3i sells pet stake, floats electronics firm

In the second largest UK retail buyout of the year, Bridgepoint has acquired Pets at Home for £230m, providing over 3.5x return for 3i, which has also realised £60m from the IPO of electronic components group e2v technologies.

Pan-European mid-market private equity firm Bridgepoint has acquired Pets at Home, the UK pet food and products retailer for £230 million (€345 million; $430 million).

The deal is the second largest private equity-backed UK retail buyout of the year behind the £699 million take-private of fashion retailer New Look by Permira and Apax Partners in March.

The transaction provides a full exit for pan-European group 3i and Intermediate Capital Group (ICG) the UK-listed mezzanine provider. 3i invested £5 million in growth capital in the company in 1996 and invested a further £20 million in December 1999 when Pets at Home acquired 92 stores from its larger UK competitor PetsMart.

3i’s overall investment of £25 million for a 40 percent stake in the company was realised for £90 million in the transaction, representing just over 3.5x return on its investment. The transaction was led by Manchester-based Keven Parker, director of new investments for the North of England and Scotland.

ICG invested £24 million of mezzanine funding in the 1999 PetsMart acquisition and had previously syndicated its mezzanine stake to 3i, AIB, Northwesternmutual and RBS for what a source described as “excellent returns” before fully exiting today. Katharine Belsham led ICG’s involvement in the transaction.

The investment in Pets at Home is the 16th investment made by Bridgepoint from its €2 billion buyout fund Bridgepoint Europe II, which closed in May 2002. The fund is understood to be approximately 50 percent invested at this stage.

In separate news, 3i has fully exited technology component company e2v technologies through an initial public offering on the London Stock Exchange. 3i acquired a 75 percent stake in e2v in a management buyout in July 2002 from Marconi Communications in a transaction valued at £57 million.

Sources close to the transaction said that 3i had made an approximately £60 million profit on the float of the company, or 2.5x money invested. The e2v group, which is headquartered in Chelmsford, England and produces high technology electronic components for the medical, defence and commercial sectors, had sales of £97.6 million for year ended 31st March 2004, generating an operating profit of £9.9 million.