EQT in largest exit to date(3)

A syndicate led by EQT, the Stockholm-based private equity firm, is to pocket approximately €750 million from a €1.4 billion Initial Public Offering for Symrise, a German company producing flavours and fragrances. The remaining €650 million will be used to strengthen the company’s balance sheet.

Following the deal, which ranks as Germany’s largest this year, EQT retains a 16 percent stake in the company. Co-investing limited partners in EQT III, a buyout fund advised by the firm, will hold another 14 percent.

“We’re very confident about the company’s prospects, which is why we chose to retain 45 percent of our original stake. Bjørn Høi Jensen, EQT

The transaction, priced near the upper limit of EQT’s target range at €17.25, constitutes the largest exit for the private equity firm to date. It is also its first IPO outside the Nordic region. 

EQT sponsored the formation of Symrise in 2002, when it bought Haarmann & Reimer from Bayer, the chemicals and pharmaceuticals group, and merged it with Dragoco, a privately owned competitor, in a deal valued at €1.7 billion.

Horst-Otto Gerbering, who owned Dragoco, became chief executive of the combined entity with a 22 percent stake in the company. EQT and co-investors shared a 51 percent stake. According to Bjørn Høi Jensen, senior partner at EQT, it was a rare case of the owner of a German Mittelstand company entering a partnership with a financial investor and agreeing to take “the back seat” in terms of ownership of the business.  

In an interview, Høi Jensen said Symrise was now the fourth-largest player in the flavours and fragrances sector globally. He said over the past four years the company had managed down its cost base to become more competitive without getting into any “tension” with German trade unions.

He said: “We managed this transformation without rocking the boat. We consider this an important achievement, because similar investment opportunities in Germany are now coming up.”

Høi Jensen also said that over the past 12 months, Symrise had completed a number of small add-on acquisitions. Further consolidation in the company’s industry sectors was a possibility, and Symrise was a potential participant, he added. He did not rule out the possibility of EQT making follow-on investments should the company continue to make acquisitions.

Commenting on Symrise’s financial condition, Høi Jensen said that after the IPO, the company’s debt level would be in line with that of its quoted peers.

“We’re very confident about the company’s prospects, which is why we chose to retain 45 percent of our original stake in the company,” he said.

On their first day of trading, shares in Symrise rose slightly above the issue price.

EQT is currently in the process of raising a new buyout partnership, which is expected to close at more than €4 billion. The firm has offices in Stockholm, Copenhagen, Helsinki, Frankfurt, Munich and Hong Kong.