Los Angeles-based Ares Management has acquired British paint company Farrow & Ball for £275m from European Capital Limited, a UK-based affiliate of American Capital.
Farrow & Ball is a leader in premium paint and wallpaper worldwide. Farrow & Ball’s senior management will retain a minority stake in the company.
European Capital received £236 million in equity proceeds and realised a gain of £138 million from the transaction, subject to closing adjustments. The transaction amounts to a return of 5.4x on the firm's equity investment, having previously realized full repayment on the senior and mezzanine debt.
European Capital acquired Farrow & Ball in August 2006, through a buyout deal that saw the firm underwrite the entire purchase price requirement through an £86 million investment in senior term loans, senior subordinated debt, institutional loan notes and common equity.
US-based American Capital is a listed private equity firm and global asset manager that focuses on middle market private equity, leveraged finance, real estate, energy & infrastructure, and structured products. As an affiliate, European Capital Limited acts as an investment company for pan-European equity, mezzanine and senior debt investments.
This is the second European investment this year for Ares Management, which acquired homebuilder London Square in July. Ares is currently investing out of its Ares Corporate Opportunities Fund IV, a $4.7 billion vehicle that closed in 2012.
The firm is also in market for two vehicles – Ares Capital Europe II, which is targeting €1.5 billion for senior debt, mezzanine and co-investment equity in European mid-market companies, and Ares Special Situations Fund IV, which has a $1.5 billion target. Known investors in the special situations vehicle include the New Mexico State Investment Council.
European Capital was advised by Rothschild and DLA Piper.