Abenex Capital has acquired Buffalo Grill, a French restaurant chain, from previous financial backers Colony Capital for an undisclosed sum, as France’s buyout market feels the strain.
“There have been fewer than ten transactions this year in France with debt financing above €100m. There’s a complete lack of visibility meaning going forward only small deals will be financed by clubs of banks,” Laurent Chenain, deputy head of leveraged finance at Calyon, who led the deal for the bank.
Buffalo was reportedly sold via competitive auction dominated by financial buyers.
The interest in consumer-facing Buffalo shows buyout players’ continued appetite for what they believe are good businesses. With few assets being brought to market, competition is intense for those that are.
“Despite the difficult environment, Buffalo has performed well continuing to show gains in market share. It’s the largest sit-down restaurant chain in France with a market share of over 50%,” said Jean-Romain Lhomme, managing director of Colony Capital. The process was run by Rothschild & Cie.
Abénex secured debt financing to support the acquisition despite the severely constrained credit markets. Senior debt was provided by a consortium of six banks led by Calyon and Société Générale, and also including CADIF, IKB, LCL and Rabobank. Alcentra, Céréa/Unigrains and Paris-Orléans together supplied a tranche of mezzanine funding.
“The business plan for Buffalo took into account the weakening economic environment and as such the deal was done with a conservative debt structure,” said Chenain.
“I think all the potential buyers found putting together a debt package tough in this climate but Abénex weren’t the only ones to be able to finance their offer,” said Lhomme.
Of its portfolio of 300 restaurants, around a third are operated as a franchise. The company has a turnover of €350m.
Abenex, which was formerly known as ABN AMRO Capital France until becoming independent in March 2008, bought a majority stake in Buffalo alongside co-investors Ixen Partners and NI Partners.
Specialist real estate investor Colony bought Buffalo in 2005 for around €330m through its two managed funds, Colyzeo and Colony Investors VII. It delisted it entirely from the stock exchange in 2007.
Over the course of its investment, Colony sought to realise value through the sale of Buffalo’s real estate. It linked up with listed property fund Klépierre in 2006, selling it around 160 restaurants for €292m.
Colony was not the only investor in France to complete a successful exit recently.
L Capital, the private equity vehicle of luxury goods conglomerate LVMH Moet Hennessy Louis Vuitton, sold French video game retailer Micromania to GameStop Corp of the US for US$700m at the beginning of October.