Epiris acquires Portals from De La Rue for £68m

Kenny Wastell
01 February 2018

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Epiris has made its maiden investment as an independent manager with the ТЃ68m EV acquisition of UK-based substrate manufacturer Portals De La Rue from listed parent De La Rue.

The investment is the first deal completed by Epiris since it ceased to be the investment portfolio manager of Electra Private Equity in 2017. The GP launched Epiris Fund II in March 2017, according to Unquote Data, with a £1bn target, of which it had reportedly reached around half by May 2017.

The transaction sees Epiris and Portals' management acquire a combined 90% stake in the company, with the £68m enterprise value equating to 12.8x average adjusted EBIT from 2015-2018 and 6.8x the projected FY18 EBIT of £10m.

The newly spun-out business consists of De La Rue's Overton and Bathford paper mills, and will see £61m payable to the trade vendor on completion.

Under the terms of the agreement, De La Rue will retain a 10% stake in the company. Portals will agree to supply a pre-agreed volume of paper to the vendor, while De La Rue will act as Portals' preferred supplier for security features.

As part of the deal, former De La Rue CFO Colin Child will take on the role of chairperson at Portals.

The divestment by the vendor forms part of its strategic aim to become a more technology-led business and focus on security features, polymer, identity-related products and product authentication.

Company
Dual-headquartered in Overton and Bathford, and with origins dating back to 1712, Portals is a manufacturer of substrate used in the production of banknotes and security documents including passports, birth and marriage certificates, and vehicle registration documents. It produces 13,000 tonnes of paper per year, of which around 50% was previously for internal use by De La Rue. The company's products are used in the production of 12 billion banknotes and 70 million passports each year.

Portals is anticipating a turnover of £120m in the year ending in March 2018, according to a statement issued by the vendor, with EBIT of £10m.

People
Epiris – Alex Fortescue (managing partner); Bill Priestley (chief investment partner); Owen Wilson (investment partner); Arvind Tewari (investment manager).
Portals De La Rue – Ross Holliday (CEO).
De La Rue – Martin Sutherland (CEO).

Advisers
Equity – CMS (legal); PwC (financial due diligence); LEK Consulting (commercial due diligence); CBRE (property due diligence, environmental due diligence); Pöyry (technical due diligence); Gallagher (insurance due diligence).