C’est la rentrée: PEs line up French deals despite adverse market

French sponsor-led deals in H1 2022 were valued at EUR 14.9bn over 78 deals, well above the EUR 7.5bn recorded in 2H21 over 67 deals in H2 2021, but 50% below H1 2021, when EUR 29.3bn was printed across 92 deals, the largest half-year total since 2010, Mergermarket reported in June.

France’s economy has managed to stay comparatively strong in the face of sluggish global growth and the inflationary pressures of the war in Ukraine. This strength means there are several exciting M&A opportunities, bankers and lawyers agreed.

The country has, so far, stayed below the high inflation rates which persist in the UK and Europe due to a far more diversified energy mix which is less reliant on Russian oil and gas, they agreed.

It registered a 6.5% year-on-year inflation rate last month vs. 8.6% on average in the Eurozone, according to the European Commission’s forecast published this June.

However, France’s expected growth rate for 2022 is predicted to slow to 2.3% from around 3.1% last year, the Banque de France noted.

Despite this, there is a solid deal pipeline with financial services, TMT, energy and infra and healthcare continuing to sustain flow in 2H22, dealmakers said.

Among the top deals awaited this half, is the sale of insurance services company April, owned by CVC. The private equity firm has mandated both Rothschild & Co and Deutsche Bank to run its exit from the company, seeking a valuation of EUR 2.5bn, a recent French press report flagged.

Another hot deal will be the sale of telecoms specialist TDF with American Tower, EQT and Orange’s TOTEM submitting non-binding offers for the asset in July, as reported by Mergermarket. The second phase of the sale should take place in September, with the largest shareholder Brookfield collecting binding bids by the end of the month.

Altitude, advised by Perella Weinberg Partners, also received NBOs for its subsidiary fibre network operator Altitude Infra this June, as reported by Mergermarket.

In the energy sector, teasers have started to be circulated for a sale of EQT Infrastructure’s 49% stake in French water company Saur. The formal process should kick off next month, sister publication Inframation reported.

Renewable energy producer Qair Energy is also expected to launch a capital increase in the second half of this year, still according to Inframation. Meanwhile, asset manager Meridiam, one of France’s largest infra funds with above USD 18bn under management, is considering selling a minority stake of around 20%, several unsourced press reports pointed out.

Tech deals the main attraction
Technology sales spearhead the French large-cap M&A pipeline with the highly anticipated sale of biometrics specialist Idemia by Advent International leading the charge; the deal was pre-marketed this June, as reported.

The process could value the company at USD 4.6bn (EUR 4.3bn), and is likely to attract suitors like French defence group Thales, other strategic parties likely to be interested are US-based Cisco, German conglomerate Siemens and private-equity players like Carlyle, as previously reported.

Five Arrows Principal Investments (FAPI) could kick off its exit from A2MAC1, a local automotive benchmarking company, right after the summer break, Mergermarket suggested.

Jefferies is mandated, as reported, for this sale. The advisor was also selected, along with Société Générale, by Apax Partners for the sale of portfolio company Infovista. The network performance solutions provider is being marketed off EUR 60m EBITDA and non-binding offers (NBOs) were expected before the summer break, Mergermarket wrote.

Calibration services specialist Trescal should also join the pipeline this September, as owner OMERS Private Equity plans to issue information memoranda by then, as flagged by Mergermarket.

Astorg, Bridgepoint, PAI Partners, CVC Capital Partners, Partners Group and Intermediate Capital Group (ICG) were reported to be circling the business.

In the education sector, IK Partners is sounding the market for a potential alliance with portfolio company Skill & You, worth more than EUR 1bn, as the French press noted this June. French peer Galileo Global Education and Cinven’s Omnes Education were named as potential buyers.

An auction process for Eureka Education, a vocational school network backed by Naxicap Partners, was also reported by this Mergermarket to be launched by 3Q22.

A mature mid-cap pipeline
While some deals are just getting started, others are well underway. The sale of Laboratoires Vivacy, an injectable dermal fillers producer was rebooted this August by owner TA Associates with advisors BNP Paribas SA and Rothschild & Co according to a newswire report.

Last December, the private equity firm received a EUR 850m offer from Bain Capital and a EUR 750m bid from Cinven, while Eurazeo decided to exit the auction after offering a EUR 700m valuation, as reported by Mergermarket.

Alpha Private Equity, which backs automotive aftermarket specialist Feu Vert, is still holding discussions with potential bidders. The sale took an unexpected turn as OPCapita and HIG Capital were the only remaining bidders this April but eventually decided against pursuing the asset. Two new bidders, a trade player and a sponsor, emerged this July with offers pencilled in before the summer break, as reported.

Capital Croissance-backed Smart Adserver scheduled NBOs for its advertising technology business in June, according to a Mergermarket article. Lincoln International is organising the sale of the company with an adjusted EBITDA of EUR 30m.

In healthcare, TPG Capital, CVC and Antin were reported by Mergermarket to be potential bidders to acquire Inovie, a medical biology laboratories operator. Rothschild is advising owner Ardian for the sale, with Inovie being marketed between EUR 350m and EUR 400m EBITDA.

Potential small cap contenders
A sale of Pinard Beauty, the French cosmetics packaging company backed by IK Partners, is expected to begin before next year, as flagged by Mergermarket. Crédit Suisse is piloting the process for the business which generates around EUR 20m EBITDA.

Peer Axilone could also be put on the block this year with owner Trustar Capital marketing its portfolio company up to EUR 100m EBITDA, as reported by Mergermarket.

French women clothes brand Sézane is another possible name in the 2H22 deal pipeline. JP Morgan is advising General Atlantic for the potential exit of the EUR 20m EBITDA-generating business, as noted in an earlier report. Pixel Holding might also exit business process services provider Tessi this year; the company de-listed from Euronext Paris in 2021, as reported.

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