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Carlyle puts new distressed fund to work

The firm’s acquisition of German wood products maker Klenk Holz comes shortly after Carlyle held a final close for its Strategic Partners III fund.

The Carlyle Group has acquired German building materials company Klenk Holz from a group of German banks.
Klenk Holz makes timber products in three manufacturing facilities and operates its own timber harvesting company. The company generated €400 million in revenues in Europe, the US and Japan last year, and bills itself as one of the top five companies in the woodworking industry in Europe. 

As a part of the transaction, Carlyle has purchased all of Klenk Holz’ debt, amounting to about €170 million, a source with knowledge of the situation told Private Equity International.

Carlyle declined to share financial details related to the acquisition.

The deal marks the first control investment made by Carlyle Strategic Partners III, which reached its final close earlier this summer. Carlyle did not disclose the size of the fund, though Private Equity International’s Research and Analytics division estimates the final close amount to be roughly $230 million. Carlyle launched the fund in 2011 with an original target of $1.5 billion, according to PEI data.

Klenk Holz encountered a difficult environment in the aftermath of the financial crisis, Carlyle managing director Ian Jackson told Private Equity International

“With the lack of new homes being built – not just in Europe but around the world – the company suffered,” Jackson said. “The bank trust arrangement meant there hasn’t been the cash that’s needed to invest in it. There’s definitely some investment required, which we’re intending to do.”

Carlyle expects to begin generating top line revenue growth within the next two to three years. “It’s the same model we do on all of these things,” Jackson said. “We stabilise the business first, stop it from bleeding cash and then position it for when the revenue comes back.”  

Carlyle’s Strategic Partners funds focus on distressed investments, with a particular focus on Europe. The firm’s Strategic Partners Fund II collected $1.35 billion in 2007.