Black Toro scoops up Spanish ice-cream duo

Following the investment in Farggi and Menorquina, BTC II will be more than 75% deployed.

Black Toro Capital has backed ice-cream manufacturer Farga Group, owner of the Farggi ice cream brand, to acquire rival La Menorquina’s Iberian production unit and distribution network from its founder-owners, according to a statement from the firm.

The combined company will become the leading Spanish ice-cream manufacturer by sales and volume, producing almost 50 million litres annually. It will also become the fifth largest manufacturer in Europe, the firm said.

Black Toro Capital has invested €40 million in the deal, structured through a combination of equity and convertible debt. The investment will be used for working capital, to cover integration costs and to restructure the balance sheet. 

Farggi has two business divisions; the industrial division, which manufactures and distributes branded and private label ice-cream products and accounts for 60 percent of sales; and the retail division, which includes a branded retail chain with 61 locations in major cities, international airports and high-end restaurants and accounts for 40 percent of sales.

Farggi’s existing plant will be sold and all production will be combined into Menorquina’s facility to optimise utilisation. It is expected there will be significant cost synergies from the integration of the manufacturing facilities, as well as through the companies' complementary distribution channels. Manufacturing capacity is expected to increase from 30 percent to 60 percent in the combined company.

The combined company is expected to have more than €140 million in sales in 2017, and a total potential production capacity of 100 million litres.

“We are thrilled about the prospect of integrating such reputed brands as Farggi and Menorquina creating Spain’s leading ice-cream producer,” Black Toro managing partner Ramon Betolaza said in the statement. “Farggi and Menorquina’s industry knowledge combined with BTC’s expertise on the acquisition of business units are a guarantee of success.”

This investment takes Black Toro Capital II to 78 percent invested. The fund closed on €235 million on 31 December. The fund was initially targeting €350 million, but the firm did not want to be in market for more than a year, and so decided to close the fund on €235 million, partner Jose Manuel de la Infiesta told Private Equity International in February.

Investors in the fund include the University of Michigan and Allstate Investments, the investment arm of US-based insurer Allstate, according to PEI data. The Black Toro Capital team made a GP commitment of €10 million.

Making both debt and equity investments, Black Toro Capital targets mid-sized businesses in Spain which have been abandoned by the traditional financial system. Many of these companies are owned by banks, which are seeking to reduce their exposure to such businesses as Spain’s financial sector undergoes an extensive restructuring in the wake of the 2008 crisis.

Other investments in Fund II include active pharmaceutical ingredient company Antibióticos de León; Carbures Group, which develops and produces carbon fibre composite structures for the aerospace, automotive and infrastructure markets; motorcycle group Torrot Gas-Gas; and women’s shoe retailer Marypaz.

Black Toro Capital has no firm plans to launch a successor vehicle at this point.