PPM Capital exits industrial parts business

Investcorp has made its second acquisition of a French auto parts distributor in the last month with the purchase of Orefi from PPM Capital for an undisclosed sum.

European mid-market firm PPM Capital, the private equity arm of UK insurer Prudential, has sold Orefi Participation, a France-based distributor of industrial parts.

Bahrain-headquartered Investorp has acquired Orefi for an undisclosed sum. The transaction, subject to regulatory approval, is expected to complete by the end of June.

Jean-Lou Rihon, director in the Paris office of PPM Capital and vice-chairman of Orefi’s supervisory board, said in an interview that the firm had “made good money” on the investment, but declined to provide further details. According to Rihon, PPM Capital paid “just north of €80 million” in a €112 million ($138 million) transaction in 1998.

Rihon said the holding period had been longer than is usual for PPM Capital. “Although the business has consistently outperformed the economy, we didn’t want to sell earlier as there had been a downturn in the sector in 2002 and 2003 and returns would not have been as good,” he said.

PPM Capital carried out an aggressive acquisition strategy during its period of ownership, according to Rihon. “The company was number two in the French market when we acquired it and was an exclusively French business,” he said. “We made 23 acquisitions, big and small, but the important one was Biesheuvel Group of Holland in 2000, which gave Orefi a new market. Along with adding a new territory, we have also developed the company’s product range.”

Founded in 1987, Orefi distributes a range of industrial products, including power transmission equipment, cutting tools and personal protection equipment, through a network of 90 branches in France and the Netherlands. The company employs 1,240 staff and reported turnover in 2005 of €293.5 million.

Rihon said Hawkpoint was appointed to advise on the sale of Orefi, which attracted both trade and financial buyers. He added that Investcorp’s recent acquisition of French auto parts distributor Autodistribution for a reported €600 million provided synergies with Orefi.

Investcorp managing director Yves Alexandre said in a statement that the firm would like to create partnerships between its two acquisitions: “We are committed to supporting Orefi in its development in France and the Netherlands. In particular, we will look to develop partnerships between Orefi and the industrial supply business of Autodistribution, which will consolidate a market leadership position.”

The French division of PPM Capital, which currently has more than €2 billion of allocated funds, was established in 1998 and comprises four investment professionals, including Rihon. The firm also has offices in London, Munich and Chicago.