SPAIN - Nazca makes 8.5x money on Svenson sale

Guy
13 March 2006

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Nazca Capital, one of the most active private equity firms in the Spanish market, has closed a deal with Investindustrial to sell its remaining 67.8% shareholding in the European hair-treatment leader for EUR 82m. The transaction was structured as a secondary buyout.

Nazca Capital acquired 100% of Svenson in April 2002 in a EUR 22m leveraged buyout (LBO) comprising EUR 10m of equity and EUR 12m of debt. The goal was to turn the company into the European leader in hair-treatment solutions.

In October 2004, Nazca Capital sold 25% of Svenson for EUR 12m, thus valuing 100% the company at EUR 52m (EUR 48m equity, EUR 4m debt). With this operation, the company recovered its initial investment. Now Nazca has sold 67.8% for EUR 82m, which means that the 100% of the company is valued at more than EUR 120m. Therefore, with this disinvestment in Svenson, Nazca has made an IRR of 80% over about four years, and multiplied its initial stake in Svenson 8.5 times.

Nazca’s hallmark is to bring its management experience to bear on the strategic decision-making of their portfolio companies’ executives. In the period 2002-2006, for example, Svenson hired a new CEO, a CFO, a business development director and an international controller. The company also opened 16 new outlets in Spain and a facility in Portugal. Svenson raised its international profile in March 2004 when it bought Svenson Haar Studios, the leading company in the German market, for EUR 10m.

With this Svenson deal, Nazca has now completed three total divestments, following the sale of Unipost to Deutsche Post in September 2004 and of Rodilla to the founding shareholders in May 2005. In these three disinvestments, Nazca has obtained an average IRR of 71% and has multiplied the invested capital 4.7 times.

In the operation, Arcano has acted as advisor of the seller. KPMG has carried out the financial and commercial due diligence and Linklaters has advised on the legal aspects of the deal.

Nazca Capital, which is planning to raise Fondo Nazca II during 2006, is one of the most active private equity firms in Spain and a leading middle market player. Nazca develops a full hands-on investment approach in Spanish companies. Fondo Nazca I was created in September 2001 with capital of EUR 100m and is today 80% invested. In recent years, Nazca has led 8 investments worth more than EUR 230m in the food and beverages industry (Vinartis winery group, Dibaq, Guzmán), catering and restaurants (Rodilla, divested in May 2005, and Lizarrán), cosmetic services (Svenson – now sold – and Hedonaï) and logistics (Unipost, divested in October 2004).