Aurelius triples EBITDA with bargain deals

The restructuring specialist predicts record earnings in 2017, with two large exits to be reported in Q3.

Aurelius Equity Opportunities, a German-listed balance sheet investor, tripled its combined group EBITDA during the first half of 2017, according to its results.

The group, which held 20 portfolio companies as of 30 June, posted €303 million of EBITDA for the period, up 204 percent from the same period a year earlier. The growth was driven by €275.1 million of bargain purchase income on four acquisitions, of which approximately €250 million came from a record deal for stationery retailer Office Depot’s European operations in January, a source familiar with the matter told Private Equity International.

The purchase prices of all companies acquired in the first half of 2017 have not been completed and are therefore provisional.

Aurelius expects to report record earnings of €650 million for 2017, with contributions from its two largest-ever disposals to be included in its Q3 results, according to its earnings statement. The firm bagged an 18.5x multiple on invested capital through the €220 million sale of ICT service group Getronics and 11x on the €185 million sale of compressor provider SECOP after the Q2 reporting period, the results noted.

“The typical case for us is a big corporate has a struggling non-core asset that has been undermanaged for many years and they just want to give it away,” Dirk Markus, chief executive of Aurelius, told PEI. “We pay low due to the fact that these companies are in special situations and if we manage to turn [them] around successfully that creates high multiples.”

Aurelius has so far avoided many of the stretched valuations currently challenging the wider German private equity market by targeting struggling companies, he added. Almost 100 of the firm’s 130 staff form a restructuring task force dedicated to turning around lossmaking businesses.

Restructuring and non-recurring expenses for the group portfolio reached €47.8 million in the first half, up from €28.9 million for the same period in 2016. The group’s net asset value rose 4 percent to €1.5 billion from December, including €371.8 million of retail and consumer products companies and €244.1 million in the industrial sector.

Aurelius has invested in more than 60 companies across Europe over the past decade. Besides Germany, the firm has offices in London, Madrid and Solna, Sweden.