Electra backs Azelis buy-and-build

The firm is backing a management buyout of the European speciality chemicals distributor in a deal worth E135m.

Electra Partners Europe, the European buyout firm, has announced its second deal in a week, backing a management buyout of Azelis, a leading European speciality chemicals distributor.

Electra Partners Europe is paying E45m to acquire a 57 per cent stake from Azelis’ current institutional investors Permira, Interbanca and Centrobanca. The management led by Hans-Udo Wenzel will hold the remaining 43 per cent. The deal gives Azelis an enterprise value of E135m.

Permira, investing from its Schroder Ventures Italian fund, backed the business in 1998 as a buy-and-build, later bringing in Interbanca and Centrobanca to further finance the company’s growth. Each of the three firms has now realized its investment in the business although IRR and exit multiples have not been disclosed.

“Permira established the business in the late 1990s as a buy-and-build opportunity,” said Brian Veitch, a director at Electra’s Frankfurt office, which led the deal. “We intend to continue to develop Azelis as a pan-European business in what remains a highly fragmented market.” Electra is providing a further E40m for further acquisitions.

The group has grown rapidly over the past five years as a result of strategic acquisitions in key markets, particularly in the UK, France and Italy. Azelis’s management team aims to continue this buy and build strategy to create Europe’s leading speciality chemicals distributor with the capability of offering pan-European coverage to suppliers.

Azelis operates in Italy, France, Germany, the UK and Eastern Europe and focuses on chemicals for the pharmaceuticals, life sciences, engineering plastics, rubber, coatings, composites and electronics industries. Azelis said it expects to report sales in 2003 of E470m.

“Azelis currently operates in a market experiencing strong above GDP growth rates due to chemical producers outsourcing sales and marketing,” adds Veitch. “There is understandable caution about IPOs at the moment but we think that Azelis will be a strong candidate in the future.”

Last week, Electra backed a management buyout of Rank Leisure Machine Services (RLMS), one of the UK’s leading suppliers of coin operated leisure equipment, in a deal worth £30m. The business was acquired through Electra’s portfolio company Danoptra (formerly Kunick).