Deal in Focus: Qualium and CDC IC acquire Vulcanic

Qualium Investissement and CDC International Capital (CDC IC) have backed the secondary buyout of electrical heating and cooling systems group Vulcanic, taking over from previous owners Abénex Capital and Cathay Capital Private Equity.

Qualium has become the new largest shareholder in Vulvanic, followed by CDC IC, as the pair backed the acquisition of the company from Abénex and Cathay. Company executives and management have also reinvested and retain a minority stake in the group.

CDC IC invested as part of Future French Champions (FFC) – a partnership established in 2014 with Qatar's sovereign wealth fund Qatar Investment Authority, and dedicated to direct investments alongside other sovereign funds and international institutional investors.

Qualium, a subsidiary of Caisse des Dépôts dedicated to the private sector, invested via its sixth investment vehicle Qualium Fund, closed on €520m in 2012.

It is the fourth buyout transaction for Vulcanic, so the group was already well-known within the private equity space" – Antoine Schouman, Abénex Capital

Abénex partner Antoine Schouman describes a competitive auction process with both private equity funds and industrial groups involved, and in which Qualium's success was not necessarily secured from the start. "It is the fourth buyout transaction for Vulcanic, so the group was already well-known within the private equity space," he says. "Interested bidders had come forward before we'd launched the auction properly."

While the information was not confirmed by the investor, Vulcanic's EV is rumoured to be around €140-160m, according to various market sources. The deal was supported by a combined senior and mezzanine debt package put in place in 2015 as part of an €85m refinancing conducted by then-majority shareholder Abénex. The mezzanine debt provider was LFPI Gestion, while senior debt was arranged by CIC and LCL. Although the debt package was not refinanced on this occasion, a source close to the deal revealed it had been renegotiated to give management more leeway in future bolt-on acquisitions.

Laying the groundwork
Being able to finance acquisitions and securing a portable debt package were key factors in the decision to refinance. Schouman says: "When the debt was put in place, we knew our exit was impending; the transferability parameter was, therefore, a key aspect of our negotiations." Vulcanic already financed a first deal with the new acquisition line this year, taking over Chinese group AOK to enter the local market.

With Abénex's and Cathay's support, turnover rose from €60m to €75m over the five-year holding period.

Abénex had taken a majority stake in Vulcanic in 2011 in a deal that marked the group's third buyout, investing via its €300m Abénex Fund IV and bringing in Cathay as co-investor. French banks CIC, LCL and BNP Paribas had provided senior debt to finance the acquisition at the time, completed by a mezzanine arrangement coming from Axa Mezzanine. 21 Centrale Partners, which preceded Abénex as the group's owner, reaped in excess of 3x its money on the sale.

Founded in 1973 and based in Neuilly-sur-Marne in France, Vulcanic specialises in the design and manufacture of electrical heating and cooling systems for the industrial sector. Currently counting more than 30,000 customers, the group employs 600 people and manages eight industrial plants across Europe.

People
Qualium Investissement – Jacques Pancrazi (managing director); Bastian Emery-Béziers (investment director).
CDC International Capital – Antoine Emmanuelli (director); Laurent Dethomas (investment director).
Abénex Capital – Antoine Schouman (partner); Antoine Houël (director); Vincent Gouedard (associate).

Advisers
Equity – Willkie Farr & Gallagher (M&A, tax, legal); ADL (strategic due diligence); KPMG (financial due diligence); ERM (environmental due diligence).
Management – Delaby & Dorison Avocats (legal).
Vendor – Canaccord Genuity (M&A); DLA Piper (legal); Eight Advisory (financial due diligence); LEK Consulting (commercial due diligence); De Pardieu Brocas Maffei (legal); AECOM (environmental due diligence).
Debt – Shearman & Sterling (legal); Allen & Overy (legal).

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• Qualium Investissement
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