossibilities for takeovers, before focusing on atrade exit. GameStop offered not only the bestprice, but also the best prospects for thecompany's development.

P. F.: To take over from afounder who had instilled his strong personality in the company's culture,we needed a charismaticbusiness leader who hadalready proven hiscapabilities in a similarsector. Pierre Cuilleret was the right man for the

job because he had admirably succeeded in makingPhone House a leading telephony player beforefloating it in 2000.

PRIVATE EQUITY MAGAZINE: How would you assess your three years of life together?

P. C.: I had been monitoring the development of Micromaniawith interest. It was gearing upfor a fascinating new growthphase for the video games mar-ket, with all the new fun anduser-friendly platforms thatwere set to be released overthe following three years.When this challenge was put to

me, I did not hesitate long before deciding to leave myposition with PhoneWarehouse, to the extent that Imade a modest investment in its capital myself.

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“In a market in which the concentration of suppliers was enabling them to capitalise on the scarcity aspect, it was vital to become the leader as quickly as possible”, adds Philippe Franchet, L Capital.

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the historical policy of opening stores inshopping centres. A repositioning con-firmed by the acquisition of 49 stores fromthe Dock Games network, another shiftaway from the Group's policy for exclu-sively internal and franchise-free growth.

Which did not prevent Micromaniafrom forging ahead with 40 company-owned stores opening up each year. Anoth-er innovation marked the new era: for thefirst time, the brand tried its hand at com-municating with the general public, launch-ing TV and radio ad campaigns. With thearrival of women and more senior cus-tomers, word-of-mouth between gamingenthusiasts was no longer enough and thebrand once again set out to win over thisnew audience. “Necessary changes pre-

empting market shares with the expansionof the target, particularly after the arrival ofNintendo's DS and Wii”, confirms Eduar-do Velasco. In order to keep in sync withthe demands of its customers, the retaileralso started to cover the second-hand mar-ket (which today accounts for 20% of itsrevenues) and moved into e-commercewith the creation of a dedicated e-tailer sitein 2006. Just some of the changes that madethe bride twice as beautiful in three years,proudly displaying 500 million euros in rev-enues with 332 stores and 1,200 employees.An appealing prospect for the global mar-ket leader Game-Stop, which has takenover the controls, rewarding L Capital forits seven years of patience. ■

Houda El Boudrari

THE STORYA

ollowing a trip through theAmerican West, Christian Pi-cart returned equipped with thesteakhouse concept. From 1980

to 1990, the network grew to includearound 40 restaurants. A media and legalstorm in 2002, set against the mass panicsurrounding mad cow’s disease, resulted inmajor trauma for the group, from whichit has been able to recover, getting back ontrack for growth from 2004, after a dras-tic drop in earnings. The group inevitablyemerged changed from this experience,from which it learnt a great deal. While itsfounder used to advocate “advertising onthe plate”, the management team led byErich Haramsymczuk is now more focusedon better communication. With 287 restau-rants, including eight in Spain, and 267 mil-lion euros in revenues in 2004, Buffalo Grillis France’s leading themed dining brand.At the age of 67, Christian Picart foundhimself without any potential successorwithin his family. The prospect of hand-ing over the business, and the real estateportfolio to be capitalized on: two perfectingredients for a player with two hats likeColony Capital. In July 2005, the fund man-

aged by Jean-Romain Lhomme andSébastien Bazin snapped up Buffalo Grill’scapital and became the majority share-holder with 75% of the group’s shares,listed at the time on Eurolist C. The offerprice valued the business at 230 million eu-ros, excluding 126 million euros in debt. Acompulsory buyout offer was submitted.However, the proposal was rejected by theFrench securities regulator (AMF) in spring2006, on the initiative of one minorityshareholder. Despite this setback, the fi-nancial teams kept their calm and weresoon at work again.

A more financial visionA strong company culture, a mix of pater-nalism and internal promotion sum up thespirit of Christian Picart’s group when hesold it on. However, the founder’s visionlacked a more financial and rational ap-proach. “Giving more independence andobjectivity in decisions was our primary con-cern”, explains Jean-Romain Lhomme, whotook over as chairman of the supervisoryboard. With this in mind, he surroundedhimself with profiles that were both oper-ational and sensitive to the mysterious work-

FOOD

In three years working with Buffalo Grill, Colony Capital has successfullydeveloped the group’s value, capitalising on its real estate expertise among otherfactors, in addition to operational improvements. (N°42. FEBRUARY 2009)


ings of the LBO. Jean-François Sautereau,formerly of Sodexo and Générale de Santé,and Jean-Louis Riallin, advisor at Colonyand ex-manager of a LBO backed company,became director and vice-chairman. As faras the management board was concerned,Erich Harasymczuk oversaw the businessplan’s operational rollout. First initiative:building a production plant with integratedlogistics and meat cutting “in order to en-sure the security of the supply chain”. A ma-jor capex, identified and developed be-forehand between the shareholder andmanagement team, but which only saw thelight of day in 2008 after Colony’s exit. Thedeployment of a classic business model fol-lowed, with a programme of 34 restaurantopenings (900 jobs created). Talks with for-eign partners began (Portugal, Poland, Ro-mania, etc.). However, it was thought to betoo early yet for international growth andthis was left for a future buyer. And itworked. By as early as July 2006, the fundhad already achieved a return on its invest-ment. Which has not prevented the in-vestors from looking into opportunities forgrowth. But how to finance its expansionwithout drawing on its capital? The solu-

The 128 restaurants sold off in 2006 werevalved at nearly 300million euros.

Colony putting real estate on the menu for Buffalo Grill

landmarks > 1980: first restaurant opened inAvrainville (Essonne)

> 1990: 39 restaurantstrading, including 11 franchises

> 1994: 100th restaurant opened in Mulhouse

> 1999: listed on theParis stock exchange’sSecond Marché

> 1997: first interna-tional restaurantopened: Spain (Madrid)

> 2004: ErichHarasymczuk becomeschairman of the Management Board

> 2005: 75% of the capital acquired by Colony Capital

> 2006: sale and lease-back operation carriedout

> 2007: companydelisted

> 2008: sold to Abénex(>50%), iXen (20%), NI Partners (20%),Céréa Gestion.

DR

F

tion came about indirectly through the saleof real estate assets.

Developing the value of opera-tional real estateSet out in the proposed takeover, the oper-ation to sell and lease back the group’s realestate was first of all the result of analyticaland informative efforts. “This major valueon the balance sheet had never really beenconsidered”, explains Jean-RomainLhomme. The real estate assets had been val-ued at 140 million euros a few months be-

twice, with rent indexed against the restau-rants’ sales figures. The choice of a long-termoperational partner was also decisive interms of getting the management team onboard. “More than the price, the quality ofthe partner was our criterion for selection”,confirms Erich Harasymczuk. In the end,out of several candidates, Klépierre metthese conditions. Following the review andselection, it was time to go operational. Au-diting some 128 restaurants throughoutFrance required a few more months work.In the end, the real estate portfolio was val-ued at nearly 300 million euros. Wrappedup in May 2006, the deal proved to be verysatisfactory for the financial shareholder andthe operator, taking their value off its bal-ance sheet in order to finance its growth. “In2007, EBITDA after rent (66.7 million eu-ros) was still higher than the 2005 level (46.8million euros)”, concludes the delightedJean-Romain Lhomme.

This transaction led to another originalpartnership with Klépierre: financingthrough off-plan sales for the building ofnew restaurants. “The upside with thisoption was that it reduced the group’s needfor further debt in accordance with thecovenants set by the lenders”, explains theformer chairman of the supervisory board.A healthy attitude to deleveraging, in linewith the group recapitalisation policy thatfirst began in 2005 and was launched againin 2007.

Withdrawal, exit, IRRThe success of these structural operationsand the group’s performances enabledColony to complete Buffalo’s delisting inorder to take 100% control. The share,which had been stagnating at around 20 eu-ros since the AMF’s ruling that the bid wasinadmissible, rallied strongly from March2007. In the end, the compulsory buyoutoffer was backed by the minority share-holders, then authorised by the AMF at aprice of 32 euros per share, after the pay-ment of a 16.99 euro dividend. Havingcome full circle, the time had come to handover the reins. After three intense yearswhich had enabled Buffalo Grill to increaseits revenues by 22% and its EBITDA by37%, Colony was looking to make an exit.While not exactly accustomed to workingalongside private equity funds before 2005,the management team chose to “go for sec-onds” with the Abénex Capital, iXen andNI Partners funds. “In the end, the pres-ence of financial shareholders enabled uscarry out quite a healthy analysis, chal-lenging our ways of doing business”, ad-mits Erich Harasymczuk, who has sincehanded over the chairmanship of the man-agement board to Jean-François Sautereau,in order to take a bit of a step back. A beau-tiful declaration to his previous shareholder,which, following the sale, recorded an IRRof 90% with a value more than eight timesthe group’s EBITDA.■ Benjamin Lhoir

E. H.: The watchword for our relationship wastrust. In addition to the monthly strategiccommittee meetings, we were in touch with one another almost daily for all strategicdecisions. Having a financial shareholder also enabled us to question and challenge ourway of doing things.

Jean-Romain Lhomme, Managing Director Europe at Colony Capital and former chair-man of Buffalo Grill’s Supervisory Board, and Erich Haramsymczuk, former chairmanof Buffalo Grill’s Management Board, look back over a successful partnership.

E. H.: Looking beyond purely financialperformance aspects, the outcome was morethan positive in human terms. Like Klépierre,our new shareholders were first and foremostselected with a view to respecting the strongcompany culture underpinning Buffalo Grill and its employees, which Colony understoodvery clearly.

J-R. L.: As chairmen of the supervisory and management boards, ourties were very strong and very frequent from the outset. We forgeda personal relationship based on trust, with mutual respect for oneanother’s expertise. This came about through many meetings inorder to understand the business on the one hand, and on the other,to ensure that the new constraints, both banking and linked to amore institutional shareholding structure, were taken on board.

J-R. L.: For three years, we carried out various structural operations that required a lot of drive, energy and time. Manyoperational initiatives were still underway. If we had decidedto stay for another three years, we would not have been shortof projects. The sale therefore went ahead in total transparen-cy. In this way, upstream from the formal options in the salesprocess, we made it possible for the candidates to build personal relationships with the management team.

J-R. L.: While he had been lookingto hand over the reins for sometime, Christian Picart initiallyapproached us with a view toselling off the real estate portfolio. As an investment fund, we were notinterested in a purely real estatedeal. Six weeks later, we hadpresented our plans to take overthe whole business, wrapped up ourbusiness plan, found our financing

and signed a firm agreement. Erich Harasymczuk was alreadychairman of the management board. A working relationshipnaturally took shape between us.

PRIVATE EQUITY MAGAZINE: How would you assess your three years of life together?

E. H.: The world of LBOs andinvestment funds,American on top of that, all seemeda littlemysterious.However, Christian Picart’sfirm beliefreassured us.

Jean-Romain Lhomme and Sébastien Bazin were very clear about their intention tocontinue developing the group.

CRO

SS

IN

SIG

HT

PRIVATE EQUITY MAGAZINE: How did you choose one another?

DR

PRIVATE EQUITY MAGAZINE : How did your separation go?


“Six weeks later, we had presented our

plans to take over the whole business,

wrapped up our business plan, found our

financing and signed a firm agreement”.

Jean-Romain Lhomme, Colony Capital

fore the fund’s takeover. “Convincing theoperational teams of the strategic value ofa deconsolidating operation was not easy tobegin with”, recalls the financier. The re-views and research therefore began veryearly on. “We worked with the managementteam for four to five months in order to ironout the details of the real estate disposal proj-ect, drawing up bespoke leases and definingcontractual relations with the investor”, addsJean-Romain Lhomme. In this way, the proj-ect to sell off 128 restaurants was combinedwith nine-year commercial leases, renewable

DR

n 1999, Benjamin Gonzalez, abiotechnology engineer trainedon the Cézeaux scientific cam-pus near Clermont- Ferrand,

founded METabolic EXplorer with LucD’Oriol, co-founder of Genset. Based onhis work on the bacteria genome, thisyoung entrepreneur (28) is looking todevelop, by biological means, non-patho-genic microorganisms capable of efficientlyproducing substitutable chemical com-pounds from plant-based raw materials…An alternative to traditional complex,expensive and polluting chemical proce-dures, which use the principle of industrialfermentation: “the initial aim was to studythe bacteria’s metabolic path, removing anyunnecessary genes, in order to make itmore efficient”, sums up Benjamin Gonza-lez. To start up its business, the companywas helped by the Sofimac regional fund,which awarded it 300,000 euros. InNovember 2000, following a first 18months in the premises of an Inserm unit,it moved to the Saint-Beauzire bio hub to

THE STORYA

The company then realigned its strate-gy, focusing back in on the development of“bioproducts” with a view to selling themexternally once they have been developed.Since he disagreed with the shareholders,Luc d’Oriol left the company and BenjaminGonzalez was appointed chairman andCEO. Since the new business modelrequired more resources, a second round of6 million euros was raised in 2002 withCrédit Agricole Private Equity (lead) andViveris Management as the new arrivals.The same year, Philippe Soucaille, a pro-fessor at INSA de Toulouse, specialised indeveloping chemical products using cleanand renewable raw materials, was recruitedas the chief scientific officer. His arrival rep-resented a major scientific guarantee, since,for the American firm Genencor and asrequested by DuPont de Nemours, he hadpreviously overseen the design of the strainthat has made it possible to produce 1.3propanediol from glucose, a basic chemical

METabolic EXplorer shakes up the chemicals world

BIOTECHNOLOGY

compound. In 2004, a first industrial mile-stone was passed for methionine, an aminoacid used in animal nutrition and pharma-ceuticals, mass produced by chemical syn-thesis from an oil derivative, propylene.

On track for industrialisationMETabolic EXplorer then made the daringgamble to “auction” this technique: “wehad targeted several potential partners onthe value chain”, recalls Paul Michalet,METabolic Explorer’s chief financial offi-cer. “Producers of bio-resources lookingfor outlets, chemists producing identicalcompounds to ours, but using a conven-tional approach, and also the end users forsuch compounds”, he adds. Having shown“proof of interest” to the Auvergne-basedbusiness, the companies submitted theirbids, and in the end Roquette, one of theworld’s leading starch producers, wasselected. “This French family group, whoseculture was similar to our own, had the pro-file that was best suited to the company,with the effective management of raw mate-rials, considerable fermentation capacitiesand major international know-how”,explains Paul Michalet. Proof of its interestin METEX, Roquette signed two partner-ship agreements in 2006, one for methion-ine and another for glycolic acid (used inthe production of cosmetics or biodegrad-able plastics) and bought into the compa-ny’s capital, following a third round offundraising for 5 million euros.

Becoming a player in its own rightEnough funds to finance the industrialisa-tion of the techniques and the developmentof other bioproducts. However, the idea offloating on the stock market took shape inthe shareholders’ minds. “The companyhad enough to move ahead for three yearsbefore another round of fundraising, butthe partnership with Roquette, which wasfurther strengthening its credibility with thechemical industry, gave it a window ofopportunity to raise capital and move a lit-tle higher up the value creation scale”,explains Philippe Guinot, senior partner atCrédit Agricole Private Equity. Indeed,with additional resources, METabolicEXplorer was able to consider movingbeyond the stage of supplying technologiesand licences to become a biological chem-

Bacteria cultivationand optimisation (seebelow) lie at the heartof METEX’s businessmodel.

32 PRIVATE EQUITY MAGAZINE | August 2009 | Special Issue |

DR

Set against the growing shortage of fossilresources, the Clermont-Ferrand-based biologicalchemicals company aims to offer an alternativeto petrochemicals by producing in another way,within a more environmentally-friendlyframework. Following a successful IPO in 2007, it can always count on its VCs to help it take a further step forward. (N°44. APRIL 2009)

the north of Clermont-Ferrand. At thesame time, an initial 1.5 million euros wereraised, financed by Seventure and Sofimac.The financiers carried out a commercialand strategic audit of the company, whichrevealed that while the post-oil niche represents the right market, the originalmodel, which was to sell the company’smetabolic engineering services to industrialchemical firms, was not going to create a lotof value for the shareholders.

I

icals player in its own right, through joint-venture agreements with limited exclusivi-ty linking it to partners with which it wouldshare revenues from its “bacteria factories”.“With our techniques, we provide a con-crete and more competitive solution foreach of the main categories in the bio-chemical industry in order to reduce theirdependency on fossil raw materials, whichcan account for up to 80% of their costs”,confirms Benjamin Gonzalez .

The adventure gains paceArmed with these arguments, METEX suc-cessfully carried out one of the best biotechIPOs in 2007, raising 60 million euros onEurolist B. At the end of the capitalincrease, the VCs, which had put forward13 million euros in the first three rounds offundraising, held 60% of the 20 millionshares in the company, valued at 162 mil-lion euros, giving them an excellent capitalgain. Nevertheless, most decided to stay inthe capital at the end of the lock-up, believ-ing that the company was only at the startof its adventure. In just one year, from theend of 2007 to the end of 2008, its work-force grew from 68 to 95 employees, andMETEX’s five chemical compounds, rep-resenting an estimated market of over 14billion dollars and protected by 181 patentsin 49 countries, have all moved into a pre-pilot industrial phase. An industrial pilot,which is currently being built, is scheduledto be started up for the end of 2009: it willmake it possible to validate, by continu-ously producing hundreds of kilos ofproducts, the cost price for each fermenta-tion and purification stage in order to pro-vide future partners with “process books”,making it possible to plan the production


of several thousand tons. The mostadvanced company-owned product, 1.3Propanediol, which is useful for the pro-duction of textile fibres, polymers and cov-erings, has already been covered by anagreement to work with the French Petro-leum Institute (IFP) for using glycerol, aby-product from the production ofbiodiesel, as a raw material. Above all,thanks to floating on the stock market, thecompany has major financial visibility,with 56 million euros in free cash, while itis gearing up for the most intensive phase inits development. Which is enabling it toembark on talks with major industrial play-ers without feeling inferior in any way, look-ing to create joint ventures on target mar-kets, such as Latin America, Asia, the USand Europe, and to imagine one day pro-ducing products for day-to-day life that aremanufactured in an environmentally-friendly way with “METEX Inside”.

■ François-Xavier Chapelle

P. G.: The company’s effective management of its cash means that it is able to calmlynegotiate a partnership, and the closer it gets towards the finished product, with itsindustrial pilot starting up, the more our value grows.

Benjamin Gonzalez (METabolic EXplorer) and Philippe Guinot,Senior Partner at Crédit Agricole Private Equity, look backover METabolic Explorer’s success.

PRIVATE EQUITY MAGAZINE : What has the contribution of funds involved?

P. G.: Our role is to provide a constructive andcritical perspective, without putting ourselves inBenjamin’s place. He remains the only captain onboard, handling all negotiations and he neveraccepts anything that he does not firmly believe in.

B. G.: We are confident that we will be able tomeet the schedule mapped out at the time of ourIPO, with the first operational units to beobtained between 2010 and 2012. The talks arecomplex and we want this partnership to be abenchmark for the chemical industry.

B. G.: Philippe, who has held executivemanagement positions in the pharmaceuticalindustry, opened up his networks to us andsuccessfully rallied the historicalshareholders during the IPO.

B. G.: Our business model,which combines technologylicenses with an industrialpartner, and the search for joint-venture agreements on high volumemarkets, has enabled

us to rapidly generate revenues and achieve profitability.

PRIVATE EQUITY MAGAZINE : When do you hope to sign your first partnership agreement for one of your company-owned products?

DR

P. G. : This success is proof that acompany can create a lot of valuefor its shareholders without rais-ing huge amounts of capital. The management team, who knew how to successfully sur-round themselves with the right

scientific and industrial capabilities, is fully awareof the solutions that the market is looking for.

“With our techniques,

we provide a more

competitive solution

for each of the main

categories in the

biochemical industry

in order to reduce

their dependency on

fossil raw materials”,

Benjamin Gonzalez,

chairman and CEO

of METabolic EXplorer

DR

CROSS INSIGHT

PRIVATE EQUITY MAGAZINE: How would you analyse Metabolic Explorer’s success?

In 10 years, BenjaminGonzalez has madeMETEX a pivotalplayer on the whitebiotechnologymarket*.

> 1999 METabolic Explorerfounded

> 2000 1st round of fundraisingfor 1.5 million euros(Sofimac Partner andSeventure)

> 2002 2nd round for 6 millioneuros (CAPE and ViverisManagement)

> 2005 Industrial agreementsealed for an exclusiveglobal license withRoquette

> 2006 3rd round of fundraisingfor 5 million euros(Roquette enters thecapital)

> 2007 Floated on Euronext

> 2008 Five products in pre-industrialisation

> 2009 Industrial pilot beingbuilt

landmarks

DR

* White biotechnology: application of biotechnology for the production of convenience chemical products (as opposed to redbiotechnology - for pharmaceuticals - and green biotechnology- for agriculture).

offensive, christening its new fund withthree deals. Indeed, while it felt that valu-ations were too high in 2008, they have nowbecome interesting again, even if it is notseeing any collapse in multiples.

Defensive positioningWhich is not preventing it from treadingcautiously by targeting sound businesses,always with a moderate leverage effect(2.9 x EBITDA on average), in sectors withrelatively defensive characteristics. First up,agrifood, “from farm to plate”, on B to Band B to C, an area in which the fund hasdistinguished itself with the acquisition ofthe food ingredients producer Saveur in

STRATEGYA


DEALS

hile Azulis Capital undeni-ably sounds more “mod-ern” than Banexi CapitalPartenaires, a name that re-

ferred to the structure set up by BNP in the70s to group its private equity activities to-gether, the specialised mid caps fund is notturning its back on its past. In fact, far fromit. While the partners have bought out thelast 32% of the capital they did not yet ownfrom their sponsor, this simply representsthe planned outcome of a spinoff that be-gan in 2004 with the acquisition of 51% ofthe management company's shares. Andthis is certainly not going to change any-thing for the life of the 11 managers, nine

of whom have been with the firm for morethan 10 years, and who are focusing moreon the continuity of the strategy, steadfastlydeployed since the first fund managed in1993: investing in French SMEs, combin-ing buyouts, OBOs and development cap-ital (40% for the first two segments and20% for the latter). A diversified blend thatis enabling the fund to come through thecrisis without weakening, despite or indeedthanks to an investment-free year in 2008,marked by two outstanding exits: Pisto andPaprec, sold respectively to the AustralianMacquarie Group’s infrastructures fundand Financière Agache Private Equity. Thisyear, Azulis Capital has been more on the

■ Saveur In October 2007, Banexi CapitalPartners and Céréa Gestionentered the capital of Saveur,which produces ingredients forthe agrifood industry. Withnearly €70 million in revenues,Saveur is the market leader inFrance and strongly positioned in Belgium and Germany. ThisLBO is aimed at developing theGroup in France andinternationally.

■ GaledoIn January 2009, Azulis Capitalcarried out a replacementfinancing operation on the FinagGroup, which has three activities:Galedo (bathroom accessories),Bois Secs de Bourgogne - BSB -(flat-pack kitchen furniture),Rossignol (metal and plasticcleaning and hygiene products).The Group recorded 50 millioneuros in revenues in 2008, andworks closely with all of themajor French DIY stores.

■ Domidep The FCPR fund MMF III hasacquired a minority interest in the Domidep Group, whichmanages retirement homesthroughout France. Azulis Capital’s developmentcapital operation has beencarried out to finance theacquisition of new retirementhomes, which will enableDomidep to become an evenmore pivotal player on thisbooming market.

■ Martine Spécialités In March 2009, Azulis Capitaland Céréa Gestion carried out an LBO on Martine Spécialités.Specialised in frozen pastries, the company, which was part of the UK agrifood groupPremier Foods, posted 74 million euros in revenues for 2008. The LBO operation will make itpossible to accelerate thecompany's development inFrance and abroad.

■ Prodene KlintIn April 2009, Azulis Capitalcarried out an OBO on EvaGroup, the parent company of Laboratoires Prodene Klint,one of the French marketleaders for non-home hygieneand cosmetics (liquid soap,shower gels and wipes).Prodene Klint’s revenuestotalled 40 million euros in 2008, and it is also presentin Germany, the US and theMaghreb Region.

After more than 30 years as part of BNP Paribas, the former Banexi Capital Partenaires turned a symbolicpage in its story by becoming Azulis Capital this year. Which has not in any way changed its diversifiedmodel, with a blend of development capital, OBO and buyout operations. (N°44. APRIL 2009)

Clear horizon for Azulis Capital

Azulis Capital manages close to 600 million euros,

with nearly 28 active lines. The Middle Market Fund III

fund, raised in 2004-2005, was fully invested at the

end of 2007, factoring in 30 million put in reserve for

reinvestments. Middle Market Fund IV is currently

being raised, with 187 million euros in subscriptions,

and a target of 250 million by the end of 2009.

Azulis Capital

21, boulevard de la Madeleine75001 Paris

Tel : +33 1 42 98 70 20Fax : +33 1 42 98 70 21www.azuliscapital.fr

■ Stability

■ Diversification

■ Sector-based approaches

■ Regional networks

■ Independent team

IDENTITY K E Y W O R D SA D D R E S SP O R T F O L I O

W


2007, followed by Martine Spécialités in2009. Other “house” sectors include retailB to C (Etam, Naf Naf, Jardiland, etc.), in-dustry services (the equipment hire groupLoxam, the oil logistics firm Pisto and therecycler Paprec), low-tech industry, healthand personal care (Domidep retirementhome group).

Sector-based approachThe founding partners, in the same wayas the associate directors and managers ,each have their specialty sector, in whichthey strive to anticipate trends in order toplan an exit approach, often trade (twothirds of fund exits), at the end of the ac-companying period, lasting on average fourto six years. As the only concession to thecurrent environment, the mid cap fund hasventured into energy and sustainable de-velopment with the OBO on the heat pumpmanufacturer France Géothermie in 2007.Azulis Capital has maintained privileged

600million euros

under management

Paribas Group, which is the leading in-vestor in Azulis Capital’s funds.

EBITDA growthWhatever the sector, and whether it is operating on a minority or majority basis,Azulis Capital aims to be a “growth accel-erator”, driven by a build-up-based strat-egy, with 73 add-ons carried out in 15 yearson the three funds’ 92 investments. “50%of our value creation is driven by growth inthe company's EBITDA, with the balancedue to multiple and leverage effects”, ex-plains Michel Rowan. Growth that also en-ables the investor to take its equity interestsup a division by building up, taking themfrom lower mid-caps, 20 to 30 million eu-ros on average, to the upper range of 40 to100 million euros, with a more diversifiedcustomer base and management team. If weadd that Azulis Capital successfully sold offits stake in Paprec in May 2008, two yearsafter joining it following an excellent 2007-08 financial year, thanks in part to the goodlevel of newspaper paper prices, that it com-pleted its exit from the oil logistics special-ist Pisto in September 2008, just before theLehman Brothers upheaval, and that threeexits are planned this year, we can see thatthe fund should come through the crisiswithout too much damage. The statisticsalso support Azulis: in 15 years, the teamhas invested 540 million euros and carriedout 58 exits, with an average of 2.1 times theinitial investment and a gross IRR of 25%,and only two “losses”…

Enough to encourage potential LPs tosubscribe for Middle Market Fund IV, thefund that is currently being raised, andwhich was closed for the first time midwaythrough last year, with 187 million euros incommitments collected so far. For the mo-ment, a dozen or so new investors have beenwon over by Azulis Capital’s cautious anddiversified strategy, following the long-stand-ing investors, with BNP Paribas leading theway with 70 million euros. Who said thatyou needed to kill the father? ■ F-X Chapelle

■ PaprecAzulis Capital, which entered the capital of this major player for recycling in France with Demeter and Naxicap, with an OBO, exited in 2008, achieving a “remarkably high” IRR. Created in 1994, Paprec started off in paper recycling, beforediversifying into plastics, wood and electrical or industrial waste. In 2007, the company recorded 320 million euros in revenues.

■PistoAzulis Capital, which hadacquired a minority interestin this oil logistics specialistwith Bridgepoint Capital andBNP Paribas Développementin 1996, alongside Compag-nie Nationale de Navigation,sold its stake in 2008 to theMacquarie Group for a confi-dential amount. The investorsachieved a satisfactory multi-ple on this deal.

EXITS■PBMIn 2008, Banexi CP withdrewfrom the PBM Group, an expert in prefabricatedconcrete steps, taken over in2005, selling 20% of itscapital stake to the chairmanand CEO Guillaume Bermond.Between 2004 and 2007,revenues climbed from 48 to 65 million euros, withEBITDA rising from 6 to 11 million euros.

ties with the BNP Paribas developmentstructure, which often takes part in Azulis’operations, as for the jeweller Cléor fromEvreux or the Lyon-based distributor ofbusiness telephony products HBP Asso-ciés. This privileged relationship has beenbuilt up over many years and is reflected inthe confidence and trust of the BNP

P A R T N E R S

The Azulis Capital team also includes: two other founding partners, André Bélard and Gilles Pérony, two more recent partners, Nicolas Cosson and Bruno Lavollé ; the senior investment managers Anthony Dubut and Anne Robert, and the CFO Donatien Noyelle.

DR

FRANCK BOGET60 years old, Essec, CPA,chairman of the managementboard. After 23 years at Banexi,he joined Azulis Capital in 2000as a founding partner.

MICHEL ROWAN58 years old, Ina-Paris, MBA from HEC, chief executiveofficer. After six years at IDI, then 10 years with the Suez Group,he joined Banexi in 1997 then Azulis Capital in 2000, as a founding partner.

CHRISTINE MARIETTE47 years old, post-graduateDESS in finance and business,post-graduate DEA in corporatelaw, associate director. After nine years at Banexi, she joined Azulis Capital as a founding partner in 2000,specialised in health.

PIERRE JOURDAIN 46 years old, Essec, Engref,associate director. After working at the FrenchMinistry of Agriculture, he moved to Banexi in 1992,before joining Azulis Capital in 2000 as a founding partner,specialised in agrifood.

YANN COLIGNON52 years old, ESTP, masters in finance from HEC, associatedirector. After seven years at Technip, he joined Banexi in 1990, before moving to Azulis Capitalin 2000 as a founding partner,specialised in the environment.

PRIVATE EQUITYMAGAZINE | August 2009 | Special Issue | 36

BUYOUT FONDATIONS CAPITAL FONDATIONS CAPITAL FUND I 1050 FRANCEBUYOUT CRÉDIT AGRICOLE PRIVATE EQUITY CACI III 300 FRANCEBUYOUT AZULIS CAPITAL MIDDLE MARKET FUND IV 250 FRANCEBUYOUT CIC LBO PARTNERS CIC LBO FUND II 250 FRANCEBUYOUT IPE IPE EXPANSION FUND 250 FRANCEBUYOUT LBO FRANCE HEXAGONE III 150 FRANCEBUYOUT OCCAM CAPITAL OCCAM I 150 FRANCEBUYOUT FINAMA PRIVATE EQUITY ACTO CAPITAL II 120 FRANCE BUYOUT NEXTSTAGE PME CHAMPIONNES II 120 FRANCEBUYOUT ICEOS SAS ICEOS CAPITAL 100 FRANCEBUYOUT ICSO PRIVATE EQUITY ICSO 2 100 FRANCEBUYOUT NBGI PRIVATE EQUITY NBGI PRIVATE EQUITY II 100 FRANCEBUYOUT UI GESTION M.I 5 100 FRANCEBUYOUT TOCQUEVILLE FINANCE TOCQUEVILLE INVESTISSEMENTS PRIVÉS FCPR 100 FRANCE BUYOUT ALTER EQUITY ALTER EQUITY 50 FRANCEBUYOUT NEF CAPITAL ETHIQUE MANAGEMENT SENS 50 WESTERN EUROPEMEZZANINE EUROMEZZANINE EUROMEZZANINE 6 FCPR 750 FRANCEMEZZANINE LFPI LFPI MEZZANINE 300 FRANCEMEZZANINE ARGOS SODITIC ARGOS EXPANSION 150 FRANCEMEZZANINE TIKEHAU INVESTMENT MANAGEMENT TIM MEZZANINE 150 FRANCEMEZZANINE CÉRÉA GESTION CÉRÉA MEZZANINE II 130 FRANCE SPECIAL SITU. EAST CAPITAL EAST CAPITAL SPECIAL OPPORTUNITIES FUND 100 EUROPESPECIAL SITU. VERMEER CAPITAL PARTNERS VERMEER CAPITAL 90 FRANCEVENTURE SOFINOVA SOFINOVA CAPITAL VI 350 WESTERN EUROPEVENTURE DEMETER PARTNERS DEMETER 2 200 WESTERN EUROPEVENTURE CDC INNOVATION SAS FCPR INNOVATION III 150 WESTERN EUROPEVENTURE SGAM AI PRIVATE EQUITY SGAM FUND BIOTECHNOLOGY 2 150 WESTERN EUROPEVENTURE TRUFFLE CAPITAL TRUFFLE VENTURE PROGRAM II 150 WESTERN EUROPEVENTURE SERENA CAPITAL SERENA CAPITAL 125 FRANCEVENTURE ELAIA PARTNERS ELAIA VENTURES II 100 FRANCEVENTURE LC CAPITAL LC CAPITAL FUND III 100 FRANCE VENTURE SIGEFI PE SIPAREX EPICEA VENTURE II 100 WESTERN EUROPE VENTURE TECHFUND EUROPE MANAGEMENT TECHFUND EUROPE II (FCPR) 100 FRANCEVENTURE ENTREPRENEURS VENTURE GESTION ENTREPRENEURS VENTURE 2 80 FRANCEVENTURE NEWFUND MANAGEMENT NEWFUND 80 FRANCEFOF AXA PRIVATE EQUITY AXA CAPITAL EUROPE I 1500 WESTERN EUROPEFOF AGF PRIVATE EQUITY AGF PRIVATE EQUITY HOLDING EUROPE V 400 WESTERN EUROPEFOF ACG PRIVATE EQUITY ACG EUROPE V 250 EUROPEFOF CAAM CAPITAL INVESTORS CPR PRIVATE EQUITY SELECTION N° 3 150 WESTERN EUROPEBUYOUT FOF AXA PRIVATE EQUITY AXA MIDCAP EUROPE 250 WESTERN EUROPEBUYOUT FOF LA FINANCIÈRE PATRIMONIALE EUROPÉENNE LFPE 200 WESTERN EUROPEBUYOUT FOF ODDO ASSET MANAGEMENT ODDO EUROPE PRIVATE FUNDS 100 WESTERN EUROPE MEZZA. FOF AGF PRIVATE EQUITY ARIAN PRIVATE DEBT FUND I 250 WESTERN EUROPEMEZZA. FOF ACG PRIVATE EQUITY MONTAIGNE MEZZANINE 150 WESTERN EUROPEINFRASTRUC. NATIXIS EIL CUBE INFRASTRUCTURE 1000 EUROPEINFRASTRUC. OFI INFRAVIA INFRAVIA 300 EUROPE

TYPE GPs FUND OBJECTIVES (M¤) LOCATION

FUNDRAISINGTABLESEach month, a global view of the fundraising market in Europe. Here a selection for france

Please send us your information by mail to: [email protected]

FOR A COMPLETE INFORMATION, MORE DETAILS ON WWW.PEMAGAZINE.FR/FUNDRAISING

GRANDS PRIX

The awards evening took place on the 3rd of February. An audience of more than 500 professionals congratulated the best performing teams of the year on the French market, chosen by a jury of 19 recognised professionals. More details on www.pemagazine.fr/grands-prix

NOMINATED FOR THIS CATEGORY CRÉDIT AGRICOLE PE, MBO PARTENAIRES,

PERFECTIS PE, IPO

SMALL CAPS LBO FUNDSponsored by Gatienne Brault & Associés

INITIATIVE & FINANCEP

NOMINATED FOR THIS CATEGORY DEMETER PARTNERS, MIDI CAPITAL, UFG PRIVATE EQUITY

EXPANSION CAPITAL FUNDSMedia partner: La Tribune

CRÉDIT AGRICOLE PE

NEXTSTAGEP

P

NOMINATED FOR THIS CATEGORY 21 CENTRALE PARTNERS, AXA PRIVATE EQUITY, BARCLAYSPRIVATE EQUITY, LBO FRANCE, L CAPITAL

NOMINATED FOR THIS CATEGORY COLONY CAPITAL, 3I GESTION

LARGE CAPS LBO FUND

LBO FRANCEP

NOMINATED FOR THIS CATEGORY COLONY CAPITAL POUR BUFFALO GRILL, INVESTORS INPRIVATE EQUITY POUR WORLD FREIGHT COMPANY.

BEST SUPPORTSponsored by Ernst & Young TAS

L CAPITAL POUR MICROMANIA

AXA PE POUR PHOTONISP

P

Jean-Patrick Demonsang, CEO ofSeventure Partners isawarded venture fundof the year.

NOMINATED FOR THIS CATEGORY DEMETER PARTNERS, EDRIP, OTC ASSET MANAGEMENT,TRUFFLE CAPITAL, VENTECH

VENTURE FUNDMedia partner: L’Usine Nouvelle

SEVENTURE PARTNERSP

Fabien Prevost(left), president of CAPE, andJean-David Haas,partner ofNextStage, are thejoint winner of thenew award thatdistinguish expan-sion capital funds.

Daniel Piette (left),L Capital, andPhilippe Poletti, AxaPE, are rewardedfor their exemplaryrole in supportingrespectivelyMicromania andPhotonis.

Olivier Tordjman(Ayache Salama & Associés)and Laurent Borey(Mayer Brown)saw their respec-tive firms awardedby the market.

Jean-Bernard Meurisse(left), CEO of Initiative& Finance, and ThierryGiron, managing director, received the prize of small capsfund, after a historicyear.

Dominique Oger,founding partner ofAtriA, was chosen thisyear by the jury for awell balanced year between nice exits and new acquisitions.

Robert Daussun, headof Lbo France, awardedafter a particularly diffi-cult year for large caps.

NOMINATED FOR THIS CATEGORY JEAN-DOMINIQUE PERREAUX – AVERYS (21 CENTRALEPARTNERS), THIERRY ORTMANS – CEPL (SAGARD), PIERREBRUNET – WORLD FREIGHT COMPANY (INVESTORS IN PRIVATEEQUITY), PIERRE CUILLERET - MICROMANIA SFMI (L CAPITAL)

MANAGER LBOSponsored by Egon Zehnder International

ALAIN DE MENDONÇAP

NOMINATED FOR THIS CATEGORY DE PARDIEU BROCAS MAFFEI, FRESHFIELDS, GIDE LOYRETTE NOUEL, LINKLATERS, SJ BERWIN

LEGAL ADVISERMedia partner: BFM

MAYER BROWN

AYACHE, SALAMA & ASSOCIÉSP

P

NOMINATED FOR THIS CATEGORY BNP PARIBAS, CLOSE BROTHERS, HAWKPOINT

FINANCIAL ADVISER Sponsored by OFI Private Equity Capital

ROTHSCHILD & CIEP

NOMINATED FOR THIS CATEGORY AXA MEZZANINE, CALYON, CIC, MEZZANIS, NATIXIS

DEBT PROVIDER

SOCIÉTÉ GÉNÉRALEP

SPONSORS OF LES GRANDS PRIX 2009:

LES GRANDS

KARAVEL -PROMOVANCES

CONTRAGULATIONS TO THE WINNERS OF “LES GRANDS PRIX” PRIVATE EQUITY MAGAZINE

PRIX

( )Alain de Mendonça developed qualitiesthat make him aremarkable LBO manager.

Richard Thil, partner of Rothschild & Cie, issingled out by his peersfor the second time inthree years.

The year has certainlynot been easy for debtproviders, but SocieteGénérale, representedby his managing director, Patrick Sandray, showed a strong face to adversity.

2009

A

MIDMARKET LBO FUNDSponsored by Ayache, Salama & Associés

ATRIA CAPITAL PARTENAIRES P


IN: EVOLEM (34%)

OUT: FOUNDERS

SECTOR: MANUFACTURING

REV: 35 M¤

EVOLEM HAS FINANCED A BIMBO DEAL ON CHEMINÉES BRISACH. With one of the two part-ners withdrawing from the company's capital, the Lyon-based fund acquired a 34% stake, injecting 2.5million euros. The chairman and CEO Thierry Rousseau raised his interest to 56% of the capital, whileEric Jacquelin, who previously worked as a logistics consultant with the company, invested 0.6 millioneuros to acquire a 10% share. The deal structure is rounded off with a 3 million euro senior debt. Found-ed in 1961 by René Brisach, the company is one of the pioneers in France for the production of fire-places,chimneys, stoves and hearths. Based in Sainte-Maxime, in the Var Region, Cheminées Brisach employs175 people, generating 35 million euros in revenues over 2008, up 10% compared with 2007. The brandhas 135 exclusive dealers in France. The range is continuing to be overhauled, notably with the recentlaunch of ethanol-based ambiance fireplaces, which should enable the company to maintain its rate ofgrowth. Evolem is also looking to accompany it with the implementation of its development plan onneighbouring European markets. Evolem: Franck Urbanski, Sandrine Escaleira.

SOCOTEC’S TAKEOVER BY CDC CAPITAL INVESTISSEMENT was finally wrapped up at the endof the year, with a value of nearly 400 million euros. Selected by the majority employee shareholdingstructure and the managers from around 30 candidates, including 3i, PAI and AXA PE, the fund is taking75% of the capital and injecting 173 million euros in equity. For the time being, the employees and themanagement team will keep 20% and 5% of the shares. The acquisition is based 47% on debt, with totalfinancing representing 4.2 times EBITDA. Taking a more detailed look, the banking pool made up of BNPParibas, Calyon, Natixis and SG is arranging a 130 million euro senior debt (60 million euros for Tranche Aand 70 million euros for Tranche B) and granting a 60 million euro bridge loan. The mezzanine contributedby AXA Mezzanine, Capzanine and IFE represents 50 million euros. This comes on top of a 20 million eurosrevolving credit and 20 million euros in cash. With its 4,800 employees across 185 sites in France andabroad, the Paris Region-based group is the building inspection specialist, generating 437 million euros inrevenues and 36 million euros in EBITDA for 2008. After the company mutual fund has been set up, theemployees’ stake may rise to 33.7% of the capital. CDC Capital Investissement: René Maury.

IN: CDC CAPITAL INVESTISSEMENT

OUT: FOUNDERS

SECTOR: BUSINESS SERVICES

TV: 400 M¤ | D: 130 M¤ |M: 50 M¤ REV: 50 M¤

IN: UNIGRAINS, CÉRÉA MEZZANINE, JÉRÔME DUPREZ

OUT: FOUNDERS

SECTOR: AGRIBUSINESS AND INDUSTRIAL GOODS

REV: 215 M¤

UNIGRAINS AND CÉRÉA MEZZANINE HAVE CARRIED OUT AN OBO on Moret Industries. Themanager Jérôme Duprez is further strengthening his stake in the industrial group, while the family share-holders, who have been present for five generations, are reducing their interest. The capital increase, rep-resenting around 30 million euros, is being financed for two thirds by senior debt (contributed by thegroup's five banks) and one third by a contribution of capital and bonds with equity warrants from Uni-grains and Céréa Mezzanine. Created in the second half of the 19th century in the Aisne Region, MoretIndustries has two branches: on the one hand, the design, manufacturing and distribution of industrialpumps, under the Ensival Moret brand, and on the other, the design and production of “turnkey” equip-ment and facilities under the Maguin brand for agrifood markets (sugar, alcohol, drying and environment),such as ethanol units. These two business lines, which represent virtually equivalent amounts, enabledit to record 215 million euros in revenues over 2008, up 10%. The strategy aims to consolidate the com-pany's positions on its main markets (France, Belgium, North Africa, Middle East, etc.) and develop itskey areas of expertise, through both external and organic growth. Unigrains: Dominique Courcoul, Daniel-Eric Marchand, François-Xavier Masson.Céréa Mezzanine: Pierre Geerolf, Catherine Réquier.

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CHEMINÉES BRISACH (FRANCE) OBO

ADVISERS IN | M&A: Natixis Finance (D. Giroux, Anne Trocme-Reinaud) - L: Freshfields - A: Ernst & Young TAS (J. Welstead) - T: Ernst & Young Société d'Avocats (A. Pierret, F. Teper) - E: August & Debouzy(Emmanuelle Barbara) - AS: Bain & Co (J-M. Le Roux), Marsh (H. d'Autichamp) - D: BNP Paribas (B. Matusiak,

S. Gagey), Calyon (L. Chenain, B. Nung), Natixis (G. Rosset, A. Groussard), SG (N. de Saint-Laon) - M: AXA Mezza-nine (C. Vulliez), Capzanine (L. Bénart), IFE (Dominique Fouquoire) - LD: White & Case (G. Peigney, S. Berlat), Linklaters (A. Fromion)

ADVISERS OUT | M&A: BNP Paribas (F. von Marx) - L: Shearman & Sterling (J. Naquet-Radiguet),Sarrau Thomas Couders (D. de Pariente, Hervé-Antoine Couderc) - A: PricewaterhouseCoopers TS (O. Marion) -F: Landwell (A. Chedal, P. P. Fisselier)

ADVISERS IN | M&A: Cap Office (F. Goenaga) - L: Alcya Conseil (L. Simon, Valérie Ciancia)

D: BNP Paribas -Banque Palatine - Caisse d'EpargneADVISERS OUT | L: Bignon Lebray (G. Bazaille) - Verniaud Rolland -

ADVISERS IN | L: Orsay (F. Milotic, V. Dixneuf), A: Abelia Consulting (D. Parquet)

| ADVISERS OUT | M&A: Aucteor Finance (D. Tréchot, L. Jamet, P. Garnier),L: Doxa (B. Lemistre), EFC (O. Davigny)

SOCOTEC (FRANCE) LBO

MORET INDUSTRIE (FRANCE) OBO

IN: UFG PE (ARNAUD FILHOL, ALEXANDRE DELBY WILKES) (4%)

OUT:FOUNDERS, APAX PARTNERS, CDC INNOVATION

SECTOR: TELECOMS

TV: 125 M¤ REV: 70 M¤ | EBITDA: 12 M¤

UFG PRIVATE EQUITY IS CONTRIBUTING 5 millioneuros to Arkadin and taking 4% of the capital alongsidethe management team, business angels and the ApaxPartners and CDC Innovation funds, which came onboard in 2004 and 2005 respectively, at the time of therounds of fundraising for 6.6 M€ and 5.2 M€. Follow-ing the fundraising, also combined with a senior debt of15 M€, corresponding to 1.2 times EBITDA in 2008, thefinancial investors own one third of the capital, withmanagement holding another third, and the balance inthe hands of the friends and family of the chairman, CEOand founder Olivier de Puymorin. Specialised in remotecollaboration services for businesses (audio and web con-ferences), the group, which has 500 employees inEurope, Asia and North America, recorded 70 millioneuros in revenues, with a “good level of profitability”,and is ranked number three worldwide among suppliersof personalised remote collaboration solutions. UFG PE: Arnaud Filhol, Alexandre Delby Wilkes - Apax Partners: Eddie Misrahi ; CDC Innovation : Franck Noiret.

ADVISERS IN | L: Bird & Bird (M. Baffreau, C. Basdevant-Soulié) , A: Grant Thornton (S. Quagliaroli)

D: Neuflize OBC (P. de Valerio) - Bred (E. Fondecave) - Crédit Coopératif (C. Giraud) Banque Commerciale duMarché Nord-Europe (E. Talbot) ADVISERS OUT | L: Gatienne Brault (G. Brault) - Chammas & Mar-cheteau (L. Chammas, M. Picciolini)

ARKADIN (FRANCE) LBO

FIND ALL THE DEALS ON WWW.PEMAGAZINE.FR/DEALS

DEALSTABLES Each month, Private Equity Magazine presents a selection of deals, in France or in Europe.

Please send us your press releases by mail to: [email protected]

KEY:

TV: TRANSACTION VALUE - CV: COMPANY VALUE

M&A: M&A ADVISER - D: DEBT - L: LEGAL ADVISER

LD: LEGAL ADVISER DEBT - SD: SENIOR DEBT

F: FINANCIAL ADVISER - A: ACCOUNTING ADVISER

E: EMPLOYMENT - AS: STRATEGICAL ACCOUNTING ADVISER

T: TAX - E: EQUITY - M: MEZZANINE - REV: REVENUES


CÉRÉA CAPITAL AND BANEXI CP HAVE BOUGHT OUT MARTINE SPÉCIALITÉS for 50 mil-lion euros from the UK agrifood group Premier Foods (LSE). The two funds have each taken 43% of thecapital, with the balance held by Didier Boudy and its management team. The debt, structured arounda club deal with five lenders and three mezzanine lenders , represents more than 30 million euros, withtwo thirds senior, including a 7 million euro capex line, and one third mezzanine. In May 2008, the Britishgroup had launched the sale of Sofrapain, including Martine Spécialités, its pastries subsidiary. After exclu-sive talks were called off with an industrial player in September, Premier Foods accepted the joint bidby the industrial firm Nutrixo and Céréa Capital to respectively buy out Sofrapain for its Viennese pas-try activities and Martine Spécialités under a spinoff. In 2008, the target recorded 74 million euros in rev-enues, and it employs 390 people at its production site in the Dordogne Region. The capex put in placeshould make it possible to finance its expansion. Martine produces nearly 30,000 tons of products, with650 references, which it supplies to the mass retail sector as well as restaurant and catering networks. Céréa Gestion: Gilles Sicard, Antoine Peyronnet, Xavier Renault - Banexi CP: Michel Rowan, Pierre Jourdain - Grand Sud-Ouest Capital: François de Vaugelas.

IN:CÉRÉA GESTION, BANEXI CAPITAL PARTENAIRES,

GRAND SUD-OUEST CAPITAL

OUT: PREMIER FOODS

SECTOR: FOOD INDUSTRY

TV: 50 M¤ | D : 30 M¤ REV: 110 M¤

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MARTINE SPÉCIALITÉS (FRANCE) LBO

ADVISERS IN | M&A: Close Brothers (P. Guézenec), L: Ayache Salama (O. Tordjman), Dumon Avocats(J-B. Dumon), A: PricewaterhouseCoopers TS (M. Naquet Radiquet), Wagram (P. Le Clerc), Bignon Lebray (F.Dedieu), E: Capstan (J-M. Mir), AS: Diligence Partners (D. Mathez), Marsh (J-M. Dargagnaratz), ERM (J. Famy),D: BNP Paribas (M. Beque), LCL (E. David), Crédit Agricole Charente (T. Vayssier), Natixis (F. Alliany)

M: Céréa Mezzanine (P. Geerolf), Unigrains (J. Geney), CIC Mezzanine (F. Petit)

ADVISERS OUT | M&A: Stamford Partners

IN: BARCLAYS PE, MARTEK POWER

OUT: MANAGERS

SECTOR: OTHER ELECTRONICS, EQUIP. INDUSTRIAL

REV: 2 M¤

MARTEK POWER, 62%-OWNED BY BARCLAYS PE since January 2008, has finalised the acqui-sition of Semelec from its manager. This build-up, the second following the group’s LBO, has been fullyfinanced through equity. Created in 1972, the target is expected to generate 2 million euros in revenuesthanks to around 20 employees. Semelec has specialised in metrology (metrics models), calibration andmaintenance for measuring equipment. This acquisition is enabling Martek Power to add a comple-mentary business to that of its subsidiary Sefelec (9 million euros in revenues), recognised and estab-lished on the European market for electrical safety and cable testing. The group, whose manager Mar-cel Katz has kept 38% of the capital alongside Barclays PE, is consolidating its position on aeronautics,defence, telecoms or medical energy conversion (68 million euros in revenues in 2007, 930 employeesacross France, England, US, Mexico, Tunisia and China).

ADVISERS IN | L: Taylor Wessing (G. Amsallem, L. Lapeyre) A: Bellot MullenbachADVISERS OUT | M&A: Acetis (F. Bos)

SEMELEC (FRANCE) BUILD-UP

IN: BNP PARIBAS DÉVELOPPEMENT

OUT: FOUNDERS

SECTOR: MEDIAS

TV: > 4,5 M¤ | SD: 2,7 M¤ REV: 6 M¤

BNP DÉVELOPPEMENT IS INVESTING 2.5 MILLION € in the capital of the Télé-Animaux group,which has at the same time successfully raised 2.7 million euros of senior debt arranged by Crédit Lyon-nais. Created in 2005 by Bernardo Gallitelli, who remains its majority shareholder (52%), the media group(formerly Buena Media) is the French market leader in the pet world. The company has developed its busi-ness through external growth and today has five magazines, including 30 Millions d’Amis, a weekly vet-erinary magazine (L’Essentiel), a trade press title (Petmarket) and an animal pharmaceutical newspaper(Pharm Animal), in addition to 10 themed sites. The funds raised will be used to accelerate external growthfor the group, which today has 6 million euros in revenues for an EBIT of 7%, taking over Girault, a man-ufacturer of grooming supplies and accessories. BNP DÉV.: Jean Charles Moulin, Valérie Bouilhet-Ferri.

ADVISERS IN | D: LCL (V. Tornamorell) - Crédit Agricole (L.Dumay, E. Dubray)

ADVISERS OUT | M&A: Aelios Finance (P. Vignaud, H. Mollard), L: Cohen Amir-Aslani, Marseillan Ornano & Associés (K. Fitau, B. Arragon, E. Cini)

TELE-ANIMAUX (FRANCE) OBO

IN: ALVEN CAPITAL, OTC AM, A PLUS FINANCE, CAPZANINE

OUT: SHAREHOLDERS

SECTOR: TELECOMS

TV: 12 M¤ REV: 8,4 M¤

ALVEN CAPITAL, OTC AM, A PLUS FINANCE AND CAPZANINE, the historical investor, are tak-ing part in a 12 million euro fundraising carried out by Ercom. Founded in 1986 by Jean Lacroix in Vél-izy, the target had been taken over through an MBO in 2007 by its management and Capzanine. It isspecialised in producing solutions to test the security and quality of telecoms networks, particularly forthe development of 4G networks, which provide very high-speed data access. With more than 20 patentsto date, the SME headed by Didier Pagnoux employs around 45 specialised engineers. Its technologicalexpertise has enabled it to develop privileged relationships with the French State and with leading groupson the telecoms market. Following its takeover, its revenues increased by 65% in 2008 to reach 8.4 mil-lion euros. More specifically, this further significant capital increase will enable Ercom to finance strate-gic acquisitions and develop its business internationally, particularly in Japan and the US for support. Alven Capital: Nicolas Celier, Jeremy Uzan - A Plus Finance: Jean Michel Pimont, Pierre Loup - OTCAM: Xavier Faure, Laurent Foiry - Capzanine: David Hoppenot, Maxence Radix.

ADVISERS IN | L: CVML (A.Dethomas, F. Brocard), A: Ernst & Young TS (E. Picard, F. Poncet, Al. Lacour)

E: Devoteam (B. Hakim, M.Toukourou, M.Bouzoubaa, S. Lefebvre)

ADVISERS OUT | M&A: Clipperton Finance (N. von Bulow), L: Denton Wilde Sapte (P. Jouglard,

K. Violeau)

ERCOM (FRANCE) DEV

INV:FSI (17%), ACE MANAGEMENT (3%)

OUT: FOUNDERS

SECTOR: AERONAUTIC

TV: 80 M¤ REV: 930 M¤

ACE MANAGEMENT IS JOINING FORCES with the new strategic investment fund (FSI) to raisetheir respective stakes in Daher, the aeronautical equipment manufacturer, to 3 and 17%. The acqui-sition of this interest is based on an 80 million euro capital increase, with the majority subscribed forby the two structures. ACE Management is intervening through its dedicated venture capital fundsAerofund I and II for the aeronautical sector, sponsored by CDC Entreprises, EADS and Safran.Announced back in November, this represents the second strategic investment by the FSI following thedeal finalised in February on the automotive equipment manufacturer Valeo. This strengthening of itscapital has enabled Daher to wrap up the 585 million euro financing plan announced for the next fiveyears, in the aeronautical and nuclear sectors according to the FSI, which aims to actively participatein governance bodies. The company employs 7,000 people in 12 countries, and is forecasting 930 mil-lion euros in revenues for 2009. ACE Management:Thierry Letailleur, Xavier Hermann, Delphine Dinard.

ADVISERS IN | ADVISERS OUT |

DAHER (FRANCE) DEV

IN: AGF PRIVATE EQUITY, SEVENTURE

OUT: FOUNDERS

SECTOR: INTERNET

TV: 6,5 M¤ REV: 6 M¤

24H00.FR HAS COLLECTED 6.5 MILLION EUROS for its sec-ond round of fundraising with its historical VC AGF Private Equity(3 million euros), joined by Seventure (3 million euros) and variousbusiness angels (500,000 euros). The women’s online shopping sitehad already raised 6 million euros at the start of 2007 (including5 from AGF PE). In 2006, its founder, Patrick Robin, a net pioneerwho created the internet service provider Imaginet then sold it onto the Colt Group in 1998, has become a minority shareholder fol-lowing this round of fundraising. Created on a model for eventssales, 24h00.fr has since the end of 2007 become an intermediation site for leading women’s chains andbrands on the web. This differentiating model enabled it to generate nearly 7 million euros in revenuesover 2008, up 50% compared with 2007, and to break even during the fourth quarter of last year. AGF Private Equity: Benoît Grossmann, Seventure: Anne Costaseque, Valérie Gombart.

ADVISERS IN | L: Jones Day (R. Bonnet, C. Gavoty), A: Fischbach (M. Fischbach)

ADVISERS OUT | M&A: Aelios Finance (P. Mercier), L: Valluet Achache (N. Valluet)

24H00 (FRANCE) VENTURE


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IN: ACCOR

OUT: COLONY CAPITAL (15%)

SECTOR: LEISURE

TV: 152 M¤ REV: 1200 M¤

COLONY CAPITAL IS SELLING ITS 15% BLOCK IN THE LUCIEN BARRIÈREGROUP for 153 million euros to Accor, which already had a 34% stake. This exit isbeing carried out in line with the initial agreement entered into in January 2004between Accor, Colony and the Barrière family, allowing the financial shareholder tosell its shares to the industrial shareholder. In November last year, Colony Capital hadofficially announced its intention to exercise its option. At the time, five banks werecalled on to value the fund's interest in the capital of the casino market leader, whichhad sales of 1.2 billion in 2008. Following this operation, Accor owns 49% of thegroup's capital, with the balance remaining within the family. The sale could also havean impact on Colony’s interest alongside Eurazeo in the Accor Group’s capital. In Feb-ruary 2009, the two funds announced that they held more than 25% of the shares.

ADVISERS IN & OUT | M&A: Société Générale (H. Motel)

GROUPE LUCIEN BARRIÈRE (FRANCE) EXIT/LBO2

INV: MEDTRONIC (100%)

OUT:SOFINNOVA PARTNERS, APAX PARTNERS, HEALTHCAP, MAVERICK

CAPITAL, FOUNDERS, MANAGERS

SECTOR: MEDICAL DEVICE

TV: 550 M¤ |MULTIPLE: > 10

THE AMERICAN MEDICAL INSTRUMENTATION SPECIALIST MEDTRONIC has taken overCorevalve for an initial amount of 700 million dollars (546 million euros). A “historical” exit for the mainshareholder Sofinnova Partners, which had come on board in 2003, and for Apax Partners, Healthcapand Maverick Capital, which joined it in 2005 and 2007. When the VCs were gearing up to reinvest inthe Irvine-based company (California), Medtronic offered them 700 million dollars, which will be fol-lowed by additional payments depending on whether or not the objectives defined beforehand areachieved, ensuring “one of the biggest capital gains in its history” for Sofinnova. Corevalve, foundedin 2001 by the surgery professor Jacques Séguin, has developed a technology that is less traumatisingthan open heart surgery for patients with aortic valve stenosis. Successfully launched in Europe, and wait-ing for its release on the US market to be authorised, planned for 2011, the product uses the smallestcatheter on the market. Sofinnova Partners: Antoine Papernik.

ADVISERS IN | ADVISERS OUT | M&A: Goldman Sachs (L. Sarsfield) - J: Wilson Soncini (M. Waters)

COREVALVE (FRANCE) EXIT/LBO2

IN: CRÉDIT AGRICOLE PE, INNOVEN PARTENAIRES, A PLUS FINANCE

OUT: SPINEVISION (100%)

SECTOR: MEDICAL PRODUCTS

TV: 8,2 M¤

CAPE, INNOVEN PARTENAIRES AND A PLUS FINANCE have contributed 8.2 million euros toSpineGuard. The funds raised have enabled the new company to acquire Pediguard, a vertebral drillinginstrument, from SpineVision, the manufacturer of medical equipment for spinal implants. Following thisfundraising, the three funds own equal stakes giving them a majority in the new company SpineGuard,alongside Pierre Jérôme and Stéphane Bette, former executives from Medtronic Sofamor-Danek and twoof SpineVision’s cofounders. Use of Pediguard, which makes it possible to optimise the placement ofpedicle screws during spinal operations requiring vertebral drilling, is developing strongly in the US (twothirds of sales). Indeed, it considerably reduces the risk of screws being positioned incorrectly, whichcould result in quadriplegias, while making it possible to avoid any use of radiology materials, whichare dangerous for staff due to radiation exposure. SpineGuard, which will employ 15 people in Parisand San Francisco, aims to equip surgery departments, which carried out close to one million vertebraldrilling operations in 2008, with the PediGuard, billed at 1,500 dollars. SpineVision, which is still sup-ported by the Sofinnova Partners, Innoven Partenaires, Healthcap and Bioam funds, will continue devel-oping and marketing other spinal surgery instruments. Cape: Alexia Pérouse - Innoven Partners: Thomas Balland - A Plus Finance: Jean-Michel Pimont.

SPINEGUARD (FRANCE) VENTURE/SPIN-OFF

ADVISERS IN | L: Dechert (E. Trombe, A. Paronneau) - A: Grant Thornton (M. Claverie, S. Dervain)

ADVISERS OUT | M&A: Aelios Finance (A. Lostis), L: Fried Frank (F. Hellot, AC Rivière) - Redlink (H. de Kervasdoué, V. Tazé), A: Plasseraud (E. Burbaud)

IN: BV CAPITAL, ALVEN CAPITAL

OUT: FOUNDERS

SECTOR: INTERNET

TV: 5 M¤ REV: > 10 M¤

MYFAB.COM, THE LEADING SITE FOR THE PRODUCTION OF DESIGNER furniture and itemson request, is carrying out its second round of fundraising for 5 million euros with the German VC BV Cap-ital (3 million euros) and Alven Capital, which had already supported the company during its start-up phaseby providing it with 200,000 euros at the beginning of 2008. Created by Stéphane Setbon, along withthree other cofounders in 2008, this Paris-based start-up has a concept that combines group purchasingand production on request, with a catalogue of over 600 products (mainly interior design). It employs 80people, split between offices in Paris, Shanghai, Hong-Kong and Hamburg, and expects to generate near-ly 10 million euros in revenues over 2009. This round of fundraising will make it possible to finance thecompany’s international development, and more specifically its entry onto the German market, scheduledto take place in a few weeks time, as well as to open up the platform to other markets such as clothing. BV Capital: Stéphane Monmousseau, Denis Catz, Alexis Wibaux, Gimv: Arnaud Leclercq, Sandra Pezet.

ADVISERS IN | L: Nixon Peabody (E. Porte, D. Glucroft)

ADVISERS OUT | L: Lefèvre Pelletier (D. Pubellier, P. Lévêque, A. Aubery)

MYFAB.COM (FRANCE) VENTURE

IN: SOFINNOVA PARTNERS

OUT: FOUNDERS

SECTOR: BIOTECHS

TV: 6 M¤

SOFINNOVA PARTNERS IS REINVESTING 4 MILLION EUROS on the new 6 million euro roundof fundraising carried out by the biopharmaceuticals company DBV Technologies. The company had raised12.6 million euros in 2006 in its first round with Sofinnova (7 million euros), Apax Partners (5 millioneuros) and its long-standing investors (0.6 million euros). Founded in Paris in 2002 by two paediatricians,who continue to hold a majority stake, DBV Technologies has developed a globally patented E-patch(needleless) technology for diagnosing milk allergies without the risks linked to invasive methods. Look-ing to establish partnerships with major pharmaceutical companies, the biopharma is today welcomingALK-Abello (250 million euros in revenues), the global desensitisation and immunotherapy market leader,into its capital. In this way, the Danish group is ploughing in 2 million euros alongside Sofinnova. Thesefunds will enable the target, headed since 2005 by Jean-François Biry, to finance clinical trials of a treat-ment for peanut allergies. Sofinnova Partners: Rafaèle Tordjman.

DBV TECHNOLOGIES (FRANCE) VENTURE

ADVISERS OUT | L: Morgan Lewis (K. Noël)

IN: PRAGMA CAPITAL, GIMV

OUT: IXEN (NPE) (55%), CAPZANINE

SECTOR: FINANCIAL SERVICES, BUSINESS SERVICES

TV: 130 M¤ | SD: 40 M¤ |M: 15 M¤ REV: 50 M¤

PRAGMA CAPITAL AND GIMV HAVE SIGNED A SECONDARY LBO on one of the French mar-ket leaders, Leyton & Associés. iXEN, which had acquired a 55% stake in the consultancy valued at 40million euros in October 2006, has sold off its interest following an over-the-counter deal for nearly 130million euros. Capzanine, which held a small stake, has also exited. Pragma Capital, which has been work-ing on the takeover project since October 2008, is taking up an equity ticket in the top of its usual invest-ment bracket, ranging from 10 to 35 million euros, giving it 36% of the capital, compared with 9% forGIMV. Founded in 1997, Leyton & Associés has developed its consulting business on payroll tax opti-misation before diversifying into tax aspects, non-strategic procurement and innovation financing in Franceand internationally. With more than 300 employees, the group posted 41 million euros in revenues for2007, and is forecasting 50 million euros in June 2009.Pragma Capital: Stéphane Monmousseau, Denis Catz, Alexis Wibaux - Gimv: Arnaud Leclercq

ADVISERS IN | M&A: Mandel Partners (B. Le Galcher Baron, F. Perez) - L: Weil Gotshal & Manges (F. Cazals, Y. Olivier, Cassandre Porgès, E. Ringeval) - A: Deloitte (H. Krissi, P. Abenso) - E: LEK (Rémi Haussmann,

David Danon-Boileau) - D: Banque Espirito Santo (T. Boistay) - CIC (V. Rivaillon) - LCL (Hélène de Prévoisin) -Société Générale (Nathalie Bleunven) - M: TIM Mezzanine (P. Bruneau, B. Fougerat) - Banque Espirito Santo (T. Boistay) - LD: Bird & Bird (H. Pillard) - SJ Berwin (C. Millar)

ADVISERS OUT | L: SJ Berwin (C. Digoy, Lea Ribeiro) - A: Constantin (Cécile Rémy, R. Montloup) -

T: Room (F. Vignalou) - E: Paul Hastings (L. Roglev, Hortense Rouvier)

LEYTON & ASSOCIÉS (FRANCE) EXIT/LBO2


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IN: FSI (8%)

OUT: TPG CAPITAL (6,5%)

SECTOR: ELECTRONIC

TV: 160 M¤ REV: 1680 M¤

THE STRATEGIC INVESTMENT FUND (FSI) has sealed its biggest investment, ploughing 160 mil-lion euros into acquiring an 8% stake in Gemalto from the investment fund TPG Capital. The latter isreducing its interest in the smartcard manufacturer to 6.5%, compared with 14.5% previously. In becom-ing one of the company’s main shareholders, the FSI has requested a seat on the company’s board ofdirectors. Created through the merger between Axalto and Gemplus in 2006, Gemalto published a 5.4% drop in revenues for the first quarter of 2009, down to 367 million euros, while confirming that it stillexpects its sales to grow over the full year. In 2008, it generated 1.68 billion euros in revenues, with 153million euros in net income.

ADVISERS IN | L: Freshfields (F. Cohen, D. Barat )

ADVISERS OUT | L: Cleary Gottlieb (S. de Beer )

GEMALTO (FRANCE) EXIT/LBO2

INV: BARCLAYS PE ( > 70%)

OUT: LBO FRANCE

SECTOR: INDUSTRIAL GOODS

TV: 95 M¤ REV: 114 M¤

BARCLAYS PE IS ACQUIRING MORE THAN 70% of the Compin Group from LBO France. The targetis valued at 95 million euros, representing 7.5 times the level of EBITDA expected for this year. The sellingfund had bought this manufacturer of seats for public rail transport in 2005. Since then, Compin has devel-oped its scope through build-ups, including the acquisition of a former subsidiary of Bombardier in 2006and a majority stake acquired in a joint venture in China. The group, which is now structured around threebusiness lines that dovetail effectively with one another (seats, interiors and front-ends), is forecasting 150million euros in revenues for the current year, with an order book of 300 million euros. Driven by this devel-opment, LBO France has taken nearly four times its initial investment and is remaining on board as a minor-ity shareholder (8%). Barclays PE is financing the acquisition thanks to senior and mezzanine debt of justless than the equity invested, which is expected to represent nearly four times EBITDA. The manager MarcGranger, is also reinvesting with its management team, moving up to a capital stake of nearly 20%.LBO France: Pierre Galix.

CONSEILS ACQUÉREURS | M&A: Baycap (C. Prévot), L: SJ Berwin (M. Bloch), A: PwC TS (F. Antarieu) AS: Roland Berger (O. de Panafieu), D: BNP Paribas (I. Guillaumet), SG (N. Bleunven), LCL (A. Patarini), Banque Palatine, BESV, M: Mezzanis (M. Benchimol), JD: Gide Loyrette Nouel (E.Cartier)

ADVISERS OUT | M&A: Close Brothers (P. Croppi) Transaction R (P. Carpinelli), L: Lefèvre Pelletier(J-L. Bedos), A: Conseil Audit & Synthèse (J-F. Nadaud) LEK (A. Bernardin)

COMPIN (FRANCE) EXIT/LBO2

IN: CATHAY CAPITAL (12,7%)

OUT: SIPAREX (12,7%)

SECTOR: AGRIBUSINESS

TV: 6 M¤ REV: 43 M¤

SIPAREX IS SELLING ITS 12.7% STAKE IN MOBAGO, the main shareholder in Eurogerm with67.1%, to the Franco-Chinese fund Cathay Capital for an amount “close to the average share price forthe company” valued at nearly 48 million euros on Alternext. Siparex had entered the capital of the pro-ducer of cereal ingredients for the milling and bread making industry in 2004 by investing 4.4 millioneuros alongside Carvest (1.4 million euros), which is still a shareholder in Mobago, with 2%. The Lyon-based financier has an “IRR of around 20%”, primarily achieved thanks to its partial exit in 2007 whenEurogerm floated on Alternext, which valued the SME from Dijon at 72 million euros. Following this cap-ital restructuring, ACG, the holding company of the chairman and founder Jean-Philippe Girard, has main-tained its majority interest, with 84.2% of Mobago. After successfully setting up in Africa and South Amer-ica, this deal confirms Eurogerm’s desire to expand in a new region: Asia. Hence the choice of CathayCapital Private Equity, which is intended to accompany it and firm up opportunities on this continent,particularly in China, where the food product segment relating to the Wheat-Flour-Bread sector is see-ing strong and structural growth, driven by changes in consumption patterns and dietary habits. With 10million euros in free cash flow, and a borrowing capacity of 2 for 1, Eurogerm (2008 revenues: 43 mil-lion euros) is armed with some 30 million euros to finance its international development.CATHAY CAPITAL: Edouard Moinet.

ADVISERS IN | L: Taj (A. Larcena)

ADVISERS OUT |

EUROGERM (FRANCE) EXIT/LBO2

LBO FRANCE IS BUYING OUT SAM+ FROM PERFECTIS PRIVATE EQUITY, which is also rein-vesting on a minority basis in order to continue supporting the managers who are still involved in the oper-ation. The funds managed by Alliance Entreprendre and Paluel-Marmont Capital, which have been partneringthe group since 2003, are also reinvesting on this deal, financed with a slight leverage effect thanks to CICand BNP Paribas. In 2006, the selling fund had carried out a secondary MBO on SAM+, the company spe-cialised in producing integrated metal structures for the building sector, joining forces with the manager atthe time, Bernard Delorme. The latter is standing down from the executive in favour of Michel Lucas, whileremaining on as a shareholder. In the three years during which Perfectis has been involved, SAM+ has grownfrom 30 to 40 million euros in revenues and virtually doubled its profitability. Perfectis has accompanied themanagement team in terms of both its external growth policy (two acquisitions in 2006-2007) and by sup-porting the maintenance activity. LBO France: Jean-Marie Leroy, Perfectis PE: Stéphane Bergez, GabrielFossorier, Alliance Entreprendre: Bernard Pénicaux, Paluel-Marmont Capital: Xavier Poppe.

IN:LBO FRANCE, MANAGERS, PERFECTIS PE, ALLIANCE ENTREPRENDRE,

PALUEL-MARMONT CAPITAL

OUT: PERFECTIS PE

SECTOR: CHEMICAL MATERIALS

REV: 400 M¤

ADVISERS IN | L: Frieh & Associés (L. Masseran, D. Boulanger), A: Conseil Audit & Synthèse (C. Piémont, J-F. Nadaud), T: Arsène, E: Estin & Co, D: CIC (J. Salmon, M. Lecomte),

BNP Paribas (M. Siciliano)

ADVISERS OUT | M&A: Close Brothers (A. Matheron, T. Marie), L: HPML (V. Libaud)

Cabinet Martin (M-D. Martin)

SAM+ (FRANCE) EXIT/LBO2

IN: JEAN-PHILIPPE GAY

OUT: MBO PARTENAIRES (60%)

SECTOR: TRANSPORT

TV: 10-15 M¤ REV: 11 M¤

MBO PARTENAIRES HAS SOLD OFF ITS 60% STAKE in the explosive materials logistics firm Trans-ports Murie to an individual “who knows the industry well” (Jean-Philippe Gay). This exit has enabled MBOPartenaires to record an IRR of 60% at the end of its three years presence in the capital, during which thefamily-owned SME carried out a build-up on its main rival Galopin in 2006. Which has consolidated itsleading position on the French market and driven it above the 10 million euro mark for revenues. In 2008,revenues came in close to 11 million euros, with operational profitability of nearly 20%. Following the oper-ation, the two owner managers, who have held operational positions within the group for more than 20years, Joël and Thierry Murie, kept a minority interest in the new structure. MBO Partenaires: Jean-Michel Rallet.

ADVISERS IN | M&A: Valactif (P. Zoppi, J-N Combasson) - L: CMS Bureau Francis Lefebvre (C-Y Rivière, J. Queyroux) - A: Exafi (C. Guyetant) - E: Fromont Briens (Y.Fromont)

ADVISERS OUT | M&A: Aforge Finance (A. Roué-Lécuyer, C. Caunésil) - L: Quadratur (G. Fresel, L. Velut)

TRANSPORT MURIE (FRANCE) EXIT/LBO2

IN: OTSUKA PHARMACEUTICAL

OUT: ABENEX CAPITAL (EX-ABN AMRO CAPITAL FRANCE), L CAPITAL

SECTOR: FOOD INDUSTRY

REV: 287 M¤

ABÉNEX CAPITAL AND L CAPITAL HAVE JUST SIGNED AN AGREEMENT with the Japanesegroup Otsuka Pharmaceutical to take over Nutrition & Santé. The amount of the sale is confidential andthe funds are not releasing their IRR or their multiple, which are likely to be high on account of the tar-get’s strategic interest for the Japanese industrial player. The European dietary food market leader hadbeen taken over with an LBO in February 2006 by Abénex Capital and L Capital from the pharmaceuti-cal group Novartis. The funds took control of 85% of the capital, with the remainder held by manage-ment. Over the past three years, Nutrition & Santé has accelerated its development, led by Didier Suber-bielle (co-founder of Parashop, former chairman of CondeNast France and Champagnes Pommery).Revenues increased by 17% to reach 287 million euros in 2008 and the company has carried out threeexternal growth operations: Binaman in Spain, Cerealpes in France and Orzo Bimbo in Italy. Based in Rev-el, the company employs 950 people throughout Europe.

ADVISERS IN | M&A: Lazard (Alexandra Soto, M. Bucaille, A. Benais, J-P Bescond) - L: CMS BureauFrancis Lefebvre (J. Isnard, E. Milhac, N. Callies, O. Benoit) - A: Deloitte (M. Jiggins, A. Sillero, P. Notargiacomo)

ADVISERS OUT | M&A: Wagram CF (P. Le Clerc, B. Bolleau) - L: Frieh & Associés (M. Frieh,

D. Boulanger)

NUTRITION & SANTÉ (FRANCE) EXIT/LBO2

BUSINESS RESTAURANTSA

PRIVATE EQUITY MAGAZINE | August 2009 | Special issue | 42

f TO CLINCH A DEAL

Oth SombathThere seems to be some sort of misunderstanding about Thai cuisine in Paris. Most of thetime, customers want it to be abrasive, singing your nostrils, mystically spicy. As if its onlypurpose was to fill, or indeed, burn a hole. The Thailand of Oth Sombath is quite anoth-er story. An air of exoticism with a truly Parisian style. For its return to the capital, afteran interlude down in St Tropez, Sombath is moving up in society, with an elegant dou-ble floor designed by Alain Ducasse’s favourite interior designer Patrick Jouin. In the end,a table that is mid-chic, mid-lemongrass, where herbs and spices caress and blend tastesand textures (outstanding beef, yellow curry prawns, spring rolls with red wine and bananasauce, water chestnut flan). Silky, piercing, sometimes bordering on snobby, an addresssomewhere between Siam and sex appeal.

OTH SOMBATH. 184, rue duFaubourg-Saint-Honoré,Paris 8th. Tel: 01.42.56.55.55. Closed Saturday and Sunday.Menus: 28 and 35 euros(lunch), 70 euros (dinner). A la carte: around 45-65 euros.A carafe? JP Brun Beaujolais2006 (38 euros). A table? Number 14 on the topfloor, the favourite of EddyMitchell (a partner in thebusiness). Parking: valetservice.

f TO NEGOTIATE

AntoineIn the place of Port Alma, an old bouillabaissenautilus, shipwrecked without too much regret, abeautiful socialite aquarium catching the wave,crafting a cuisine that will make you froth at themouth, ideal for serving up first-class fish in theirsimplest ways: sea bream tartar combining anexotic touch with a virgin combava sauce, red mul-let whitebait with crispy iodine, a fine serving ofsole as silky as its accompanying puree of kipflerpotatoes, line-caught bar grilled over fennelwood…A deliciously chic maritime table, with thefine sea salt on the back of the cod and, for once,capable of conjuringup truly originaldesserts like the headyyuzu lemon soufflé.Seen from the room’s

bay window (ask for table number 10), the Eiffel Tower itselfseems to get on board in its own way, like an unexpected light-house in the heart of the city.

ANTOINE. 10, avenue de New York, Paris 16th. Tel: 01.40.70.19.28. Every day. A la carte: around 60-100 euros. Menu: 48 euros. Cellar: beautiful surroundings, but tasty bill. Lounge available for private hire (10 to 12 people). Valet service.

f WITH COLLEAGUES

La BigarradeAfter its slightly over-the-top beginnings, this chic kitchenette,launched in 2009, has not taken long to rein in its ego and set the spot-light firmly on the stove of a brand spanking new young chef, former-ly of the Royal Monceau. Gone are the overly precious behaviour andboastful service, giving way to an ambience of complicity, bringing thefeeling to life with, in the twilight of appetites, a truly outstanding andunique menu orchestrated like a travelling gourmand: line-caught bass,“pouce-pied” goose barnacles with spring leeks in vinegary stock, rosécrispy pigeon thickened with blood…five dishes, five emotions, thepleasure of this gradual and sudden slide, this feeling that rarely, this sea-son, cooking has been so knowledgeably open. In the restaurant as wellas on the plate.

LA BIGARRADE. 106, rue Nollet, Paris 17th. Tel. 01 42 26 01 02. Every day except Saturday lunchtime and Sunday. A la carte: around 50-60 euros. Menu:35 and 45 euros (lunch), 65 euros (dinner). A dish? Raw scallops, green apple juice and lemon caviar, almond butter. A carafe? Organic Saumur-Champigny Clos Cristal 2006 (29 euros). A table? Number 3 (but be careful, there are only 20). Parking: Batignolles.

f SEDUCING THE MANAGEMENT

Yam TchaA little revelation of a restaurant hidden away in the old Halles district.An unpretentious decor, half a room with 16 tables and a cupboard-sized kitchen with a young female chef, who recently left the famousthree-star Astrance (Paris 16th). What else? Unexpected but oftensurprising! No menu, waiting staff who reveal the menu’s secrets anddishes that keep on coming, without any other concern than the hereand now, the talent, here and Asia, the intensity of the products and thescience of the cooking. The result: a gastronomic experience all aboutrefined taste, deliciously warmed by a rare tea sommelier: Mozambicanprawn ravioli, foie gras on asparagus, szechuan aubergines and challansduck, olive oil cracker, milk ice cream, and more.

YAM TCHA. 4, rue Sauval, Paris 1st. Tel: 01.40.26.08.06. Closed Monday andTuesday. Menus: 30 euros (lunch), 45 euros (dinner) and 65 euros (discoverymenu). A dish? Line-caught croaker, green Provence asparagus. A glass? Red tea.A table? The As. Parking: Les Halles.

f TO GET ACQUAINTED

Bar LaduréeWith Ladurée, the tea room, we already knew about its hot chocolate onJapanese lips and macaroons eaten on Vuitton heels, with the wholeworld lifting their little finger with a savoury-sweet tea. More recently,the address has gone over to the bar side, with an extremely designer barwhere the district’s overactive people put down their elbows for a chatwith their mouths full of these deliciously high-society delicacies,blending glamour with a more down to earth touch. Let's call it in thein-the-know appetite: Noirmoutier potatoes stuffed with caviar orsalmon eggs, high-quality selections served raw with ginger (beef, lobster,scallops, etc.), ever varied alternatives of scrambled eggs, temptingsweets in small glasses. A table midway between strategy and snobbery.

BAR LADURÉE. 13, rue Lincoln, Paris 8th. Tel. 01 40 75 08 75. Every day until midnight. A la carte: around 40-60 euros. A dish? Cod egg and rose petal blini. A drink? Small but smart selection, including a dry white Sancerre Terre deMaimbray, Domaine Reverdy (10 euros). A table: As stool. Parking: Pierre-Charron.

DR

R E S T A U R A N T SA selection of the latest reviews of our favorite business tables.By Emmanuel Rubin

DR

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