MINING A RICH SEAM

When London-based Close Brothers Private Equity (CBPE) was given the opportunity to invest in UK mining services business Fosroc Mining three years ago, there were two very good reasons for passing. Having ultimately been bold enough to override such concerns, CBPE was recently rewarded in spades with a 17x return multiple.

Deal leader Sean Dinnen, a CBPE partner, reflects that competition for the deal was scant when the firm agreed to part with £14 million (€21 million; $26 million) in equity as part of the £32 million buyout of the business, since renamed Minova, in April 2003. One reason was scepticism towards the future of the coal industry. Nonetheless, says Dinnen: “There was a solid base to the business and we thought we could enlarge its footprint via acquisitions. We bought out a joint venture partner in Germany and made an acquisition in the US as well as expanding more into places like China and Russia.”

The other apparent problem with the deal was its complexity. The group essentially comprised 14 underlying businesses with activities all over the world. For large investment houses with a strong international resource, the size of the deal meant it fell below the radar. Meanwhile, says Dinnen: “Most lower mid-market firms don't have a track record in complex cross-border deals and might therefore have passed on the deal fairly quickly.”

During its three-year involvement, CBPE concentrated on developing the business's core mining services activities in the world's leading coal markets such as China and the US. The firm's speciality chemicals are used in safety applications such as steel bolts for roofs and seals for ventilation shafts. In Western Europe, where coalmining is on the wane, the firm's applications were targeted at tunnelling projects, which now account for around 15 percent of the firm's overall business.

Profits increased fivefold during CBPE's tenure which meant that, unlike the original sale in 2003, the latest version reportedly attracted no lack of interest from trade and financial parties. Orica, the listed Australian mining services firm, got the green light with a £357 million offer.

ARCAPITA TO BUY IRISH POWER SUPPLIER FOR £1.62BN
Arcapita, a Bahrain-based investment firm, has had its £1.62 billion (€2.4 billion; $3.04 billion) takeover approach for Viridian Group recommended by the board of Northern Ireland's main electricity supplier. Debt for the transaction has been arranged by Dresdner Kleinwort and underwritten by Dresdner Bank. If the offer is successful, Viridian will de-list from the London Stock Exchange and the Irish Stock Exchange. Belfast-based Viridian supplies power and builds and maintains transmissions networks in Northern Ireland through its Northern Ireland Electricity (NIE) business, and supplies electricity to over 25,000 business customers in Northern Ireland and Republic of Ireland through Energia.

MACQUARIE IN £8BN WATER UPSET
Macquarie has triumphed to snatch Thames Water from under its rival's nose in an £8 billion ($14.9 billion; €11.9 billion) deal, upsetting what some reports had suggested was a done deal for the Qatar Investment Authority in the Goldman Sachs-run auction. Macquarie defeated bids from a rival Australian group, Alinta, Guy Hands's private equity firm Terra Firma and the Qatari group. Macquarie said it was paying £4.8 billion leveraged with debt of £3.2 billion. The Macquarie consortium is also said to include Canada's Alberta Pension Fund and ABP, a Dutch pension fund.

CVC, ALPINVEST'S WAVIN FLOATS AT BOTTOM OF RANGE
Wavin, a Dutch plastic pipe supplier backed by international private equity firm CVC Capital Partners and Dutch private equity investor AlpInvest Partners, has launched on Euronext at €11 per share – at the bottom of its indicative price range of €11 to €13.50. Wavin also reduced the offering size to 33.7 million shares, 13 million less than anticipated, in a flotation which raised €371 million ($465 million). ABN Amro, Lehman Brothers and Merrill Lynch were joint bookrunners on the flotation (see p. 46).

PARTNERS LISTED FUND IN €104M PORTFOLIO DEAL
Partners Group Global Opportunities, a €400 million fund listed by Swiss fund manager Partners Group on AIM in late September, has completed its first transaction with the acquisition of a portfolio including two direct equity investments, 11 mezzanine loans and two second lien loans at a total cost of €104 million ($130.5 million). Merrill Lynch and Credit Suisse advised on the acquisition. The deal includes financing elements of buyout transactions led by Apax Partners, BC Partners, Candover, Cinven, CVC Capital Partners, EQT, Leonard Green & Partners, Montagu Private Equity, Permira, The Carlyle Group and Wendel Investissement.

AXA, TEXAS PACIFIC CLINCH STAKE IN TDF
AXA Private Equity and Texas Pacific Group have acquired a 60 percent stake in TDF, a French television and multimedia business. TDF said in a statement that the deal will provide funds for the company's organic growth amounting to €1 billion over five years and up to €1 billion to finance mergers or acquisitions. The deal gives Texas Pacific Group a 42 percent stake in TDF, with AXA Private Equity acquiring an 18 percent share. According to The Wall Street Journal, Texas Pacific Group and AXA Private Equity paid approximately €3.3 billion ($4.14 billion). Existing shareholders Caisse des Dép^ts and Charterhouse Capital Partners rolled over the sale proceeds and reinvested in the company..

VENTURE FIRMS EXIT VACCINE INVESTMENT
PowderMed, a UK biotechnology company specialising in DNA-based vaccines, has been acquired by pharmaceuticals group Pfizer in a deal which is expected to provide a profitable exit for venture capital investors Advent Venture Partners, Abingworth Management, Oxford Bioscience Partners, the ISIS College Fund and SV Life Sciences. No transaction price was disclosed for the transaction, but reports suggested Pfizer had paid up to $400 million (€318 million). The VC firms took an equal share in PowderMed, with the £20 million funding spread over three milestone-based tranches, with a further £5 million invested since, according to Jerry Benjamin, general partner at Advent Venture Partners.

COGNETAS EXITS BWG FOR €390M
The pan-European mid-market firm, which changed its name from Electra Partners Europe in September, has sold retail group BWG to its management for €390 million ($489 million). Cognetas bought BWG, which operates 439 Spar and 130 Mace stores in Ireland and 327 Spar outlets in England, as well as a cash and carry business in Ireland, from drinks group Pernod Ricard in a €220 million auction in July 2002. Cognetas, headed by managing partner Nigel McConnell, disposed of a number of BWG's non-core assets and carried out a €150 million refinancing in May 2004.

PERMIRA FLOATS HOGG ROBINSON AT REDUCED PRICE
Hogg Robinson, a UK business travel company owned by Permira, has priced its initial public offering at 90 pence per share, the bottom of its revised price range of 90 pence to 120 pence. The company ditched a pricing range of 140 pence to 200 pence, when it shelved original plans for a flotation at the end of September, citing adverse market conditions. It relaunched the offer a week later with the heavily reduced pricing range. The 90 pence offer price values Hogg Robinson at £275 million (€407 million; $513 million), below the original pricing's midpoint valuation of £380 million.

CAPMAN EXITS UNSUCCESSFUL DANISH WASTE COMPANY
A partner at Nordic buyout firm CapMan has described RGS 90, the firm's largest investment of 2002, as “unsuccessful”, despite a sale of the Danish recycling and soil treatment business to DSV Miljø, a trade buyer. Anders Björkell, partner at CapMan, said that the investment as a whole had been unsuccessful due to problems with its Carbogrit plant facility, established as part of the original financing. CapMan invested DKr250 million (€33.5 million; $42.6 million) to acquire a 42 percent stake in RGS 90 in December 2002. The firm did not disclose how much DSV Miljø paid to buy the asset.

CHARTERHOUSE REFINANCES SAGA AHEAD OF FLOTATION
Charterhouse has carried out a refinancing of portfolio company Saga, a UK travel, leisure and financial services business aimed at the over 50s. Saga was acquired by Charterhouse in a £1.35 billion (€2 billion; $2.55 billion) transaction in 2004. According to reports, Charterhouse has recouped its entire equity investment in a refinancing carried out by investment bank Merrill Lynch. Saga was purchased from the De Haan family with approximately £500 million of equity and £880 million of debt, the latter provided by Merrill Lynch, HBoS and Lehman Brothers. Charterhouse is expected to float Saga on the London Stock Exchange for approximately £2 billion.