Mid-market firms Rutland Partners and Electra Private Equity have managed to raise debt financing despite the collapse in the credit markets.
The mid market firms’ successful fundraising contrasts with the trials of Bain Capital, The Carlyle Group and Clayton Dubilier & Rice under pressure from the investment banks underwriting their $10.3 billion buyout of Home Depot’s supply division.
CIT Capital Finance provided £53 million ($103 million, €76 million) of debt facilities for Rutland’s £51.5 million acquisition of Pulse Home Products from Alba, while Royal Bank of Scotland led the refinancing of animal tracking company Allflex Holdings.
Electra will receive $78.3 million (€58 million) from the refinancing and a $114 million stake in Allflex. Electra’s listed vehicle’s net asset value will increase by £42 million or £1.125 per share.
Allflex sells animal identification tags and it has expanded into DNA identification tagging this year via an acquisition of an unnamed company. It had sales of $148.3 million in 2006.
In 1998, Electra led the $160m buyout of Allflex. It has since refinanced the company twice before most recently in 2005. Many debt market participants believe that rapid refinancings will be scarce over the next year.
Electra’s investment has led to a multiple of more than five times its original investment with an internal rate of return over nine years of 25 percent, based on proceeds from the deal and Electra’s remaining stake.
Pulse Home Products sells various UK domestic brands from hair products represented by Nicky Clarke, to cleaning company Dirt Devil. Rutland provided £25 million equity from its second fund.
Graham Randell, senior managing director, CIT Commercial Finance Europe said in a statement his company was committed to mid-market management buyouts despite extreme market volatility.