Mid-market private equity firm Cognetas (formerly Electra Partners), is close to selling its 65% stake in Irish retailer BWG. The business is thought to be worth in the region of €400m (US$510m).
While the firm has not commented on reports that it is on the point of agreeing a deal, a source close to the situation confirmed that Cognetas was set to exit its stake at a level that implies a near doubling in value of BWG since 2002. A €400m deal would value its interest in BWG at €260m, a return of almost 3.5 times its initial equity investment, which is thought to have been about €76m.
The firm’s interest in the business will be bought by the existing management under CEO Leo Crawford, backed by debt financing from Irish bank AIB. No institutional private equity firms are linked to the proposed secondary buyout, according to weekend newspaper reports.
The then Electra Partners acquired its 65% holding in BWG, which operates a wholesale food distribution business and the Spar convenience chain in Ireland, when it backed a 2002 management buyout.
That deal saw the current owners by the business from Irish Distillers Group, a unit of drinks group Pernod-Ricard, for €220m (US$222.57m), in a leveraged buyout transaction. Electra is believed to have made an initial investment of €76m of equity for its 65% holding, with management retaining the remaining stake.
Electra completed a refinancing of the €144m debt associated with the business in mid-2004 and in January 2006 BWG sold its UK based drinks wholesaler Bargain Booze to private equity investor ECIU Bargain Booze in a £65m (US$115m) deal.