Ergon et al. sell Indo to PE-backed Rodenstock

Harriet Matthews
19 May 2022

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Ergon Capital, Sherpa Capital and Oquendo Capital have sold Spain-based ophthalmic lenses manufacturer Indo to Rodenstock, a Germany-based optical lenses and glasses frames producer backed by Apax Partners and Mubadala Capital.

A source familiar with the situation told Unquote that a structured auction process was not necessary for the deal, given the strategic fit between the two businesses.

A second source familiar said that the deal values Indo in the EUR 150m-200m range.

Spanish publication Expansion reported earlier in May 2022 that Ergon was in advanced negotiations with Rodenstock to sell Indo, with the company expected to be valued at more than EUR 160m. The report stated that Ergon held a 70% stake in Indo at the time of the sale.

Ergon acquired Indo in June 2018 in an SBO from Sherpa Capital. The deal saw Sherpa retain a minority stake in the business, with debt provided by direct lender Oquendo Capital. Ergon deployed equity via Ergon Capital Partners III, which held a final close in 2010 on EUR 500m, with an additional EUR 150m raised for the fund in 2016. The fund typically deploys equity tickets of EUR 25m-75m, investing in European mid-market businesses.

Sherpa Capital originally acquired Indo in 2013 in the form of a carve-out of the production unit of Grupo Indo, which was declared bankrupt in 2010. The GP deployed equity via its EUR 30m, 2010-vintage debut fund, which was dedicated to distressed companies based in Spain. The investment was later held in the GP's Special Situations II fund, which held a final close in May 2014 on EUR 100m.

A third source familiar told Unquote that Sherpa Capital held a stake of 20% at the time of the exit.

During Ergon's investment period, the company expanded its client base and invested in its production plants and new product launches, according to a statement from Indo's selling shareholders.

Apax and Mubadala acquired Rodenstock from Compass Partners in a EUR 1.5bn SBO in March 2021.

Rodenstock said in a statement that the deal is expected to complete in Q3 2022 and is subject to competition authority approval. The statement added that Rodenstock expects to see significant growth in Indo's operations in Morocco, where the market is expected to grow at 10% CAGR between 2022 and 2027.

Houlihan Lokey, Rodenstock, Apax Partners and Sherpa Capital declined to comment. Ergon Capital had not responded to requests for comment at the time of publication.

Company
Founded in 1937 and headquartered in Sant Cugat del Vallès, Indo manufactures ophthalmic lenses and distributes medical equipment for the eye care sector. The company employs 440 staff, versus 350 at the time of its acquisition by Ergon. It operates in Spain, Morocco, Portugal and France, with manufacturing plants in Barcelona and Tangier.

People
Ergon Capital – Pablo Álvarez Couso (managing director); Emanuele Lembo (senior partner).
Indo – Enric Florensa (CEO).
Rodenstock – Anders Hedegaard (CEO); Marcus Desimoni (CFO).
Apax Partners – Steven Dyson (partner, co-head of healthcare); Arthur Brothag (partner).

Advisers
Vendor – Houlihan Lokey (corporate finance).
Acquirer – PwC (financial due diligence); WTS (tax); BCG (commercial due diligence); Uría Menendez (legal).