Carlyle acquires ADB Safegate from PAI Partners

PAI Partners acquired ADB from Montagu Private Equity in 2013, with its total investment in the company amounting to €208m, according to the GP. PAI had put its majority stake up for sale in May this year.

According to Reuters, the sale values ADB at €900m, representing more than 10x its expected 2017 EBITDA of €70-80m.

ADB Safegate's management team, led by Christian Onselaere, invested alongside Carlyle and retains a minority stake in the company. 

According to a source familiar with the matter, PAI will generate a 3.3x return and 35% IRR from the exit. It is the third exit completed by the GP over the last three months with returns in excess of 3x, the source added, with around €3bn returned to investors over the last 12 months.

Carlyle drew equity from the European upper-mid-market buyout vehicle Carlyle Europe Partners IV (CEP IV), closed with €3.75bn in commitments in 2015. The GP has completed a dozen investments to date with the vehicle, the most recent of which were German electrical equipment company Atotech, Spanish business support services provider Digitex and Italian clothing and accessories specialist Golden Goose.

In March, and prior to the acquisitions of Irca from Ardian and of Præsidiad from CVC Capital Partners, CEP IV was invested at 63%, according to the GP. The current deal is the 16th transaction closed with the vehicle, and Præsidiad – announced a day later – is the 17th. 

The sale was officially launched in February/March this year in a competitive process with two rounds that included both private equity investors and industrials, a source familiar with the matter told unquote". Other bidders reportedly included EQT, KKR and Partners Group.

Last year, PAI backed ADB's acquisition of Swedish airfield services company Safegate from the Fairford Group. The deal was the first bolt-on for ADB since PAI invested in 2013, and triggered the company's rebranding as ADB Safegate.

The transaction is expected to close in the second half of 2017. ADB Safegate should benefit both from Carlyle's experience in the sector (previous investments have included Innovista Sensors, incidentally co-held with PAI), and from its worlwide network. An international expansion through bolt-on acquisitions will be particularly geared towards Asia and the US, the same source added.

Debt
According to unquote" sister publication Debtwire, the deal will be part-funded with a €685m senior and senior lien package. Pro-forma leverage on the deal is 6.25x, according to a person familiar with the situation, the publication added.

The deal comprises a €405m term loan B, a €100m second lien, and €180m in undrawn facilities.

Bank of Ireland, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, HSBC and ING underwrote the first lien, while the second lien was pre-placed with MV Credit, with syndication expected to launch after the summer.

Debtwire also reported that financiers and bidders alike were pondering whether to use ADB's last-12-months €63m EBITDA, or the pro-forma figure of €72m.

Previous funding
In 2013, Montagu sold ADB Safegate (then known as ADB Airfield Solutions) to PAI. PAI's investment was understood to be around the €200m mark, according to unquote" data. Senior debt financing worth around €120m was arranged by Bank of Ireland, BNP Paribas and UniCredit, according to reports. The GP drew equity from its €2.7bn PAI Europe V vehicle.

Montagu had acquired ADB Airfield Solutions from Siemens in September 2009. The deal was financed with a €73m debt facility provided by Bank of Ireland, WestLB, Siemens Financial Services, Fortis and KBC Bank.

Company
Originally founded in 1920 by Adrien de Backer, ADB Safegate was first acquired by Siemens in 1987. Known as ADB Airfield Solutions until its merger with Swedish group Safegate in 2016, the business designs, develops and provides systems, products and services for airfield ground lighting, aircraft docking guidance and air traffic control.

Headquartered in Brussels, ADB reportedly services 2,500 airports across 175 countries, and manages four production facilities in Belgium, Germany, the US and China, as well as a software development centre in Austria. The company employs 900 people in 20 countries, and had an EBITDA of around €63m in 2016.

People
ADB Safegate – Christian Onselaere (CEO).
PAI Partners – Laurent Rivoire (partner).
Carlyle Europe Partners – Jonathan Zafrani (managing director).

Advisers
Equity – Citi Capital (corporate finance); Lazard (corporate finance); Freshfields Bruckhaus Deringer (legal).
Vendor – Credit Suisse (corporate finance); Rothschild & Cie (corporate finance); Willkie Farr & Gallagher (legal).
Company – Callisto (corporate finance); Clairfield (corporate finance).

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