Arcadia buys Castello Italia

Alessia Argentieri
11 September 2018

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Italian private equity firm Arcadia has acquired a 75% stake in plastic extrusion specialist Castello Italia from Chemical Project Holding in an all-equity deal.

Chemical Project Holding, which acquired Castello Italia in 2000, retains the remaining 25% stake in the business.

Unquote understands that Arcadia deployed an equity ticket of around €10m.

Arcadia plans to support the company's organic growth and does not exclude the possibility of expanding the business by acquiring other Italian companies operating in the same sector to enlarge Castello's portfolio of products and market share, Arcadia CEO Simone Arnaboldi told Unquote.

Following the deal, Castello CEO Pierluigi Testa, who has been leading the company since 2014, will keep his role, while Arcadia's business partner, Fausto Lanfranco, will be appointed president. Chemical Project Holding's main shareholder, Frédéric Hepineuze, will stay on with the company as a member of the board of directors.

The GP deployed capital from its Private Equity Arcadia Small Cap II fund, which was launched with a €100m target in September 2016, held a €47m first close in October 2017 and a €63m second closing in December 2017. It acquires majority stakes in companies with revenues of between €10-50m, mainly based in northern Italy.

According to the firm, the fund has raised €65m so far and is expected to reach a final close in January 2019. This is the second deal made by the firm via this vehicle, following the acquisition of Chiorino Technology, a specialist in leather tanning and manufacturing for the fashion industry, bought in March.

Company
Established in 1965 and based in Casalmorano, near Cremona, Castello Italia specialises in thermoplastic extrusion. The company manufactures polyamide and polyurethane tubes for various industries, including automotive and industrial automotion.

The company generated a 15% EBITDA margin from revenues of €17m in 2017, of which 80% came from outside Italy. It expects to exceed a turnover of €22m in 2018.

People
Arcadia – Simone Arnaboldi (co-founder, partner, CEO); Alessandro Grassi (director).
Castello Italia – Pierluigi Testa (CEO).

Advisers
Acquirer – EY (corporate finance); NCTM Studio Legale (legal); Verto Value Regeneration (financial due diligence); Sicor Service (financial due diligence).
Vendor – Compagnie d'Investissements et de Gestione Privée (corporate finance); Studio BC& (tax); Winston & Strawn (legal).