European Acquisition Capital (EAC) is backing the MBO of 5 à Sec, the French dry-cleaning chain, for an undisclosed amount. Erick Rinner, partner at EAC, says the industry has huge growth potential.
CEO Peter Aepli is leading the buyout of existing investors SPEF and BNP Développment.
The value of the deal is undisclosed. However, Rinner said the deal was worth “less than E100m”.
Rinner says that the fragmented nature of the dry-cleaning market means there is huge scope for consolidation and growth.
“It’s a fundamental issue in the industry,” he says. “Dry-cleaning businesses used to be run by individuals. After 30 years they hand it over to their children. But their kids not so interested in such businesses. So we find a lot of people are keen sellers of their shops.”
The opportunities thrown up by issues of succession are not limited to dry-cleaning. Rinner also points to the retirement home industry. “Single unit retirement homes run by entrepreneurs are great businesses,” he says.
And private equity firms across Europe are licking their lips at the prospect of dealflow emanating from Germany’s Mittelstand – small-to-medium-sized businesses (SMEs) – when the country’s tax reforms kick in next year.
However, many of the new generation do not necessarily want to leave the dry-cleaning industry. “We give young people the opportunity to do other things,” says Rinner. “We’ve done an acquisition in Toulouse and have employed the daughter of the company’s founder as an international manager. This gives us room to grab good people and consolidate.”
He compares the dry-cleaning industry now to the restaurant trade 20 years ago. “There was a shift from individual restaurants to fast food franchises,” he said. “And on the continent, 5 à Sec is compared to McDonalds. It works in exactly the same way – it is completely transparent.”
Rinner says the most likely exit from 5 à Sec is an IPO, which will take place in the next two to three years. According to EAC, the global dry-cleaning market is worth about E686m a year. EAC will take a majority stake in the business and Rinner will join the 5 à Sec board.
5 à Sec was founded in 1968 in Marseilles and has operations across Europe, Asia and South America and its annual turnover is about E200m. CEO Aepli joined the company in 1998 when he led a management buy-in.
EAC has about E288m under management and typically makes investments worth between E100m and E200m for majority stakes.
Crédit Lyonnais, BNP Paribas, Crédit du Nord and Caisse d’Epargne France are providing debt facilities. KPMG advised EAC on the deal.