Paris-headquartered PAI Partners has sealed its largest ever exit, which it completed in three liquidity events over roughly 18 months.
The firm has sold its remaining stake in biosciences company Chr. Hansen to Danish firm Novo for approximately €560 million, generating a 4x return multiple.
“This is the biggest capital gain that PAI has ever made on behalf of its LPs and co-investors,” PAI partner Frederic Stevenin told Private Equity International.
PAI’s third divestment from the company comes following a €232 million partial exit in November 2011 and a €430 million initial public offering in June 2010. The IPO of Chr. Hansen, which supplies bioscience-based ingredients to the food, health and animal feed industries, came in a tough environment for IPOs that continued into 2011.
“When we bought it, we thought it was possible it could be [exited through] an IPO but also that it could be sold to [a trade buyer],” Stevenin said. “The business became so successful in terms of profitability and grew so fast that the value of the business became very big for the trade players to buy it.”
Morgan Stanley acted as financial advisor to PAI.
The firm acquired Chr. Hansen in 2005 in a take-private that valued the company at around €1.1 billion. PAI invested in Chr. Hansen from its €2.7 billion PAI Europe III fund and doubled the company’s earnings before interest, tax, depreciation and amortisation over a five-year period.
PAI is currently investing its €2.7 billion fifth European fund, which closed in 2008 on €5.35 billion before the firm reduced the fund to roughly half its original size. Fund V is roughly 66 percent invested.
PAI makes control investments in mid to large size European companies in five sectors: Food and consumer goods, retail and distribution, business services, healthcare and general industries. The firm has returned €3.75 billion in distributions to its investors and acquired five businesses during the past 18 months. In March 2011, PAI’s sale of dairy products group Yoplait generated roughly a 10x return multiple, market sources told Private Equity International at the time.
PAI’s recent realisations and acquisitions are further evidence of a return to activity following a turbulent period in 2009 that saw the abrupt departure of chief executive Dominique Megrét and the reduction in size of Fund V. The firm has completed 41 buyout acquisitions worth nearly €35 billion since its founding in 1998.