Charterhouse's Elior aiming to raise up to €845m in IPO

Elior set an indicative price range of €14.35-17.50 for the IPO, with trading due to commence on 11 June in Paris. The business expects to raise €845m, including €785m of new shares and approximately €60m of existing shares sold by shareholders including Charterhouse, Chequers Capital and ICG. The vendors will also have the option to sell additional shares representing up to 12.5% of the initial offering.

Deutsche Bank, JP Morgan, Crédit Agricole Corporate and Investment Bank and HSBC France are acting as global coordinators and joint bookrunners in the IPO. Barclays and Credit Suisse are also acting as joint bookrunners.

Charterhouse took Elior private in 2006 in a deal that valued the business at €2.5bn. The IPO, which is expected to value the group at €2.4-2.8bn, would be a further signal that the Paris bourse is once again open as an exit route for private equity-backed businesses at the larger end of the spectrum (read our analysis here).

Stop-start process
The listing would also put an end to months of uncertainty surrounding a potential sale of the business, with Charterhouse believed to have been looking at a divestment as early as November 2012, when the asset had already been in its portfolio for more than six years.

In Q1 2013, the GP reportedly received a joint €3.5bn bid from CVC and BC Partners. However, it emerged that CVC and BC's offer was the only one on the table and came short of Charterhouse's expectations, prompting observers to question whether the GP would ultimately pull the sale.

Meanwhile, Charterhouse started looking at alternatives at the end of Q2 last year, with the GP reported to be mulling an IPO for Elior to take place as early as November 2013.

Just a few weeks later, it emerged that Ardian and Caisse de Dépôt et Placement du Québec made a €3.7bn joint bid for the catering business – close to Charterhouse's initial €4bn asking price and enough to revive the sale process after weeks of virtual standstill.

But despite Ardian confirming in October last year that it was still interested in Elior should Charterhouse be willing to strike a deal, a sale never materialised.

In the meantime, Elior turned to the high-yield market for a refinancing, issuing bonds worth €350m in Q2 last year, maturing in 2020 with a 6.5% coupon. The company was also believed to have negotiated an amend-and-extend on senior debt worth €1.1bn at the same time, pushing the maturity to 2019.

The proceeds of the IPO will mainly go towards reducing the company's debt: €131m has been earmarked to repay 35% of the bonds issued in 2013 at a price equal to 106% of their nominal value, plus accrued interest. Meanwhile, the remaining €615m will repay the senior debt arranged as part of the 2006 buyout.

Established in 1991, Elior is a catering group operating through 17,500 restaurants and points of sale in 13 countries. It posted a turnover in excess of €5bn for the 2012-13 financial year.

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