Deal in Focus: Value Italy hands out DT to Ardian

Value Italy, formerly known as MPVenture, recently sold Italian-American auto parts producer Dynamic Technologies Group (DT), alongside Palladio Finanziaria, Friulia Veneto Sviluppo and Abacus Invest, to the North American branch of French buyout house Ardian, after 11 years of investment. During its ownership, the consortium led the business through the financial turmoil started in 2007 and subsequently across the gloomy cycle that affected the automobile industry until 2010.

"During 2009 and 2010, we went through though market conditions," says Marco Canale, chair and CEO at Value Italy. "Investors made many efforts to support the business, which has returned to growth since 2012 and ultimately performed over its budget in 2016."

With €242m in revenues and €30m in EBITDA posted in 2016, the fund managers were understood to have appointed William Blair in early 2016 to find a suitable exit route for the asset.

Last year was marked by significant uncertainty though, further affecting the asset. In particular, the November election of the US president Donald Trump, who seemed keen on introducing tariffs on foreign companies, highlighted a surge of protectionism policies that could have affected the business. In fact, the firm was strongly exposed to the US as it manufactures components in Mexico and Canada and currently counts General Motors as one of its largest clients, unquote" understands.

The shareholders put negotiations on hold as an undisclosed bidder stepped away from the table, a source close to the situation confirms. In early 2017, the GPs appointed investment bank Lincoln International with a view to restart the selling process and ultimately inked a deal with Ardian, which was keen on closing its first investment with North America Fund II.

According to the source, the sale saw Value Italy sell a 29.7% stake, while Palladio Finanziaria exited a 25% holding through its Venice Investimenti vehicle, Fiulia sold a 22.6% stake and Abacus sold 12% via its Elektron Private Equity fund. Moreover, turnaround fund Idea Credit Corporate Recovery I (CCRI), co-managed by Italian private equity firm Idea Capital Funds and Bayside Capital (the distressed arm of HIG Capital), saw the full repayment of its €15m loan, says another source familiar with the matter. The deal marks the first divestment for CCR I after its initial acquisition of a loans portfolio in June 2016.

Building up
Formerly known as Raco, the business was originally acquired by Absolute Ventures, which purchased an 85% stake in 2004 alongside the managers Gino Berti and Walter Zonta, who retained the remaining 15%. In 2005, the business acquired Chinese competitor Senstar and expanded across the Chinese market. Subsequently, MPVenture acquired a minority stake in the business via MPVenture 1 in July 2006 as part of a capital increase. The deal aimed to support the acquisition of Friulpress and allow a tubing-focused DT to expand across the die casting segment. Absolute retained a 46% stake, while the management team increased its stake above 20%, and the business was renamed to Dynamic Technologies.

During the following two years, the business acquired UK-based Cooling Power Holding and Italy's OML Morando. In June 2008, MPVenture led a secondary buyout for the business via its MPVenture 2 fund, alongside Palladio Finanziaria, Friulia Veneto Sviluppo, Abacus and the managers. "The deal was designed to support the acquisition of Canadian firm Bend All Automotive," says Canale. The shareholding structure saw MPVenture and Palladio control equal parts of a 51% stake, while Friulia and Abacus held 20% each. The remaining stake was in the hands of the management team.

DT currently comprises Dynamic Technologies, Bend All, Racotube, Friulpress and Specialist Heat Exchangers, and has 11 production facilities, including three plants in Italy, one in Hungary, one in Poland, one in the UK, one in Mexico, two in Canada and two in China.

People
Value Italy – Marco Canale (chair, CEO).
Ardian – Vincent Fandozzi (head of Ardian North America Direct Buyouts).
Dynamic Technologies Group – Walter Zonta (CEO).
Huron – Robert Bales (chair); Jerry Solar (CEO).

Advisers
Vendors – Lincoln International (corporate finance).

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