The primary market remains moribund, with just the final stages of a handful of deals in syndication now occupying desks. The pipeline of deals is at an all-time low, with nothing on the agenda between now and year-end.
Sponsors do still have money, however; Advent International has acquired the card processing activities of
Experian’s other French transaction processing unit, a business process outsourcing business, is being acquired by Doc@Post. The gross cash consideration for both businesses is €203m.
Pascal Stefani, head of Advent International in France, said in a statement: “In the current difficult environment, we are delighted to have structured an innovative deal, without debt-financing, by involving Doc@Post, an excellent strategic player.”
Sources away from the deal suggested that private equity firms with funds to invest confronted by compelling value could use equity as a de facto bridge to the return of the leveraged finance market down the line, or target growth opportunities and minority investments.
Advent International has previously invested in a number of deals in the same sector, including PaySys, Mach, MBF Cards, CSU, CardSystem, Euronet, Dolex and CCS.
Add-on deals to existing LBOs also remain a possibility. IK Investment Partners (formerly Industri Kapital)-backed Schenck Process has completed an add-on acquisition of Screenex, an Australian maker of poly and rubber screening panels.
The deal is financed via a combination of an existing acquisition facility of €30m, newly committed acquisition facilities via Dresdner Kleinwort of €10m and an equity contribution from IK Investment Partners. The facilities have a weighted average margin of 285bp.
Schenck Process manufactures equipment to measure and process technologies in industrial weighing, feeding, screening and automation. The 2007 LBO of Schenck Process was backed by €340m of senior financing backing, arranged by mandated lead arrangers CIBC and Dresdner Kleinwort, and mezzanine provided by Babson Capital.