European mid-market firm Milestone Capital Partners has achieved a 6x cash multiple with the sale of Cadum International. It is the firm’s second exit from its current portfolio, having last year recorded a 3.7x return on the sale of Coffee Nation to Costa Coffee.
Financial terms weren’t disclosed on the Cadum sale, though French media reported the deal’s value at about €200 million. The transaction was the result of a competitive bidding process over a roughly three-month period, reportedly involving a number of strategic buyers including Unilever. It marks the first time cosmetics giant L’oreal has purchased a business from a private equity firm.
Milestone invested €17.5 million in the French soap and baby products company in 2007 and has since nearly tripled its EBIDTA and increased sales to €58 million from €16 million, managing partner Erick Rinner told Private Equity International. He said integrating the company’s sales force (which took headcount to 60 from 12), launching a number of new product lines and exporting the company’s products to new markets including the UK, Belgium and Vietnam helped spur Cadum’s growth.
Cadum was the first deal Milestone struck as part of its most recent ‘investment programme’. Rather than raise traditional private equity funds, its model is based on an annual commitment programme for investors. Rinner said LPs typically commit to a five-year ‘programme’; Milestone’s current ‘programme’ launched in 2007 with the aim to invest about €50 million per year and has invested in five companies and exited two.
The firm moved to this capital raising model in 2007, and also rebranded as Milestone, after investors failed to see any returns from its 2002-vintage Fund III. Originally called European Acquisition Capital, the firm’s LPs encouraged it to cut costs and sell assets given the underperformance of Fund III. Co-founder Robert Mason and two other equity partners were let go as part of its cost-cutting efforts at the time and co-founder Bill Robinson and Rinner took over as managing partners.