Euromobiliare SIM (Italy) - Nov 2007

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01 November 2007

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US-based private equity house JC Flowers and Italian investment company Mid Industry Capital have invested €117.3m and €22.7m respectively to acquire a 60% stake in financial institution Euromobiliare SIM in a deal value at €140m. The operation was carried out through the newco E2Holding. JC Flowers will retain a 50.1% stake, while Mid Industry Capital will hold on to a 9.99% in what is a strategic shareholding partnership. The remaining 40% will remain with the management team. This is one of the first deals in which a financial institution is backed by private equity. The deal, which closed in late 2007, took five months to sign and three months to be authorised, not including the summer break. This period is short considering that due to the nature of the acquisition Banca d’Italia had to extend its approval. The move was originated by the management team wishing to establish the institution’s credibility independently from a banking entity. Mid Industry targets the SME special situations segment of the market and has been listed since May 2007. Buyout house JC Flowers was established in 2001 to invest in the financial services sector in the Americas and Western Europe. Its particular focus lies on distressed situations, as well as cross-border consolidations. This operation grants the company a first entry into the Italian market.

Company

Milan-based Euromobiliare SIM was born out of the Gruppo Euromobiliare in 1991. In 1994 Euromobiliare SIM SpA became part of the Gruppo Credem which had acquired the Euromobiliare parent company from the Hong Kong Shanghai Bank of Commerce (HSBC). The firm supplies investors and businesses with the best consulting and performance services available on the Italian stock market. The backers and management are working towards a possible IPO in 12-18 months’ time. They intend to maintain the current profitability of the company, while also developing divisions such as asset management, corporate finance and M&A that had limited possibilities for growth under the previous regime. In 2007 the projected turnover and EBITDA was approximately €67m and €30m respectively.

People

Dario Levi and Ravi Sinha led the operation for Mid Industry Capital and JC Flowers respectively.

Advisers

Equity - Allen & Overy , Giovanni Gazzaniga (Legal)Equity - Camozzi & Bonissoni , Angelo Bonissoni (Tax)Equity - Chiomenti, Vianini Tolomei (Legal)Equity - KPMG, (Financial Due Diligence)Vendor - Clifford Chance LLP, (Legal)Vendor - Vitale & Associati, Guido Roberto Vitale (Financial Due Diligence)