BACK TO THE FUTURE

Not for a long time has a £1.6 billion (€2 billion; $3.2 billion) deal looked quite so crowded. In the bid for listed UK oil services firm Expro – which looked set to proceed at the time of going to press – Candover was preparing to share the equity portion with Goldman Sachs Capital Partners and co-investor Alpinvest Partners, a regular LP in Candover funds. But this mere trio of equity contributors was heavily outnumbered by a syndicate of no less than six large banks on the debt side: Royal Bank of Scotland, Lloyds TSB, HSBC, HBOS, DNB Nor and Royal Bank of Canada.

What's more, it's reported that this heavily populated banking group is proposing to provide only just over 50 percent of the total financing for the deal (which is worth £1.9 billion if you include £300 million of Expro borrowings) – equity finance comprises the remaining near-50 percent. This seems a far cry from the peak of the LBO boom when a deal of this size might have been comfortably underwritten by a single bank and when the debt to equity ratio crept up in some cases to around five to one.

A commentary on the deal by Nils Pratley in UK newspaper The Guardian was entitled “Into the Unknown”. In it, Pratley drew attention to the words of buyout arch-critic Michael Gordon, head of institutional investment at fund manager Fidelity. Gordon has long argued that leveraged buyout exponents were effectively one-trick ponies. Volunteering the industry's counter-argument that there's much more to the private equity model than that (management skill, alignment of interest etc) Pratley insisted that – through equity-rich, debt-lite deals such as Expro – now is the time to prove it.

On the other hand, one could argue that the last few years have been the “unknown” period for private equity. From industry veterans' point of view, the kind of deal structuring being seen now appears very much like a return to the long-term norm.

EQUITY INJECTION AT GALA CORAL
Permira, Candover and Cinven, the three buyout firms behind Gala Coral, a UK gaming business, are injecting £125 million (€159 million; $249 million) of additional equity to reduce the company's debt burden. Around £85 million will immediately go towards paying down debt, which amounts to £2.25 billion, while Gala has committed to paying increased interest on its senior debt of 0.5 percent and on mezzanine debt of 0.75 percent. The lenders are also due a one-off fee. The syndicate of banks has agreed to stretch the covenants on the loans by 10 to 15 percent above Gala's forecast ratios of debt to EBITDA, giving the troubled business extra room to manouevre, should its position worsen. Gala, operator of nearly 1,600 betting shops, 165 bingo clubs and 29 casinos, has endured well documented troubles with the UK's smoking ban hitting its bingo clubs and a rise in tax hurting its casinos.

GRAPHITE SELLS FOR 3X IN SECONDARY
Mid-market buyout firm The Riverside Company has bought Summit Medical from Graphite Capital for £36 million (€45 million; $71.5 million). Graphite more than doubled turnover and profits at Summit during its six and a half years of ownership to make a three times return on its investment. Summit's turnover is now more than £16 million. Graphite bought the company in 2001 for £17 million. Graphite bolted on hip and knee implant business Marlux Medical and disposable curtains business Orthodynamics to Summit. It realised the majority of its investment through a refinancing with HBoS in 2005.

CVC BACKS SCANDINAVIAN POSTAL MERGER
CVC Capital Partners-backed Post Danmark is merging with its Swedish rival, the state-owned Posten, creating a postal group with revenues of approximately Skr45 billion (€4.79 billion; $7.51 billion), according to a statement. CVC, the Danish state and the employees of Post Danmark are taking a 40 percent stake in the combined group, while the employees of Posten and the Swedish state will own the remaining 60 percent. Posten will also pay an extraordinary dividend of Skr1.4 billion to the Swedish state. The Swedish state will have voting rights equal to CVC and the Danish state. The traditional postal businesses will remain under the respective Posten and Post Danmark brands in the two countries. Otherwise the group will merge its logistics and other divisions. Post Danmark's 25 percent ownership of Belgian postal service De Post-La Poste will be acquired by the company. CVC and Post Danmark together acquired a 50 percent stake, less one share, in De Post-La Poste for €300 million in 2006. CVC acquired its 22 percent stake in Post Danmark for Dkr1.27 billion (€170.2 million; $267 million) in June 2005.

MERRILL LYNCH COMPLETES DEBENHAMS EXIT
Merrill Lynch Private Equity (MLPE) has sold its remaining stake in UK retailer Debenhams at less than a third of its initial public offering price. The sale of 47 million shares, or a 6.2 percent stake, to institutional investors at £0.60 (€0.76; $1.20) per share has raised around £30 million for the private equity unit of the investment bank, according to a Merrill Lynch spokesman. MLPE took the company public, alongside TPG Capital and CVC Capital Partners, at £1.95 per share in May 2006 with a market capitalisation of £1.68 billion. The spokesman said at the time of the sale it had a 19.4 percent stake in the company.

TPG IN $800M RUSSIAN EQUITY DEAL
TPG Capital has bought a 50 percent stake in SIA International, the largest pharmaceutical distributor in Russia, from its founder Igor Rudinsky, for $800 million (€504 million) in a pure equity deal, according to a statement. Part of the purchase price will be used to finance the business' working capital needs as well as fund investment for logistical infrastructure and systems. TPG will take four seats on the company's board, while Rudinsky will appoint the other four. TPG spent eight months in due diligence, and SIA held talks with rival bidders including Russian businessman Roman Abramovich, the owner of Chelsea Football Club, according to UK newspaper Financial Times. In 2007 SIA had $2.7 billion of sales and it has 15,500 employees. The company also owns four pharmaceutical production plants. It said in the statement the Russian pharmaceutical market had around $12.4 billion of sales in 2007, representing 16 percent growth on 2006.

GMT SELLS FINNISH CREDIT FIRM TO INVESTCORP
GMT Communications Partners, a European communications specialist buyout firm, has sold Asiakastieto, the largest business and credit information company in Finland, to Investcorp. Terms were undisclosed, but GMT said in a statement it had delivered an internal rate of return of 70 percent in less than two years. Tim Green, a managing partner at GMT, said the company was the first acquisition and the first exit from its latest fund, which had its final close last year on €350 million ($551 million). Green said his firm had helped the company bolster its marketing and pursue organic growth by expanding the company's range of products, while backing management. It is understood GMT bought Asiakastieto in July 2006 for €100 million.

HG BUYS INTO SWEDISH WIND FARM
HgCapital has acquired a 75 percent stake in Swedish onshore wind farm Havsnas in a deal valued at €185 million ($289 million). Hg, a European-focussed private equity firm, has formed a partnership with wind farm developer Renewable Energy Systems to provide equity finance to the project. A trio of banks, CommerzBank, ING and NordLB, will provide a 17-year €127 million construction and term project finance loan facility. Renewable Energy Systems is expected to begin work following the deal and is retaining the remaining 25 percent stake in Havsnas, which is expected to start commercial operations after November 2009. The Nordic power sector has traditionally been dominated by utilities with assets mostly financed on balance sheet, according to Hg. The private equity firm said Havsnas represented the largest non-recourse project financing in the Nordic power market. Hg added the wind farm was a “merchant” wind farm which would trade power and green certificates in the NordPool power market at fluctuating prices rather than the guaranteed prices given in other markets.