Deal in focus: Altor sells Lindorff to Nordic Capital

According to unquote" data, only two secondary deals in the Nordic region have had a higher value than the recent sale of debt administrator Lindorff: the 2007 sale of Mölnlycke Clinical Products for €2.85bn and the 2011 SBO of Securitas Direct for €2.63bn.

The mega-deal will be financed with a mega-bond, a €1.45bn high-yield instrument, which is the largest of its kind ever to be marketed by a Nordic company and has raised as much capital as the entire Norwegian high-yield bond market managed in the entire month of June.

"Because of the size of the deal and the size of the financing package, it was preferred to go through international capital markets to find the best financing options," says Kristoffer Melinder, managing partner at Nordic Capital. "There are always pros and cons, but given the size of this and what terms Lindorff was able to get on capital markets, it was the best option."

All hands on debt
Lindorff purchases portfolios of non-performing loans from lenders in the financial services sector and attempts to recover them, and Melinder says the need for the banking sector in Europe to strengthen capital bases and capital ratios had created a significant growth opportunity for the company.

Melinder says the bond would partly finance the acquisition, but also provide the company with growth capital: "Lindorff will finance acquisitions and debt portfolio acquisitions, through a combination of internally generated means as well as new debt and equity, and Lindorff needs a capital structure that enables that."

The GP plans to use Lindorff's strong position in the Nordic countries, Spain and Germany as a means to grow the company's continental European market share, as evidenced by the recent acquisition of Spanish Banco Sabadell's debt recovery arm and the firm's expansion into Italy.

While the company had already been showing healthy profits, reaching an EBITDA of around €260m from €450m in revenues in 2013, Melinder says he expects Lindorff's EBITDA to be significantly higher this year.

IPO no-go
Before the deal was announced, Lindorff had been considered a prime candidate for an IPO, with Altor and Investor reportedly appointing banks to lead a planned flotation in late 2013, and the rumoured IPO plans may have helped rustle up a high bidder in Nordic Capital.

As recently as January this year, Altor's founding partner, Harald Mix, told unquote" the company was an exciting case for the stock exchange.

Simon Wakefield, head of acquisition finance at SEB, says it is normal for private equity vendors to pursue numerous sale avenues at the same time and pointed to the lack of a clean exit as a disadvantage in IPOs.

This is mirrored by Altor's head of communications Tor Krusell. Speaking to unquote" when the deal was announced, Krusell stated that, having owned Lindorff for more than 10 years, Altor had looked for different ways to exit the business and had considered all options.

Asked whether the deal was a sign that the market for flotations may be seen by some as being in bubble territory, Nordic's Melinder said: "The IPO market continues to be strong, but in this case I think Nordic Capital was providing the sellers with a transaction that could be done several months earlier than an IPO."

People
Altor – Harald Mix, Hugo Maurstad, Klas Johansson
Nordic Capital – Kristoffer Melinder, Andreas Näsvik, Joakim Andreasson, Johan Lunden, Joel Davidkin
Investor AB – Börje Ekholm

Advisers
Equity – Bain & Co (Commercial due diligence); EY (Financial due diligence, IT due diligence, tax); Deutsche Bank (M&A); White & Case (Legal); Wiersholm (Legal); Accura (Legal); Van Doorne (Legal).

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