Converteam (France) - Jun 2008

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01 June 2008

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Barclays Private Equity France has staged a partial exit of Converteam. In what is set to be the largest buyout of the year to date with a deal value of around €1.9bn, LBO France has taken a third of the company alongside the management who took the remaining third by reinvesting most of the €700m plus-value generated. Barclays PE reinvested with its fund Barclays Private Equity European Fund III in order to retain a third of the equity. In line with company policy Barclays PE exited its investment from its second European fund only to reinvest with its third fund.

Barclays PE purchased the company, formerly called Alstom Power Conversion, from Alstom in November 2005 in an MBO deal worth €150m. State-owned Alstom had been seeking to divest the company for five years since it was losing around €20m a year. Financing the original acquisition was complicated and only mezzanine was arranged. The turnaround by Barclays PE of Converteam led by Pierre Bastid, who joined the company just before Barclay's original buyout, has been a complete success and returns from the partial exit are said to be exceptional.

Hawkpoint and Lehman Brothers were mandated to run the auction process which was launched at the turn of the 2007/2008 year. The auction consisted of two rounds and drew attention from private equity and industrial companies alike.

Debt

Lehman Brothers were also mandated to provide a debt package. As a result a staple financing agreement was arranged between HSBC, Lehman Brothers, Natixis, Société Générale and Royal Bank of Scotland. The debt package worth close to €900m was described as ‘classic' consisting of a senior A and B tranche as well as a mezzanine tranche.

Company

Massy-based Converteam, is a power conversion and engineering company, which manufactures rotating machines, converters and drives for the marine, oil and gas and offshore energy industries. Its origins date back to the late 1800s and early 1900s, however, its current shape took form under Alstom's ownership in the early 1990s. The name Converteam was established at the time of the sale of the division by Alstom to Barclays PE. The company has 4,600 employees in 14 countries worldwide and recorded an 80% increase in orders to a value of €1.43bn for 2007. The new owners will seek to take Converteam public in the next three years.

People

Robert Dausson and Thomas Boulman worked on the deal for LBO France, while Guillaume Jacqueau, Arnaud Thomas and Grégoire Chatillion worked on the deal for Barclays Private Equity. Pierre Bastid is the company CEO.

Advisers

Equity - Bain, (Other Due Diligence)
Equity - Ernst & Young - Transaction Advisory Services , Pascal Raidron, Stéphane Kraft (Financial Due Diligence)
Equity - Mayer Brown, Xavier Jaspar (Legal)
Vendor - AT Kearney, (Financial Due Diligence)
Vendor - Hawkpoint, Nadim Barouki, Pierre-Arnaud de la Charrière (Corporate Finance)
Vendor - Lehman Brothers, Emmanuel Roger, Olivier Trojani (Corporate Finance)
Vendor - SJ Berwin LLP, Maxence Bloch (Legal)