PSP to co-invest in BC Partners’ $1.6bn Keter deal

Canada’s PSP Investments, which will acquire a minority stake in Israel-based furniture maker Keter, said in June that it had bought a 'significant minority interest' in BC Partners-owned Allflex.  

Canadian pension fund investment manager The Public Sector Pension Investment Board will co-invest alongside BC Partners in its acquisition of Keter Group, a manufacturer of resin-based home and garden furniture, BC Partners and PSP Investments said Thursday.

Keter makes items like planters, benches, and sheds, as well as accessories like the KNIT Cozy Seat, a round ottoman made of resin whose exterior mimics the woven look of knitwear, a best-selling item, according to Keter's website. The Herzliya, Israel-based company sells its products through more than 25,000 retail outlets, such as B&Q in the UK.

The deal to buy Keter is understood to give the furniture maker an enterprise value of about $1.6 billion. BC Partners is buying Keter from its founders, the Sagol family, and is reportedly acquiring an 80 percent stake. The Sagol family will keep a minority stake in the business and will reinvest alongside BC Partners, the private equity firm said.

Ottawa-based PSP Investments, which manages about C$117 billion ($88.8 billion; €80.1 billion) in assets, will acquire a minority interest in Keter.

The Canadian pension fund manager said June 10 that it was acquiring a “significant minority interest” in UK-based Allflex Group, a BC Partners-owned business which provides farmers and pet owners with radio-frequency identification (RFID) technology to help them monitor the movements of animals. BC Partners first acquired a controlling stake in Allflex in 2013.

Guthrie Stewart, Senior Vice President and Global Head of Private Investments at PSP Investments, said that the Keter deal is another example of its private equity strategy to “invest in innovative companies with attractive growth prospects, alongside select partners that provide sector expertise and geographic diversity”.

PSP Investments allocates about 9 percent of its portfolio to private equity, but its target allocation is 14 percent, according to data from PEI.

Keter generated about €800 million ($886 million) in sales in 2015, with half of the revenues stemming from new products, such as indoor decorations, introduced in the last three years. 

The transaction is expected to close in the fourth quarter of this year, according to BC Partners.

The Sagol family received advising from Rothschild, White & Cas and EY.

BC Partners received financial advising from UBS and JPMorgan, legal advising from Linklaters, and accounting and tax advising from EY.

BC Partners is currently investing its ninth fund, BC European Capital IX, which closed on €6.7 billion in 2011. Investors in that fund include the Canada Pension Plan Investment Board, Columbia University, Florida State Board of Administration and Metropolitan Life Insurance Company, according to PEI data.

It is also fundraising its 10th fund, BC European Capital X, which is targeting €7 billion, according to PEI data. The firm manages over €12 billion in assets.

PSP Investments is currently planning to open its London office in 2017 that will serve as its European hub, as reported by PEI .