Deal in Focus: BC enters Italian restaurant sector

Themed restaurants franchiser Cigierre was bought in a secondary buyout in November that saw BC Partners secure an 85% stake in the company from its former private equity owners L Capital and Paladin Capital Partners, and founder and CEO Marco di Giusto. The selling firms are believed to have fully exited, while di Giusto reinvested substantially to remain as minority shareholder.

Speaking to unquote", a source familiar with the deal revealed BC Partners drew equity from its ninth fund, a 2011-vintage vehicle that closed on €6.7bn in February 2012.

The takeover, supported by a debt facility from UniCredit, valued Cigierre at around the €300m mark. The figure makes it the sixth largest Italian deal to be recorded by unquote" data so far in 2015; the year has seen Italian private equity outfits triple aggregate deal value figures from the same period in 2014.

Changing hands
Founded in 1995, the Cigierre restaurant group operates casual dining brands Wiener Haus, Old Wild West, Arabian Kebab, Kukkuma and Shi'S. With headquarters in Tavagnacco, north-eastern Italy, the business manages 180 establishments across the country as well as in Belgium and Croatia.

The company first came under private equity ownership in July 2012, in a deal that saw L Capital secure a 35% stake, while Paladin picked up 33.78%.

The GP duo is no stranger to Italian food-related assets, having previously acquired food processor Le Conserve delle Nonna from its founder in June 2005.

Under their joint four-year ownership, Cigierre added 70 new restaurants to its network and experienced a reported 40% boost to its revenues and EBITDA, currently sitting at €130m and €33m, respectively.

With BC as new majority shareholder, Cigierre intends to accelerate its expansion, targeting 25 openings per year in Italy and abroad. The approach mirrors that of Côte Restaurants, a UK-based chain in which BC has been a shareholder since acquiring CBPE Capital's stake in a £250m SBO in July, again via its ninth fund.

Navigating the Italian market
Although similar, the roll-out strategy will likely yield a different outcome for each business. British Côte operates within a country where strong branding and investor appetite have turned the casual dining segment into an established actor.

Meanwhile, Italian Cigierre will need to navigate its way through a country with a stronger attachment to national cuisine and the small, family-owned business model. An opportunity still exists in bigger population centres where smaller establishments are struggling to survive under mounting rents, says Change Capital Partners managing director Nico Iacuzzi; his firm is the owner of Cigierre's peer Rossopomodoro.

Whether the chain sticks to Italy's major cities or not, it will still need to grapple with the country's unforgiving labour system, Iacuzzi says: "Against 25-30% in the UK, you would be a star to keep labour costs between 30-40% of the revenues in Italy. In addition, you can't hire people to fit your purpose, for weekend shifts, for example." There is also real estate to bear in mind, as a fragmented market means negotiations with countless landlords can get in the way of a restaurant roll-out strategy. 

Despite these challenges, according to Iacuzzi, the Italian casual dining space is set for growth. "Recession has pushed people into malls for cheaper shopping. Mall operators require food businesses to keep customers for a longer time and Cigierre, with a strong brand, has benefited from this."

People
BC Partners – Nikos Stathopoulos
Cigierre – Marco Di Giusto.

Advisers
Equity – DVRCapital (Corporate finance); UniCredit (Debt advisory);PwC (Financial due diligence); Facchini Rossi & Soci (Tax); Reno (Commercial due diligence); Bonelli Erede (Legal); Dickson Minto (Legal).
Vendor – Rothschild (Corporate finance); NCTM (Legal).
Company – Studio Molaro Romanelli Pezzetta Del Fabbro (Financial due diligence).

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Buyouts
• Southern Europe
• Exits
• Consumer
• Deal in focus
• Italy
• BC Partners
• Top story
• L Capital Management