A SWEETER SMELL(5)

Germany was the country where, in 2005, a leading politician accused foreign investment firms of acting like locusts, destroying jobs and greedily feeding on the country's best corporate assets before moving on to other targets.

However, Franz Müntefering's infamous tirade seemed but a distant memory in December, when private equity-owned German fragrance maker Symrise completed a €1.4 billion ($1.8 billion) IPO – the largest flotation in Germany in 2006.

It was also a highly profitable exit for EQT, the Swedish buyout firm, which pocketed about €750 million by selling a portion of its stake in Symrise.

Unexpectedly perhaps, accusations of asset-stripping were nowhere to be found. The market welcomed Symrise with open arms; investor appetite was so great that it persuaded EQT to opt against a planned trade sale. For this and other reasons, it was a remarkable deal.

EQT formed Symrise in 2002, by acquiring chemicals division Haarmann & Reimer from German pharmaceuticals group Bayer and merging it with Dragoco, a privately owned German Mittelstand company, in a deal worth €1.7 billion. Unusually, EQT managed to persuade Dragoco's owners to sell a majority stake, despite having no wish to exit the business. Bjørn Høi Jensen, senior partner at EQT, said it was very rare for the owner of a German Mittelstand company to agree to “take the back seat” in terms of ownership of the company. EQT (and co-investors from its third buyout fund) took a 51 percent stake in the combined entity, while Dragoco's owner Horst-Otto Gerberding became chief executive with a 22 percent stake.

EQT set about trimming costs, including the wage bill – yet managed to avoid falling foul of the trade unions. Jensen believes this may open the door for other such deals in the country. “We managed this transformation without rocking the boat. We consider this an important achievement, because similar investment opportunities in Germany are now coming up,” he said.

EQT's willingness to remain involved with the company also helped reassure investors. The buyout firm has retained a 16 percent stake, and Jensen suggested EQT would be willing to make follow-on investments if it would help Symrise play an active role in the further consolidation of the industry.

3I MAKES 10X MONEY ON NORDIC MODULAR
3i, the London-listed private equity group, has sold Nordic Modular, a temporary building provider, to Kungsleden, a Stockholm-listed real estate firm, for €100 million ($130 million). 3i made almost 10 times its original investment and a capital gain of Skr600 million (€65 million), according to Lars Erik Blom, director of 3i Nordic. 3i bought Nordic Modular from Skanska, a global construction group, in 2005 for an enterprise value of Skr360 million. Meanwhile, 3i, Candover and JP Morgan Partners have sold Vetco Gray, an oil and gas services company, for $1.5 billion to US conglomerate General Electric.

GPS BUSINESSES FIND NEW DESTINATIONS
3i, Nordic VC InnovationsKapital, Germany's SMAC Partners and management are selling their stakes in global positioning systems (GPS) company Nordnav to Cambridge Silicon Radio for $75 million (€58 million), a statement said. InnovationsKapital and 3i co-led the first investment round in Nordnav in May 2005. Also in the GPS sector, Prelude Trust, an investment trust managed by Esprit Capital Partners, has sold Cambridge Positioning Systems to CSR, a Bluetooth technology company, for $35 million.

BARCLAYS BUYS INTO BIO-DIESEL
Barclays Private Equity, the mid-market private equity arm of Barclays Bank, has backed a management buyout of Desmet Ballestra, a provider of edible oils, bio-diesel and chemicals. Thomas Grob, a manager at Barclays Private Equity, said its stake in the company is more than 60 percent. Management holds the remaining share. Desmet Ballestra was formed from the merger of De Smet Technologies & Services, a Belgian specialist in edible oil processing plants; Ballestra, an Italian chemicals company, and their subsidiary Desmet Ballestra Oleo, an oleochemical plants designer and supplier. The merger started in 2004 and took two years to complete. Grob said Desmet is targeting bolt-on acquisitions in all sectors of its business worldwide.

TWO DEALS FOR MID EUROPA
Mid Europa, a CEE-focused private equity firm, and GMT Communications, a communications focused private equity group, are selling Invitel, a Hungarian telecoms operator, to Hungarian Telephone & Cable for €470 million ($610 million). Mid Europa and GMT own almost 67 percent of Invitel's holding company, Matel, and expect to raise $52 million in a final equity distribution on the sale's completion. Invitel's senior management will also sell their holdings in the company, enabling Hungarian Telephone & Cable to buy almost 100 percent of the business. GMT and Mid Europa bought Invitel in May 2003 from Vivendi Telecom International, a telecoms operator, for €325 million. In separate news, a Mid Europa Partners portfolio company, Baltic Rail Services, has sold Estonian Railways, a rail operator, to the Republic of Estonia for €150 million.

ARGAN'S PRIVATE EQUITY BAGGAGE
Argan Capital, a pan-European midmarket private equity firm, is buying DELSEY Group, a Paris and Baltimore-based luggage company, for an undisclosed amount. Argan completed its spinout from Bank of America in October and closed its first fund at €425 million. Argan has offices in London, Milan, Paris and Warsaw.

LUMORA HITS TATE & LYLE'S SWEETSPOT
Tate & Lyle Ventures, the UK sugar company's corporate venture fund, has bought a minority stake in food safety diagnostics company Lumora, a spinout from Cambridge University, for £2 million (€3 million; $4 million), according to a spokesman. Tate & Lyle Ventures did not disclose the size of its stake but a spokesman said that the fund targets stakes of 20 to 50 percent in food technology and bio-materials businesses. Other shareholders in Lumora include the University of Cambridge and founders Jim Murray and Laurence Tisi. The fund, which a spokesman said has looked at 55 investments, was launched in July 2006 with a £23 million commitment from Tate & Lyle.

ABN AMRO PICKS UP PIPELINES
Clessidra Capital Partners, the Italian private equity firm, is selling Societa Gasdotti Italia, an Italian gas company, to ABN AMRO's Global Infrastructure Fund for €300 million ($389.8 million), including debt. The business operates an integrated network of high-pressure natural gas pipelines in central and southern Italy. The ABN AMRO fund already owns ESP Pipelines Group, the third-largest independent gas transporter in the UK. The fund was launched in 2005 and has around €1 billion of capital commitments, €300 million of which has already been invested in infrastructure assets throughout Europe.