Deal in focus: Alto buys Dolciaria Val D'Enza stake

After a minority investment in 2007, the company was previously under the ownership of Cape Natixis, which was put under emergency administration in 2011 by the Bank of Italy due to regulatory violations and administrative irregularities.

According to Alto partner Mario Visioni: "Following the crisis of the previous fund, the majority shareholders bought back the shares of the company to own 100%. And then they invited the former Monviso shareholders – Franco Vitale and Franco Gribaldi – to buy the majority of shares, because they realised they needed some new blood in terms of management and ideas."

The founders of Monviso, a gluten-free bread maker, had an existing relationship with the GP: Alto acquired Monviso from 3i in 2008, going on to sell the asset to PM & Partners in 2012 and reaping a 2x money multiple.

"The former Monviso shareholders bought the majority of the shares and started to revise Dolciaria's commercial and production approach," says Visioni. "They managed to dramatically reduce the production costs and improve the company's profitability, making it more competitive, especially in terms of the private label business. They helped dramatically turn the company around: in 2012, turnover hit €8.5m with an EBITDA of around €0.3m. Now it's €11m and an EBITDA of 14% of turnover."

Founded in 1977 and based in Ciano D'Enza, Dolciaria Val D'Enza specialises in the production of oven-baked goods such as pies and tartlets. The firm's production lines can manufacture 45,000kg of pies, tarts, cakes and tartlets per day. The firm's proprietary brands represent 65% of revenues, with the remaining 35% coming from private label products for retail chains.

Dolciaria's original management team wished to exit the company for personal reasons, so turned to Alto to take on the 41.88% stake in the firm. Says Visioni: "We had a really fantastic experience running a company with the Monviso shareholders before – it was an excellent investment for us. There was a lot of confidence and trust already."

Made in Italy
The GP intends to follow a buy-and-build strategy for the company in Italy, bolting on small companies with turnover of €1-2m. "It's not easy doing buy-and-build in Italy," says Visioni. "There's sometimes an ego problem, because company founders know each other and consider each other real competitors. But it's still feasible because we want to buy really small companies focused on gourmet products." For these smaller companies weathering a tough recession, an acquisition could be a lifeline that allows them to sell through an existing network.

For the time being, the investor will focus on Italian targets, leveraging the allure of the Made in Italy brand. "In the food sector, the Italian brand is still at a premium. In the end, staying in Italy and stressing the Italian context is a value-add," says Visioni.

Alto committed capital from its latest buyout fund Alto Capital III, which closed on around €100m in March 2013. "We're at the start of this fund. We have time to create this group, make good acquisitions and find a niche," Visioni explains. 

People
Alto Partners – Mario Visioni, Alice Barberini

Advisers
Equity – EY, Giovanni Calia, Filippo Cerrone (Commercial due diligence); Russo De Rosa Associati, Leo De Rosa, Andrea de Panfilis, Federica Paiella (Legal, financial due diligence); Athena Audit, Alberto Fioritti, Andrea Mioli, Enea Chersoni (Financial due diligence); Vitale Associati, Alberto Gennarini (Corporate finance). 

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• Topics
• Southern Europe
• Consumer
• Expansion
• Italy