Quadrivio reaps 40%-plus IRR, 2.2x cash-on-cash from EPI sale

The GP will reap more than 40% IRR and around 2.2x cash-on-cash from the transaction, Quadrivio’s co-founder and CEO Alessandro Binello told Unquote.

The sale was officiated via bilateral talks between the vendor and the buyer, he said. Following a lot of inbound interest for the company, the sponsor was planning to sell EPI to an industry player, given the business’ “excellent” positioning in the sports merchandising industry, said Binello.

The GP engaged in talks with at least three other trade buyers before agreeing to proceed with the sale to Fanatics, which it chose due to its leading position in licensed sports merchandise and its global digital platform, he said. The buyer is about to IPO in the US and is present in more than 60 countries, he added.

After a 2.5 year holding period, the sponsor was ready for an exit, he added, following value creation initiatives that saw EPI's sales increase by 125%, from EUR 20m in 2020 to EUR 45m in 2022. Profitability more than doubled and EBITDA rose from EUR 2m to EUR 4.5m in the same period, according to a press release.

As part of the business plan, EPI purchased Free Time Management Group, the owner of Calcioshop, which operates soccer equipment and apparel e-shop The Pitch, it said.

The sponsor also invested in the growth of EPI’s e-commerce channel and logistics, and enhanced the digitalisation of the production process and logistics.

The sale marks the first exit for Quadrivio’sIndustry 4.0 Fund, which invests Italian SMEs, focusing on digital transition and technological innovation. After holding a final close on EUR 200m in 2022, as reported, the fund is now 70% deployed and will aim to reach 85% before the summer. The vehicle seeks to invest in 10-15 Italian SMEs in total operating in the manufacturing industry by deploying equity tickets of around EUR 20m-EUR 30m.

Quadrivio expects to complete two more deals via Industry 4.0 by the summer, both in the circular economy space. The first deal is just a few weeks away from signing and is a business with turnover of more than EUR 100m, said Binello.

At present, the GP is on the road fundraising for its Silver Economy Fund and Lifestyle Fund II, as reported.

Company
Based in Milan, Italy, EPI was founded in 1996 and sells sports products and accessories via e-commerce and brick and mortar stores. It also specialises in events merchandise and product development. Currently, it is the official licensee and/or the retail partner of several sports clubs, including top Italian football and basketball teams. It has more than 65 employees.

People
Quadrivio Group − Nicolò Grange (investment manager), Pietro Paparoni (investment director of Industry 4.0 Fund).
EPI − Lorenzo Forte (founder and CEO).

Advisers
Vendor − Studio Giliberti Triscornia Associati, Francesco Cartolano, Chiara Cella and Leonardo Giroletti (legal); T8P Consulting, Cataldo Tedone, Carlo Cremona, Paolo Davico (operation adviser).

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