Bridgepoint buys Flexitallic Group from Eurazeo

Bridgepoint acquired a majority stake in Flexitallic from Eurazeo and will be invested alongside the company's management and Remi Toledano, the company's CEO since 2010.

The GP plans to support the business in its geographical and technological expansion, notably in Asia, Australia, South America and North America, where the group is already present. Bridgepoint expects the company to double in size over the next five years, it said in a statement.

Eurazeo reaped cash proceeds of €145m from the sale, with a capital gain of €95m. The exit returned a multiple of 2.9x on the GP's original investment and a 28% IRR over a period of more than six years.

The deal was an off-market transaction that resulted from bilateral discussions between the two GPs, a source told unquote". The transaction is set to complete in July.

Debt
A €200m unitranche facility was arranged by a club led by Axa Private Equity to finance the deal, according to sources. The backers put together a further €75m debt facility to be drawn later for capital expenditure purposes.  

Previous funding
Eurazeo (then OFI Private Equity) purchased a stake in French company Siem in 2006, valuing the business at €40m. In 2007, the firm bought US business Flexitallic from local private equity firm Cravey Green & Whalen, investing €13.6m in equity in a deal valuing the business at €100m. It then merged the two companies, which had previously been long-term business partners, to form the beginnings of The Flexitallic Group.

Post-merger, the French GP owned 55.5% of the business, alongside private shareholders and management (30%), and mezzanine providers Capzanine and Axa Mezzanine, which held a combined 14.5%. The newly formed group had an enterprise value of around €140m, with revenues of €75m, and was headquartered in France.

Over the last six years, Flexitallic's business strategy has been based on global expansion. The company acquired six businesses in the UK and North America while also investing €12m in modernising its manufacturing facilities and in R&D, with the help of the GP.

Eurazeo carried out four capital reinvestments for the group over the holding period, including $26m's worth of multi-currency (USD, CAD, EUR) unitranche bonds from European Capital in May 2012, to support Flexitallic's restructuring and the acquisition of Canada-based AGS Group, alongside €10m from Cathay Capital.

European Capital provided a further $7m in unitranche bonds in January this year to finance the acquisition of US-based Custom Rubber Products, alongside a commitment from the private debt team of Axa Private Equity. Cathay reinvested €5m in March 2013.

Over the six-year holding period Flexitallic multiplied its revenue by 11, from €18m to €210m, of which 90% was generated outside of France. The number of employees increased from 46 to 1,250 in the same period.

Company
Flexitallic manufactures sealing solutions and products for the energy production sector and the oil and gas, chemical and petrochemical industries in emerging markets and developed countries.

The group is present in all segments of the energy industry: upstream, midstream, downstream and power generation, and comprises companies Flexitallic, AGS Flexitallic, Siem Supranite, Novus Sealing, Induseal Gaskets, Sealex and Custom Rubber Products.

The business has operations in the US, Canada, China, France, the UK, UAE and Kazakhstan, with a network of 750 specialist distributors. Its best-known products are Thermiculite, Sigma and its new semi-metallic joint Change.

Flexitallic was established in 2004 and is mainly based in Paris, the US and Canada.

People
Frédéric Pescatori is the partner responsible for Bridgepoint's investment activity in France. Olivier Millet, Erwann Le Ligné and Rodolphe de Tilly led the deal for Eurazeo. 

Advisers
Equity – DLA Piper (Legal); Arthur D Little (Commercial due diligence); McKinsey (Commercial due diligence); Deloitte (Financial due diligence); ERM (Environmental due diligence); Arsene Taxand (Tax); Marsh (Insurance due diligence).
Vendor – SJ Berwin, Maxence Bloch, Pierre-Louis Sevegrand-Lions (Legal); Leonardo, Ludovic Tron, Jean-Baptiste Marchand (M&A).

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