OpenGate seals fifth platform deal, moves through debut fund

OpenGate Capital made the fifth platform investment from its debut fund, carving out Umicore Zinc Chemicals from its parent Umicore, a Belgian materials and recycling company, Andrew Nikou, OpenGate’s chief executive, said in an interview.

The deal included about 90 million euros ($95.4 million) of debt, and the rest equity, Nikou said. The unit’s enterprise value in the deal was 142.4 million euros, Umicore said in a June announcement of the deal with OpenGate.

Umicore Zinc Chemicals makes fine zinc powders, battery materials and zinc oxides. These materials are used in end products like batteries, sunscreens and anti-corrosion paints.

“The underlying … products are need-to-have versus a nice-to-have. Given the market position around the world, given the [areas] where we believe we could create operational efficiency, it [turned] into an interesting investment opportunity for us,” Nikou said.

Umicore Zinc Chemicals posts about 400 million euros of annual revenue and employs more than 500.

Fund I, which closed on $305 million earlier this year, is now around 42 percent deployed. Nikou said the debut fund likely will have a total of around 10 platform investments.

Other deals in Fund I are power-transformer maker Power Partners Inc., ENERGI Fenestration Solutions, which makes vinyl window and patio door profiles, building-materials distributor Bois & Matériaux and Alfatherm, a PVC film producer.

At its current pace, OpenGate could be back in market next year with Fund II, Nikou said.

“We’re seeing close to 1,100 deals over the year … there’s a lot out there,” he said.

OpenGate specializes in carving out non-core units from larger organizations, a strategy the firm has followed since Nikou founded the firm in 2005. The firm splits the fund between the U.S. and Europe. Prior to OpenGate, Nikou was in Platinum Equity’s Paris office.

Several macro factors influence companies’ decision to sell non-core units, which keeps OpenGate’s deal pipeline jammed. One factor: the Brexit, Britain’s vote to leave the European Union, he said.

Action Item: OpenGate’s Form ADV: https://adviserinfo.sec.gov/IAPD/Part2Brochures.aspx?ORG_PK=213518

Andrew Nikou, founder and CEO of OpenGate Capital. Photo courtesy of the firm.