Inflexion sells Kynetec to Paine Schwartz Partners

The sale ends a holding period that began in May 2016 and is Inflexion's fourth exit in four months, according to Unquote Data.

Inflexion scored returns of more than 3x money and a 25% IRR on the sale, which values the company at $225m, according to a source close to the situation.

Unquote sister publication Mergermarket reported in September 2020 that the sale process Kynetec was expected to begin in early 2021.

The company was expected to generate a valuation of 12-13x EBITDA, Mergermarket reported, with the vendor expecting up to 14x, equating to more than $200m. Sources told the publication at the start of March 2021 that the business was being marketed based on EBITDA of $15-16m.

Corten Capital, Levine Leichtman and Paine Schwartz were cited as sponsors involved in the final stages of the auction by three sources, according to Mergermarket. Two sources also said that KKR's Global Impact Fund was in the running.

Paine Schwartz is investing in Kynetec via Paine Schwartz Food Chain Fund V. The fund closed on its hard-cap of $1.425bn in October 2019 and invests in the food and agricultural business sectors on a global basis. The firm's previous investments include Dublin-based trace-mineral injections manufacturer Warburton Technology.

According to a statement from Paine Schwartz, the company's future growth will be based on a strategy of developing Kynetec's market research offerings and capabilities, as well as expanding its customer base.

Previous funding
Inflexion announced in November 2015 that it was to acquire the animal and crop health business of Frankfurt-listed GFK via a carve-out. The company employed 220 people and posted revenues of $40m at the time of the GP's initial investment. The business was subsequently rebranded as Kynetec. Inflexion invested via Inflexion Buyout Fund IV, which held a final close in October 2014 on £650m. The vehicle made equity investments of £15-75m.

Lloyds backed a refinancing for Kynetec in July 2017. Ares provided unitranche financing for the company in 2019, according to Unquote sister publication Debtwire.

During the investment period, Inflexion invested in the company's technology, the GP said in a statement. According to Inflexion's website, Kynetec also saw EBITDA growth of 200% under Inflexion's ownership.

Kynetec also completed five add-ons in Europe, the US and Australia. It bought Ipsos North America's agricultural and animal health research business in 2016. In 2017, it acquired US-based Market Probe Agriculture and Animal Health, and Belgium-headquartered Market Probe Europe in 2017. In 2019, Kynetec acquired Belgium-based call centre JTL and Australia-based agricultural data company Neil Clark & Associates. In November that year, the company merged with Germany-headquartered Kleiffman Group's market research business, with Inflexion providing additional equity to back the deal via its fourth buyout fund, according to Unquote Data.

Company
Founded in 2002 and headquartered in Newbury, Kynetec is an animal health and agriculture market research business. The company provides data and information via its digital platform, covering topics including market trends and forecasts, with the aim of supporting the development of companies' brands and customer bases.

The business has operations in 30 countries, with its US headquarters in St Louis, Missouri. The company generated 2019 EBITDA of £5m and revenues of £67m, compared with 2018 EBITDA of £7.1m and revenues of £69m, according to its public accounts filings. Kynetec employs 850 staff.

People
Kynetec – Daniel Wirth (CEO).
Inflexion – Mark Williams (partner); Nick Rosenberg (assistant director).
Paine Schwartz Partners – Kevin Schwartz (CEO).

Advisers
Vendor – Houlihan Lokey (corporate finance); Addleshaw Goddard (legal); PwC (financial & commercial due diligence); Alvarez & Marsal (tax).
Equity – Kramer Levin, Ernie Wechsler, Adi Herman (legal); Simmons & Simmons (legal).

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• Topics
• Buyouts
• Exits
• UK / Ireland
• Industrials
• Secondary buyout
• Inflexion Private Equity
• United Kingdom