IK sells Magotteaux for €550m, reaps 6x money

Greg Gille
23 August 2011

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IK Investment Partners has sold Belgian industrial supplier Magotteaux to Chilean group Sigdo Koppers for €550m.

A number of factors encouraged IK to consider an exit from the business, which it acquired in 2007. The growth strategy outlined at the time of the original investment had been successfully implemented, with increased profitability and improved corporate governance a clear attractive factor for potential suitors.

In addition, IK felt that the current consolidation trend in the industry would have required significant additional investments going forward, which would not fit with the firm's core investment remit.

The sale was subsequently organised as an auction process run by Morgan Stanley, which attracted interest from private equity firms and trade buyers alike. Sigdo Koppers plans to maintain Magotteaux as a stand-alone business unit going forward.

IK is understood to have reaped a 6x multiple on its investment.

Previous funding
IK acquired a majority stake in 2007 through a capital increase. The operation was financed via the Industri Kapital 2004 fund, which closed on €825m in January 2005. Since then, the firm initiated a number of operational improvements and undertook a significant investment programme in Magotteaux.

As soon as it gained control of the company, IK identified Magotteaux as a company with a strong engineering expertise and growth potential, but still being run as a small family business. It therefore introduced several changes aiming to promote a healthy performance culture in the business, including the appointment of a new CEO and CFO and the creation of a sourcing department.

In addition, more than €120m were spent on maintenance projects and capex. Costs per unit were reduced, but headcount rose by 15%.

Finally, Magotteaux shifted its focus to the mining industry. Initially a small part of the company's operations, this sector now accounts for more than 50% of Magotteaux's activity. The company also expanded its activities in emerging markets such as Thailand and India.

Under IK ownership, turnover rose by a third to €500m while EBITDA increased by two thirds to €66m.

Company
Liège-based Magotteaux is a global provider of high-performance and wear-resistant consumables to industries where crushing, grinding and similar processes are essential. It principally targets the mining, cement, aggregate, utilities and dredging industries. Magotteaux currently employs around 2,500 staff.

People
Bart Borms and Michaël Vervisch worked on the transaction for IK. Juan Pablo Aboitiz is CEO of Sigdo Koppers. Bernard Goblet is CEO of Magotteaux.

Advisers
Vendors – Morgan Stanley (M&A); Clifford Chance (Legal).
Acquirer – BNP Paribas (M&A); Allen & Overy (Legal).