MONETISING MOTORISTS

Motorists using Germany's famous motorway system, the Autobahn, constitute a formidable example of a captive customer base. Once you're on it and cruising along at characteristically high speed, you're unlikely to want to turn off prior to reaching your final destination. If you do choose to take a break, chances are you will be pulling into one of the 338 Autobahn service stations operated by de factomonopolist Tank & Rast along the way. Apart from the many unmanned parking lots and emergency bays scattered along the 11,530 kilometres of motorway, there isn't anywhere else to go.

As a result, no less than an estimated 250 million drivers temporarily switch off their engines at a Tank & Rast outlet every year, according to Terra Firma Capital Partners, the London-headquartered private equity group that in November acquired the company for €1.035 billion ($1.35 billion).

Terra Firma, which is run by Guy Hands, acquired the business from a private equity-led syndicate comprising Apax Partners, Allianz Capital Partners and Lufthansa, the German airline carrier. The trio had invested in Tank & Rast in 1998 in a €600 million public-to-private.

Private equity firms acting as buyers in secondary deals need to be confident that there is enough potential for future growth in the underlying asset to make the investment worth their wile.

In the case of Tank & Rast, there is one statistic in particular that has caught the eye of Hands and his colleagues: of the 250 million travellers pulling up every year, only 20 percent actually ever spend any money. The remaining 80 percent might visit the restroom, stretch their legs and breath some fresh air, but they don't reach for their wallets before getting back into their vehicles. Terra Firma is betting the €350 million of equity it has invested in the deal in part on the belief that this 80 percent is a number that can be brought down relatively easily.

With 338 filling stations, 381 restaurants and 51 motels across Germany, Tank & Rast certainly isn't lacking the infrastructure needed to sell more drivers more products and services. And given the legions of Autofahrern that the company is currently failing to sell to, even a seemingly small improvement in the number of customers and average spend could move the needle in a pretty significant way

To illustrate: just think of what would happen to cash flows if Tank & Rast started charging travellers for using the gents. At a modest 10 cents a pop, you'd be looking at a potential extra €25 million per annum right there.

HENDERSON MAKES GERMAN ACQUISITION
Dutch private equity firm Gilde has sold German chilled foods producer Homann-Feinkost to London-headquartered Henderson Private Capital in a transaction valued at €140m ($180 million). Henderson beat off a number of other private equity firms including 3i, EQT and Quadriga in a competitive auction process. Homann generates annual sales of approximately €260 million and employs 1,140 people. Gilde acquired a 51 percent stake in Homann in a management buyout from Anglo-Dutch food conglomerate Unilever in December 1999.

BRIDGEPOINT SCORES WITH ALCONTROL
The pan-European buyout house has sold Alcontrol, a Dutch-based laboratory testing services group, to London-headquartered Candover for approximately €345 million ($447 million). The sale, Bridgepoint's 12th exit of 2004, has generated a multiple of 5x the firm's original investment in the €112 million buyout from Kelda Group in December 2000. Candover reportedly beat off competition from private equity firms ABN AMRO Capital, Apax Partners, JP Morgan Partners and Warburg Pincus in an auction process run by BNP Paribas. For Candover, the deal comes shortly after acquiring Bureau van Dijk and Thule AB.

INDUSTRI KAPITAL BUYS FRENCH ENERGY FIRM
The Nordic private equity firm's 2000 fund has financed the acquisition of Idex, a French energy and environment services company, from its founding family and a consortium of financial investors in a transaction valuing the company at €200 million ($260 million). Idex, which was founded in 1963 by the Planchot family, provides technical maintenance and energy management services to clients including local authorities, residential complexes and industry. It employs 3,000 people and has estimated sales of €400 million this year. Following the acquisition, IK's fifth in France, Alain Planchot is to remain as company chairman. The Planchot family will also continue to hold a stake in the company, the size of which has not been disclosed. Christopher Masek, a partner at IK, said in a statement that the company's growth strategy would include strategic acquisitions.

ATP TAKES 12% OF NORDIC CAPITAL DEAL
ATP Private Equity Partners, the private equity fund investment arm of Danish pension fund manager ATP will co-invest alongside Nordic Capital to acquire Danish rescue and safety company Falck for over €700m. Nordic will own 88 percent of Cidron, the offer acquisition vehicle, with ATP holding the remaining 12 percent. The offer has been unanimously recommended by Falck's board of directors. Falck provides safety and rescue services, including ambulances, throughout Denmark, employing more than 11,000 people. The transaction is the fourth direct co-investment for ATP since its inception in 2001, according to managing partner Jens Bisgaard-Frantzen. In 2003, the firm co-invested €20 million alongside European private equity house Cinven in the acquisition of UK casino operator Gala. Bisgaard-Frantzen said the firm had a “positive attitude” towards co-investing and was continuously seeking to make co-investments in the €5 to €25 million range.

PHOENIX QUADRUPLES MONEY ON FASHION ICON
Hicks Muse (Europe), the ([A-z]+)-based European arm of Dallas-headquartered mid-market investor Hicks, Muse, Tate & Furst, has acquired a majority stake in iconic fashion retailer Jimmy Choo in a transaction valuing the company at £101 million (€144 million; $188 million). UK investor Phoenix Equity Partners has fully realised its investment in the company, having invested £9 million for a 51 percent stake in the firm alongside entrepreneur Robert Bensoussan in 2001. According to Phoenix's managing partner Hugh Lenon, the approximately £35 million that the firm will receive from the transaction equates to a return of 3.8 times the firm's original investment and an IRR of 55 percent.

CARLYLE IN THIRD EURO EXIT IN THREE MONTHS
The global private equity firm has more than doubled its money by selling its 37.1 percent stake in German automotive supplier Beru AG to US automotive components maker BorgWarner Inc for €218 million ($280 million). Ludwigsburg, Germany-headquartered Beru manufactures cold-start products for diesel engines. With a global market share of 40 percent, the company reported sales of approximately €350 million in 2003/4. The sale of Beru is the sixth exit from Carlyle Europe Partners I and the third in the last three months. In September, Carlyle sold Honsel International Technologies to Ripplewood Holdings and two weeks ago sold its 50 percent stake in the Riello Group to the Riello family.

EMP AGREES POLISH CABLE SALE TO HICKS MUSE
Emerging Markets Partnership (EMP), the Cent ral Europefocused private equity house, has agreed to sell its 39 percent stake in Polish broadband operator Aster City Cable to Hicks, Muse, Tate & Furst. which is an existing investor in the business. EMP teamed up with Hicks Muse and Argus Capital Partners – a division of Prudential-owned PRICOA Capital Group – to buy Aster from Elektrim Telekomunikacja, the Polish telecom business, for €10 million ($83 million) in March 2003. EMP chief executive Thierry Baudon said EMP expected to generate a return of approximately three times its initial investment from the sale to its fellow investor.

ABN AMRO IN €270M DE DIETRICH DISPOSAL
The French arm of ABN AMRO Capital has completed its final divestment of the De Dietrich group, which it acquired for €520 million ($670 million) in one of the largest take-privates on the French stock exchange in 2000. The sale of De Dietrich to the De Dietrich family provides a full exit for ABN AMRO Capital. A source close to the transaction confirmed that the sale price was around €270 million. Hervé Claquin, head of ABN AMRO Capital in France, confirmed that 145 members of the De Dietrich family were involved in the transaction. “We were approached by trade buyers from Germany and the USA but, although it was very complicated legally speaking, we preferred the family option,” said Claquin.