JZ makes 1.3x money on €96.3m direct secondary

JosУЉ Rojo
09 February 2016

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Listed investor JZ Capital Partners has made 1.3x money selling six stakes held by its EuroMicrocap (EMC) 2010 fund to a financial buyer for a total of тЌ96.3m.

According to JZ, the divestment was structured as a two-stage transaction. In early February, the firm already sold a first five stakes to the "major" financial buyer for €75.2m; all five are Spanish companies in which JZ became a shareholder between 2011-2013.

In March 2011, JZ bought a 60% stake in wireless equipment distributor Xacom through a €27m buyout. In May of the same year, the GP purchased a 45.07% holding in document outsourcer DocOut for €13m and a 75% interest in security specialist Ombuds through a €74m buyout. Later, OneWorld Packaging and Toro Finance were backed in April and December 2013, respectively.

In addition to the aforementioned Spanish assets, work is underway at JZ to sell the 36% stake it has held in British legal services firm the Winn Group since October 2013, when £9m was co-invested alongside Souter Investments. According to JZ, the Winn sale could result in €21.1m in proceeds, bringing capital returns up to a total €96.3m.

Once the Winn divestment goes through, JZ claims it will reap a gross exit multiple of 1.6x across all six stakes, though the return drops to 1.3x when adjusted for currency impacts. According to the firm, four of the six assets were sold at a 1.7x multiple, while the remaining two were priced at a discount to cost.

Following the deal, JZ's EMC 2010 fund will retain holdings in German money transfer service Fidor Bank and Spanish businesses Factor Energía and Oro Direct. Together, the three assets represent a combined EV of €84.2m.

According to JZ, the secondary sale will provide it with the liquidity it needs to finance forays across its three core spaces: US microcap, European microcap and real estate.

The firm, the Europe-focused investment arm of JZ Advisers, recently held a €400m second and final close for its third fund, above its €350m target.

Companies
Founded in 2011, Madrid-based DocOut specialises in document outsourcing services and business process outsourcing (BPO) for the banking, insurance and utilities sectors.

Also headquartered in Madrid, Ombuds was founded in 1995 and specialises in a range of security and protection services.

Oneworld Packaging is a manufacturer of biodegradable containers, founded in 2013. The company is headquartered in Valladolid, Spain.

Established in 2013, Toro Finance provides short-term working capital and receivables finance to the suppliers of Spanish companies. The company is based in Madrid.

With headquarters both in Madrid and Barcelona, Xacom Comunicaciones was founded in 1991 as an actor involved in the development, manufacturing and distribution of equipment for wireless and mobile communication.

Founded in 2002 and based in Newcastle, The Winn Group is an accident management firm. The company provides a complete accident management process, including legal services, replacement car hire, credit repair and medical treatment.

People
JZ Capital Partners – David Zalaznick (founder, investment adviser).