News in brief

Sarah Alexander is the first executive director of the Emerging Markets Private Equity Association (EMPEA). Launched in May, the association has more than 1,000 private equity and venture capital firms active in Asia, Eastern Europe, Africa, Latin America and the Middle East. Interviews with 22 institutional investors representing US$108bn in private equity assets revealed that 45% said their allocation to emerging market funds would likely increase over the next four to five years.

Nordic Capital and Accent Equity are acquiring KappAhl, a Swedish fashion retailer, for SKr1.95bn (US$275m) from the Swedish Co-operative Union (KF). Nordic, which will take a majority stake, is investing from its fifth fund, which closed at €1.5bn. In recent years KappAhl has reversed a negative earnings trend by trimming its business and merchandise assortment, focusing on its core demographic and slashing costs. In 2003, it reported revenues of SKr3.8bn and operating earnings of SKr120m.

Permira Europe II and Private Equity Partners are acquiring a 33% minority stake in Italy’s Marazzi Group, the world’s largest manufacturer of ceramic tiles. The entry is designed to facilitate a listing on the Italian Stock Exchange within three to five years. The new partners will back the 2004-2006 business plan, which specifically envisages continuing growth in emerging markets. This will be achieved through investment in production capacity in Russia and the US. The group has also started up in China through a new division, Marazzi China.

Apax Partners and Cinven conducted a wide-ranging search before settling on Andrew Day as the new chief executive of World Directories, the directory and yellow pages business they bought from VNU. Day is the former chief executive of Sensis, Australia’s leading directories business. Apax and Cinven agreed to buy the company last month for €2.075bn from the publicly listed Dutch information and media business. Ed Penninx, the current CEO of World Directories, is returning to VNU as an adviser to the Board and will assist Day in his development of the company.

Ownership structures resulting from LBOs may undermine the creditworthiness of satellite operators, according to a report from S&P. Though these companies are global operators, an increasing number, like PanAmSat, have raised financing in Europe. The ratings agency said private equity owners of satellite companies would look to maximise cash flow or to extract higher dividends. “This shift in focus comes at a price,” said Michael O’Brien, S&P credit analyst Michael O’Brien. “Higher debt levels, coupled with a potential lack of investment, could constrain the long-term development of these satellite services providers, delaying the introduction of new services and technological advances.”

Bank of Scotland, Lehman and Merrill Lynch launched syndication of £720m in loan facilities for Charterhouse’s £1.35bn buyout of Saga. Senior debt starts at 4.4x and total debt starts at 6.5x. The equity contribution made by Charterhouse at closing is one of the largest single investments in the firm’s 70-year history, representing 45% of enterprise value. The structure includes term loan A, B and C tranches, a cash collateral tranche, mezzanine and a junior PIK tranche. Pricing ranges from 275bp and 325bp on the term loans to 450bp on the mezzanine.