LDC reaps 3.3x in sale of A-Gas to KKR

The deal sees LDC reap a 3.3x money multiple and an IRR of 24%, having invested a total of £59m throughout the course of its tenure.

Financial details of the deal remain undisclosed, though prior to the deal, sources close to the situation told unquote" sister publication Debtwire the business was expected to be sold for 8-10x EBITDA.

KKR's capital was drawn from its fourth European fund, a $3.6bn vehicle that held its final close in December 2015.

A source close to the situation told unquote" the business intends to increase its rapid recovery and reclamation capacity as well as capitalising on "regulatory tail-winds" that should bolster its organic expansion.

Under LDC's stewardship, the company has undertaken an international acquisitive growth strategy, bolting on US-based Coolgas, Rapid Recovery and RemTec International; Australia-based Technochem and SA Rural; and UK-based A-Zone Technologies.

A-Gas has also expanded its service offering from an initial focus on distribution to include full recovery and reclamation of environmentally hazardous gases and chemicals used in cooling, refrigeration and fire protection. In September 2016, it invested more than £1m in a new refrigerant separator at its Portbury plant near Bristol.

According to a statement issued by the vendor, A-Gas has increased its turnover by 79% and its EBITDA by 103% during the course of the firm's holding period. The business generated revenues of £50m and EBITDA of £10m in 2010, the year prior to LDC's acquisition, according to unquote" data.

Debt
According to a recent report by Debtwire, financiers were "lining up to provide financing" in anticipation of the sale. The publication cited two sources with knowledge of the matter, stating a strong group of incumbent banks were keen to stay in the game, with pitches in the 4-4.25x range on all-senior debt. Debt funds were also reportedly circling, touting unitranche at up to 5.5x.

Previous funding
A-Gas first received private equity backing in October 2001, when 3i acquired a minority stake as part of a £16m deal.

In February of 2007, Growth Capital Partners (GCP) acquired a 40% stake in the business for £32m, with 3i making an exit via the deal.

LDC then invested £29m in the £70m tertiary buyout of A-Gas in April 2011. The GP provided a total of £30m of additional expansion capital over its tenure, in order to support the company's acquisitive growth strategy.

Company
Founded in 1993 and headquartered in Bristol, A-Gas distributes speciality gases and chemicals including fluorinated and non-fluorinated refrigerants, such as ammonia, hydrocarbons and carbon dioxide. The group operates from 16 locations across Europe, Australia, South Africa and North America.

According to publicly available documents, A-Gas generated £93.5m in revenues and £17.6m in EBITDA in 2015.

People
LDC – Martin Draper (CEO).
A-Gas – Andrew Ambrose (CEO).

Advisers
Vendor – Rothschild (corporate finance); Osborne Clarke (legal).

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• Topics
• Exits
• UK / Ireland
• Industrials
• United Kingdom
• LDC
• KKR
• Secondary buyout