A Capital in DKK 185m PIPE for Bang & Olufsen

A Capital managing partner André Loesekrug-Pietri told unquote" that it directly approached the company in December 2011, offering a strategic angle in the form of accelerated growth in the Chinese market. "Bang & Olufsen is a known brand in China, but needs stronger marketing and a larger distribution network," he added.

After deciding to invest, A Capital identified luxury goods distributor Sparkle Roll through its corporate network in China. Loesekrug-Pietri explained that it was then a matter of convincing existing shareholders in Bang & Olufsen that the value created by an accelerated development in Asia and particularly into the Chinese market would outweigh any share dilution occurring from the investment.

The investment was made at market rate by means of a share issuance, corresponding to 8.35% of the existing capital. A Capital, investing from its Euro-China Growth Capital Fund, subscribed to a fifth of the sum, which will give it a 1.59% stake in the business. Hong Kong-based Sparkle Roll will own a 6.12% stake following the transaction.

The DKK 177m net proceeds from the transaction will be used to accelerate Bang & Olufsen's growth in China and for general business purposes. The GP plans to hold on to the investment for between two to four years, depending on progress, and aims for a 3-4x return on its investment.

Based in Beijing, Brussels and Shanghai, A Capital aims to secure strategic Chinese co-investors to drive the growth of its portfolio companies in the Asian markets. A Capital's anchor LPs are the Chinese sovereign wealth fund CIC and the Belgian Holdings SFPI; its fund has a €250m target.

Company
Bang & Olufsen, founded in 1925 and currently listed on the Copenhagen Stock Exchange, designs, manufactures and distributes consumer electronics. Its main products include televisions, sound systems and car audio products. Based in Struer, Denmark, the company employs 2,000 staff and reported an operating profit of DKK 60m from a DKK 2.9bn turnover in 2011.

People
Managing partner André Loesekrug-Pietri worked on the deal for A Capital and will be put forward as board member at Bang & Olufsen's next annual general meeting.

Advisers
Equity – Plesner, Henrik Rossing Lønberg (Legal); Loyens & Loeff, Thibaut Partsch (Legal); Baker & McKenzie, Thomas Gilles, Elsa Chan, Nikolaus Reinhuber, Christian Atzler (Legal).
Management – Accura, Morten Jensen (Legal); FIH, Oscar Mosgaard (Corporate finance).

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• Nordics
• PIPEs
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