Immigrant workers in Russia know their families will benefit when they send some of their hard earned cash back home. They will also be aware that, via the fees it charges, the money transfer facilitator will take a slice. But they would be less likely to envisage that their actions might also help to line the pockets of a private equity investor.
In late November, that scenario took a step closer to reality when London-listed investment vehicle Aurora Russia agreed to acquire a 26 percent stake in Unistream Bank in a deal expected to complete in the first quarter of 2007. Unistream accounted for a quarter of all money transfers make to and from Russia in the first half of 2006. While it has operations around the world, the firm's most lucrative business comes from the 15 million Russian immigrant workers from the CIS countries (including former Soviet republics such as Georiga and the Ukraine).
Statistics from the Russian Central Bank make clear that this is a fast growing area of business. Last year, the Bank estimates that between $3-6 billion was sent home by Russian immigrant workers, while, from 2003 to 2005, transfers in and out of the country grew at an annual compound growth rate of 56 percent.
Aurora director John McRoberts says that many of Unistream's customers at present are construction site workers in Moscow. However, the client base is expected to diversify. In a statement announcing the deal, Aurora said: “As more and more businesses in Russia embark on a regional development strategy, more jobs will be created in the regional cities of Russia, creating attractive opportunities for additional immigrants”.
Unistream is majority-owned by UniAstrum Bank, a top ten Russian bank by number of branches, which has retained a 74 percent stake. Aurora, which is investing a £75 million fund, has been brought in to help guide the company towards a planned IPO in two to three years' time. At which point, it may become evident just how lucrative money transfers can be – and not just for those involved in the initial transaction.
ADVENT INTERNATIONAL, CARLYLE BUY METALS BUSINESS
The Bayer Group, a chemical and pharmaceutical holding company, is selling metal products business H.C Starck to a consortium comprising Advent International and The Carlyle Group for approximately €1.2 billion. The consideration includes a cash component of more than €700 million and the assumption of financial liabilities and personnel-related commitments totaling €450 million. The sale reduces Bayer's net debt by about €150 million. Advent and Carlyle aim to position the company for an initial public offering in three to five years.
ESPRIT BACKS SOCIAL NETWORKING VENTURE
Esprit Capital Partners, the venture firm formed from the merger of Prelude Ventures and Cazenove Private Equity, is backing Lastminute.com founder Brent Hoberman in an $11 million(€8.4 million) funding of Where Are You Now?, a travel and lifestyle social network. The Series A syndicate led by Esprit includes Hoberman and other angel investors such as Adrian Critchlow and Andy Phillipps, cofounders of website Active Hotels, which was sold to Priceline in 2004. in the last 18 months, she site has grown from 45,000 users in March 2005 to seven million today.
HGCAPITAL BUSINESS SERVICES TEAM OFF THE MARK
HgCapital firm, has completed the public-to-private acquisition of SHL Group, a psychometric objective testing products and services provider. Hg's offer values the business at £100 million (€148 million), at a premium of 32.7 percent to the average closing price of 135.6 pence since 12 May 2006, when SHL announced that profits for the year to 31 December 2006 would be lower than market expectations. This is the first deal completed by HgCapital's business services sector team launched in April 2006. Hg has funds under management of €2.5 billion and specializes in mid-market investments ranging from £50 million to £350 million.
DOUGHTY BACKS FRENCH INDUSTRIAL
Doughty Hanson, a European buyout firm, has paid about €400 million ($512 million), including debt, for KP1, a French industrial group, in a secondary buyout. Alpha, a French buyout firm, AlpInvest, one of the world's largest investors in private equity, and Belgian-based Koramic, a roof-tile manufacturer turned financial investor, sold the manufacturer of high-performance prefabricated and prestressed concrete products, which they bought in December 2004. Management is rolling over its investment to take a 25 percent stake in the company, which is expected to generate revenues of €310 million in 2006.
GLIDE SCORES DEAL HAT-TRICK
Glide, a Benelux buyout firm, has bought Uniq Belgium, a producer of private label and branded spreadable salads, from the UK's Uniq, for €60 million ($80 million). Glide made the acquisition from its recently raised €150 million Glide Equity Management Benelux fund, which focuses on smaller mid-market buyouts in the Benelux region. Separately, Glide has sold its stake in CABB, a German specialty chemicals company, to Axa private Equity, the captive arm of the French insurer. No financial details were disclosed. Glide is also buying French life science technology company Groupe Novasep from specialty materials business Rockwood Holding for €425 million ($560 million).
CINVEN CASHES OUT
Cinven, the European buyout firm, made almost five times its money on the sale of its stake in French satellite operator Eutelsat to Abertis, a Spanish construction company. Cinven was part of the consortium, which also included Texas Pacific Group, Spectrum Equity Investors and Goldman Sachs and has now sold its control stake in the satellite firm for €1.07bn ($1.4bn). Eutelsat had grown revenues by a compound annual growth rate of 9 percent.