Portobello and Vista exit Maxam to Advent for €900m

Portobello and Vista reaped a money multiple of around 3.5x on their original investment, giving them an IRR of 28%. Maxam has paid dividends of approximately €5m per year to all shareholders since the private equity firms' entry five years ago.

This transaction, which is subject to approval from the regulatory authorities, represents the first exit for Portobello from the portfolio it acquired from Ibersuizas earlier this year.

Advent's track record in the chemical and industrial sectors and its global team were influencing factors when it came to securing the deal. Its numerous investment in the mining and chemical services segments include Boart Longyear and BOS Solutions, while its chemical and industrial portfolio includes Oxea, HC Starck, HT Troplast and the Möller group.

Maxam's new backer believes it has strong expansion potential, at a time when healthy growth is forecast in the commodities markets due to the demand anticipated from the developing world in the coming years.

Advent's plans at the company include developing a joint venture in China to establish Maxam as a major player in the local market, making selective acquisitions and investing in product innovation and customer services improvements.

The remaining 50% of share capital is in the hands of the management team.

Advent invested via its Global Private Equity VI fund, which closed on €6.6bn in April 2008.

Debt
The deal has been financed at this stage using 100% equity.

Previous funding
Ibersuizas completed a joint deal with Vista Capital in March 2006 to acquire 49% of Maxam (then known as Unión Española de Explosivos), which at that time was worth €500m. Ibersuizas took 27.4%, while Vista held 22.6%, and the company's management team increased their stake to 50%. Originated by a corporate finance adviser, the transaction involved the acquisition of the 57.5% that previously belonged to Reef Investissements and BancBoston Capital. A debt package was provided by Banestoque.

In 2001, Reef and BancBoston acquired the company in a secondary buyout believed to be in the region of €50-100m, with management retaining 42.5%. Previously, in 2000, BancBoston and PineBridge Investments completed a refinancing of the company, valued at £133m. In 1994, Pallas Invest Iberian Fund led a £43m buyout which left management with a 20% stake.

Since 2006, Maxam has consolidated its positioning within Europe with the acquisition of Italian, German, Danish and a number of Eastern European companies from the explosives sector. The company has also expanded by investing in its operations in Brazil, Asia, Russia, Africa, America and Australia, and by acquiring a major ammonium nitrate producer in France and Uzbekistan. It achieved a compound annual growth rate of more than 25% between 2004 and 2010.

A trade sale was another possible exit route for Portobello and Vista.

Company
Maxam supplies explosives, initiating systems, sport cartridges and ammunition for the armed forces. It is the third largest operator of its kind worldwide and has factories located in more than 40 countries. Exports now account for around 85% of sales (compared to 20% in 2006) and the group generated a turnover of €888m last year with EBITDA of €113m, compared to revenues of €399m on a EBITDA of more than €50m in 2006.

Founded in 1872, the Madrid-based company employs more than 6,000 people.

People
Spain CEO Juan Díaz-Laviada led the deal for Advent. Íñigo Sánchez-Asiaín, partner, and Carlos Rodriguiz de Tembleque, chairman, represented Portobello and Vista respectively. José Fernando Sanchez-Junco is the chairman and CEO of Maxam.

Advisers
Purchaser – N+1, Oscar Garcia Cabeza (Corporate finance); Uría y Menéndez, Christian Hoedl (Legal); Clifford Chance, Javier Amantegui (Legal); Garrigues, Luis Guerreiro (Tax); KPMG, David Hohn and Joaquín Torruella (Financial due diligence, tax); Aon Gil y Carvajal, Jose Maria Allendesalazar (Commercial & insurance due diligence); Boston Consulting Group (Commercial due diligence); Environ, Mathias Stein (Environmental due diligence); TINSA, Joaquín Mongé (Property due diligence); BCG, Jesper Nielsen (Commercial due diligence).
Vendor – CMS Albiñana y Suárez de Lezo, Rafael Suárez de Lezo (Legal).

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• Topics
• Southern Europe
• Buyouts
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• Advent International
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