Eurazeo PME exits Mors Smitt

Carmen Reichman
15 June 2012

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Eurazeo subsidiary Eurazeo PME has exited Franco-Dutch electronic rail equipment maker Mors Smitt to US manufacturer Wabtec, reaping a 3.5x money multiple on its initial investment.

The GP reported an IRR of 27% over the six-year holding period following the €70m sale of the business, which earned Eurazeo PME €21.5m.

Eurazeo PME told unquote" that it sought the most pragmatic way to exit and approached only a few corporates for a sale of the business.

Previous investment
Eurazeo PME (then OFI Private Equity) and Capzanine acquired Mors Smitt in a secondary buyout from Perfectis in March 2006. Eurazeo PME proceeded to take over Capzanine's stake in September 2010. In total the GP invested €6m in the business and held a 50% stake alongside management and a private investor.

Debt for the 2006 buyout was provided by ABN Amro and Crédit Agricole. After a full refinancing in 2011, ABN Amro remained as the company's sole debt provider.

Throughout the holding period, the business grew organically, opening a new office and plant in China. It also acquired STS Rail in 2011, which opened doors to the UK, India and South Africa.

The company invested €15m to modernise and boost its R&D department – the budget of which has tripled over the past few years, according to Eurazeo.

Turnover figures for the business grew strongly following its internationalisation. In 2011, Mors Smitt generated revenues of €44m, up from €24m in 2006 – 75% of the revenues came from the company's international development.

Company
Mors Smitt is a Franco-Dutch company with offices in the Netherlands, France, the UK, Hong Kong and the US. The company manufactures on-board electromechanical relays for the rail industry.

Mors Smitt's global headquarters are based in Rosny-sous-Bois, France. The group employs 371 people.

People
Olivier Millet is chairman of the executive board of Eurazeo PME. He led the original deal for Eurazeo PME with Pierre Meignen. Meignen and Mathieu Betrancourt participated in the exit.

Advisers
Vendor – DC Advisory, David Benin, Cédric Hawthorn, Camilla Macapili, Nelson Camara (M&A); Roland Berger, Xavier Aymonod (Commercial due diligence); 8 Advisory, Katia Wagner, Nadia Gacem (Financial due diligence); Arsène Taxand, Frédéric Teper, Jacques Mestoudjan (Tax); SJ Berwin, Maxence Bloch, Augustin Fleytoux, Imen Moustafid (Legal).