
Eurazeo exits Iberchem in €820m deal

Eurazeo Capital has sold its stake in Spanish fragrances and flavourings producer Iberchem to UK-based speciality chemical company Croda.
The deal values Iberchem at €820m, which equates to 24x its 2019 EBITDA and 20.5x its 2020 EBITDA.
This disposal will generate for Eurazeo a cash-on-cash multiple of 2.1x and a 25% IRR. Proceeds will amount to €565m for Eurazeo, its affiliates and partners (€384m for Eurazeo only).
The sale ends a three-year holding period for Eurazeo, which acquired Iberchem from Spanish private equity firm Magnum Capital Industrial Partners in a deal valuing the business at €405m. The transaction saw the French GP acquire a 70% stake in the business for €270m. Magnum exited the investment, while the company's management retained the remaining minority stake in the business.
Under Eurazeo's ownership, Iberchem grew organically and via new acquisitions. Its revenues have increased from €117m posted in 2017 to €187m forecasted for 2020 and its EBITDA from €25m in 2017 to €40m in 2020. The company acquired South Africa-based food flavours producer Versachem in May 2018 and two aroma manufacturers based in Asia – Malaysian company Flavor Inn Corporation and Chinese business Duomei – in February 2020.
Iberchem was put on the market at the beginning of November, when Eurazeo hired BNP Paribas to run the sale, according to press reports. The auction attracted several bidders, including New York-headquartered International Flavours & Fragrances, Indian company Firmenich, Switzerland-based Givaudan, and German business Symrise, along with PE firms Carlyle, KKR, Cinven, CVC, PAI Partners, EQT and Bridgepoint, according to press reports.
With this acquisition, London-listed Croda intends to strengthen its focus on fast-growing consumer markets, reinforcing its presence in the personal care and home care fragrances sectors.
The company intends to fund the consideration for the transaction via a combination of its existing debt facilities and the proceeds from placing new ordinary shares to institutional investors, which is expected to raise around £600m.
On completion, Croda's leverage is expected to increase modestly to approximately 2x EBITDA and is to reduce to 1.6x EBITDA by the end of 2021, with the structure of the financing preserving the group's flexibility and balance sheet strength.
Previous funding
Iberchem's private equity funding history started in 1999 when Espiga Capital acquired a 78% stake in the business for €5m from the company's founding partners. In 2002, Espiga reinvested in the business alongside Baring Private Equity Partners, which deployed capital from its InverMurcia vehicle to support the opening of a factory in Murcia and the acquisition of a Chinese plant. The two GPs led an additional €1.5m capital increase in 2005, with Espiga injecting €1.1m.
In 2008, Capital Alianza acquired an 87.1% stake in Iberchem as part of an MBO valuing the business at €35m. The transaction saw Espiga and Baring Private Equity exit the firm, with the former enjoying an IRR of around 20% and a money multiple in excess of 3x.
Subsequently, Magnum acquired a 73% stake from Alianza in June 2013 via its Magnum Capital I fund. The deal valued Iberchem at around €80m, which equated to 8x its 2012 EBITDA.
Company
Established in 1985 and headquartered in Murcia, Iberchem manufactures fragrances for the personal care industry and flavourings for the food and beverage sector.
The company employs 850 staff across 14 manufacturing plants and 10 R&D centres, and has a commercial presence in 120 countries worldwide.
Iberchem generated EBITDA of €34m from revenues of €174m in 2019 and forecasts turnover of €187m and EBITDA of €40m in 2020.
People
Eurazeo Capital – Marc Frappier (managing partner).
Iberchem – Ramon Fernandez (CEO, founder).
Croda – Steve Foots (CEO).
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