Sedal (Spain) - Nov 2007

unquote
01 November 2007

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Spanish family office Landon Investments has acquired Spanish manufacturer Sedal in a €35m secondary buyout. Vendors Espiga and Baring Private Equity Partners (BPEP) sold their 63% and 32% stakes respectively. The senior debt package was underwritten by Banco Santander. The operation took approximately nine months to complete and was originated by Atlas Capital.

Exit deal

Espiga Capital and BPEP sold their stakes in ceramic plumbing fixtures Sedal. Espiga is reported to have made an IRR of 30%, generating returns of 4x equity invested. Prior to this exit the investors had realised value through partial dividends. The initial strategy was to increase the company’s manufacturing capacity of the company. This was done through the opening of a factory in Kaiping (China), gaining access to the Asian market and doubling the production. The entry to Asia gave the firm the comparative advantage in the market, a factor determining the time of the exit.

Deal history

Espiga and BPEP backers had acquired 63% and 32% the business through a management buyout in 2002 investing €5.7m and €2.9m respectively. The remaining 5% of the equity was held by managing director and former shareholder Jorge Bonada. The deal was valued at €15.1m. The €6m debt package was led by Banco Santander Central Hispano (SCH), alongside BBVA and Bancaja and supported the €9m worth of equity.

Company

Established in the 1980s, Barcelona-based Sedal manufactures ceramic cartridges for single lever taps. The ceramic cartridge is used to adjust and mix hot and cold water within the single lever tap. In 2007, the company projects a turnover and an EBITDA of more than €25m and €5m respectively. It employs 240 staff between its Spanish and Chinese operations. The new sponsors plan to take the company forward by increasing production in the Chinese factory. The competitiveness of the operation lies in the capacity to produce at local cost without sacrificing the quality of the final product. The company will also develop its range of complementary products to improve the commercialisation of the goods.

People

Javier Casanueva and Juan Carvajal led the deal for BPEP and Espiga respectively. Jorge Gallardo and Marc Caus led the deal for Landon Investments.

Advisers

Purchaser - Accuracy, (Other Due Diligence)Purchaser - Addiens Asesores, (Other Due Diligence)Purchaser - Cuatrecasas, Elena Cuatrecasa (Legal)Vendor - Atlas Capital, Ricardo Levit (Corporate Finance)Vendor - Linklaters, Pedro Rojas (Legal)

Sourced from: Southern Europe unquote" 71 (Feb 2008)