Ixo and BPI France in Neotec OBO

José Rojo
12 February 2016

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Ixo Private Equity and state backer BPI France have become minority shareholders in French railway component manufacturer Neotec Développement as part of an OBO for the business.

Neotec's enterprise value was not disclosed but a source familiar with the situation confirmed it fell within the €10-50m range. Ixo did not reveal its equity investment in Neotec, but the GP typically deploys €1-15m per deal.

According to the same source, Neotec was fully controlled by the founder and CEO Pascal Roux and his family prior to the OBO. In late 2014, Ixo was approached by the executive, who at the time was keen on a growth capital injection with a view to fund a build-up strategy for Neotec.

The expansion deal never went ahead and talks between the GP and the business resumed during Q3 2015. This time around, Ixo put forward a proposal for an OBO deal and the agreement was negotiated one-on-one, without any intermediaries or an auction process.

It was decided that Roux would remain as majority shareholder alongside his sister and managing director Emmanuelle Gadaux-Roux. Meanwhile, Ixo and BPI France each came to hold a minority stake – Ixo secured the larger holding, unquote" understands.

The fresh equity, supplied via three of Ixo's retail FIP funds, will be allocated to Neotec's international expansion plan. The company expects to hit the €20m revenue mark over the next three to five years.

Already present in France, the UK, Benelux, Spain and Portugal, Neotec now intends to set up operations in Germany, Austria and Switzerland. Over the next few years, the US will be a key market; active in Canada via its Neotec Innovation subsidiary since 2011, the company is understood to have landed its first orders in the US in 2015.

According to unquote" data, the buyout is the second to be inked by Ixo so far in 2016. In early January, the GP bought a majority stake in fire protection system designer Evas via its third fund. Having closed on its €150m hard-cap in January 2015, the vehicle has deployed 40-50% of its capital through four investments.

Debt
The OBO was supported with a senior package arranged by Societe Generale, with debt coming from Banque Courtois and HSBC. According to the unquote" source, the deal was leveraged around the 1-2x EBITDA mark.

Company
Founded in 1991, Neotec Développement manufactures components used in the construction and the maintenance of trains, railways and aeronautic projects; railway operators represent 90% of its business.

Headquartered in Bressols, southern France, the business currently employs around 60 staff and works with 500 trains worldwide. In 2015, the company posted €11m in revenues and claims to have grown at an annual 20% since 2012.

People
Ixo Private Equity – Jean-Luc Rivière (associate director); Rémi Cheriaux (investment director); André Debet (project manager).
BPI France – Christine Busque (investment manager).

Advisers
Equity – Altij, Sylvain Favier, Daniel Cappeler (legal); KPMG, Béatrice Charlas, Rémi Dufetel (financial due diligence); ERM, Julien Famy, Aurélien Beckman (environmental due diligence); Morelle & Bardou, Jacques Bardou (IP due diligence); Assurinco, Stéphane Juan (insurance due diligence).
Company – SPBS Avocats, Thierry Sucau (legal); Bright Avocats, Sarah Bright-Thomas (legal).