Advent Expands Brazilian Cleaning Co., Looks To IPO

Advent International is trying to clean up in the laundry business.

One of its portfolio companies in Brazil, Atmosfera, just vastly expanded its textile cleaning business by acquiring Mr. Clean—not the famous American detergent emblazoned with the bald-headed cleaning genie, but Brazil’s leading industrial laundry company serving hotels and restaurants. The combined company generates annual sales of about $100 million.

The firm paid about $23 million for the company using a combination of cash, shares in Atmosfera and the assumption of $17 million of Mr. Clean’s debt, according to Erwin Russel, an Advent partner in Sao Paulo. The deal closed Dec. 15. The acquisition is Atmosfera’s third since Advent invested in the business in 2002, and Advent is interested in acquisitions elsewhere in Latin America. The firm has also talked about taking Atmosfera public next year, says Russel

The three shareholders of Mr. Clean were Brazil’s national development bank, Banco Nacional de Desenvolvimento Econômico e Social, which held a 37% stake; private equity firm Pactual Electra; and Moysés Aguiar, Mr. Clean’s founder and chief executive. Pactual Electra is a joint venture fund between Pactual, a local Brazilian investment bank, and Electra Partners, an asset manager in London. The fund is “in divesting mode,” according to Russel. Advent bought the development bank’s share outright and gave Pactual Electra and Aguiar shares in Atmosfera. Aguiar will run Atmosfera’s commercial team.

Before the deal, Atmosfera was Brazil’s top provider of textile services to the country’s hospitals and industries. With the acquisition, it becomes the leader in the hotel and restaurant sector of textile services as well, providing linen rental, linen cleaning, uniform maintenance and uniform cleaning, among other services.

Mr. Clean’s principal facilities are located in São Paulo, Rio de Janeiro, Salvador, Recife and Natal; it also has on-site operations in selected hotels. With Mr. Clean included, Atmosfera processes some 200 tons of textiles per day in 17 plants, serving more than 2,500 customers.“The outsourcing rate for industrial laundry activities in Brazil is below 30% today, compared with about 80% in the US and Europe,” said Paulo Barreto, Atmosfera’s chief executive, in a statement. To support growth, the company has invested more than $25 million this year in the construction of three modern plants for textile services.

The Mr. Clean transaction continues an active period for Advent in Latin America. So far this year, the firm has completed four major investments: Grupo La Mansión, a casual dining restaurant operator in Mexico; Nuevo Banco Comercial, Uruguay’s largest commercial bank; Controladora Milano, Mexico’s largest discount clothing retailer; and Brasif, Brazil’s leading travel retail operator. Recent exits include the IPO of Brazilian credit card administrator CSU CardSystem and the sale of Argentine pharmaceutical company Fada Pharma to Polygon Labs.

Advent has a 10-year history of investing in Latin America. To date the firm has invested in over 30 Latin American companies with a combined enterprise value exceeding $3 billion.—E.B.