
Deal in focus: Seafort buys three firms from Auctus
Newly founded private equity house Seafort Advisers has kicked things off with a hat-trick of secondary buyouts from Auctus Capital Partners via a dedicated vehicle.
Seafort Advisers bought packaging recycling company Noventiz, business services provider DialogFeld Communication and lighting manufacturer Dieter Braun.
The Hamburg-based GP now owns a stake of around 82% in each company, while the firms' management teams own approximately 18%. The fresh capital will be used to expand the firms' international footprints, with the GP planning to grow the companies organically as well as through add-on acquisitions.
Founded in August 2013, Seafort invested via Seafort Advisers I, a private equity fund raised in order to acquire the three targets. The overall transaction value was between €50-70m, about 40% of which was debt provided by German bank Commerzbank. It was one of the seller's conditions for the transaction that Seafort was to acquire all three firms, which had been circled by the GP since Q4 2012. Of the secondary buyouts, Seafort managing director Patrick Hennings-Huep (pictured) said: "The price expectations, the recent development of the portfolio companies and the number of firms to be acquired were all subject to a long bidding and rather difficult buying process."
Seafort initially bid for the firms without having actually raised the fund. The GP only had an investor agreement stating that institutional backers from France, the UK and the US would commit to the fund as soon as Seafort was able to acquire the firms. In the end, the entire vehicle, whose management fees, hurdle rate and carried interest follow industry standards, was registered and raised within six weeks – as the support of potential investors in dedicated vehicles tends to be unsecured until shortly before the transaction. "Moreover, the GP has to raise capital as well as attend the bidding processes at the same time when raising an ad hoc fund," Hennings-Huep added. "When raising a traditional fund, however, the fundraising happens first, followed by the investment period."
In the managing director's opinion, one of the clear advantages is that Seafort works with clearly identified assets. He said: "Investors will consider a GP's track record, but with an ad hoc fund, they will know exactly where the money goes. Furthermore, a typical fund has around eight years of lifespan with a two-year extension. Our fund, however, does not have the investment period in the beginning, because we invest straight away. The investors are faced with shorter investment periods, a holding period of four or five years, and the returns are fulfilled quicker. In return, they have to be able to commit on very short notice, which can be a problem. Overall, 20% of all the investors who followed our bidding process have changed until the final signing."
Seafort will aim to start raising another fund, Seafort Advisers II, from January 2014. It seeks to invest in mid-market companies with revenues up to €50m across Europe.
Auctus had been holding onto Dieter Braun, a manufacturer of lighting for the automotive sector, since May 2008. Founded in 1993, the firm now employs 800 staff. Nürnberg-headquartered marketing agency DialogFeld, which operates in the German-speaking region as well as Eastern Europe, was meanwhile acquired by the GP in June 2008. The firm currently employs 500 staff across six branches in Germany. Two years later, Auctus bought Noventiz, a Cologne-based provider of recycling and waste disposal solutions, via its Auctus III vehicle. Founded in 2007, the firm has a customer base of around 1,000 clients and employs an estimated 42 staff.
People
Seafort Advisers – Patrick Hennings-Huep, Johann Herstatt
Auctus – Ingo Krocke
Advisers
Equity – Argonas Corporate Finance Advisors (M&A, debt); Credit Suisse (M&A); CMS Hasche Sigle (Legal).
Vendor – Mummert & Company (M&A).
This deal was originally covered on 25 November 2013
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