Deal in Focus: Chequers exits Provalliance group

Chequers Capital this month exited Paris-based hair salon operator Provalliance after a four-and-a-half-year holding period. The deal, completed in late December, saw the founding family Provost and company management becoming the sole shareholders in the group.

Established in 1989, Provalliance is an operator of hair salons. The group is understood to be generating €1.2bn in revenues at present, from a network of 500 branches and 2,250 franchises in 30 countries. The business serves around 35 million customers per year.

Chequers first invested in the group in 2012, acquiring a 40% minority stake from American hair salon group Regis in a deal valued between €50-100m, according to unquote" data. By the time of the company's sale, the GP's stake amounted to around 45%, while the balance belonged to the Provost family, a source close to the deal told unquote". The GP made the investment from its Chequers Capital XVI fund, which closed on its €850m hard-cap after only three months in 2011.

"Underlying the transaction was a clear desire from the founding family to increase its stake in the group," a source said. "In terms of timing, the investor had also reached a four-year milestone, which seemed appropriate to reappraise the situation." Two priorities were set in the sale: enabling the family to regain more capital, and generating good cash returns for the investor.

The enterprise value of the deal falls within the €350-450m range, representing a 7.5-8x EBITDA multiple. The transaction was also supported by a senior debt package worth around €250m and arranged by a pool of eight banks, including BNP Paribas, CEPAC, CADIF, CIC/BECM, LCL, HSBC, Natixis and Societe Generale.

The group benefited from an active consortium of banks regularly reaching out to the owners to present them with various financing solutions, a separate source told unquote". The owners did not rule out the possibility of getting a new fund on board, but favourable financing conditions enabled them to secure a sponsorless deal and buy back all of the company shares.

Growing the family
A key asset in Provalliance's growth strategy over the years has been its ability to keep expanding and diversifying its offer by regularly adding on new brands and franchises. As it stands, the group operates nine complementary brands, including Franck Provost, Jean-Louis David, Saint Algue, Fabio Salsa or Maniatis.

"[When Chequers entered the group], the point was to continue the group's expansion by way of external growth, which actually happened later rather than sooner. The first two years of the holding period were marked by few opportunities for bolt-ons," the second source said. "Those happened in the second part of the holding period, first with the acquisition of Haircoif [in 2015], which was followed by other smaller deals." However, certain opportunities, in the UK and the Nordic region for instance, did not come to completion.

Over the holding period, the group thus focused its efforts on developing its network of franchises and salons to improve geographic coverage, while pushing on the acquisitions side as well. "In spite of the crisis in the consumer sector over the last few years, the group managed to achieve a good level of growth, and that is mainly due to the fact that it remained open to new additions the whole way along," the same source added.

Chequers was not available for comment when contacted by unquote". The GP has been reportedly gathering commitments for Chequers Capital XVII, with a target of €1bn.

People
Chequers Capital – Guillaume Planchon, Axelle Dumousset.

Advisers
Equity – UBS, Fabrice Scheer, Arnaud Fauqueur, Nicolas Senlis (corporate finance); Paul Hastings, Olivier Deren, Edith Boucaya, Nicolas Lovas, Valentin Savage, Allard de Waal, Etienne Bimbeau (legal); Latham & Watkins, Xavier Farde, Fanny Colson (legal).
Vendor – Mayer Brown, Guillaume Kuperfils, Ségolène Dufetel (legal).

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