Rhone in €657m exit to GP Investments portfolio company

GP Investments’ portfolio company, Magnesita Refratários, has agreed to acquire Germany’s LWB Refractories from Rhone Capital for an enterprise value of €657 million ($923 million).

The deal includes repayment of a €108 million shareholder loan and the issuance of €169 million in Magnesita shares to LWB shareholders. Magnesita will also assume €380 million in net debt.

Both companies manufacture refractory products for the steel and cement industries but have “virtually no overlap” between industry segments and geographies, Magnesita said in a statement.

Brazilian private equity firm GP Investments acquired a controlling stake in publicly-listed Brazilian company Magnesita for R$1.24 billion in August 2007. The transaction involved 70.7 percent of the voting capital and 38.6 of total capital.

Rio de Janeiro-based Gavea, which this month closed its third private equity fund on $1.2 billion, is also a shareholder of Magnesita.

London- and New York-based private equity firm Rhone Capital will become a shareholder in Magnesita. Following the close of the transaction, LWB shareholders will own approximately 11 percent of Magnesita.

Middle market-focused Rhone invested in LWB through its third private equity fund which closed on €804 million in 2006.

GP Investments took its stake in Magnesita through Fund IV. That fund closed on $1.3 billion in October 2007 and is at least 75 percent invested, GP chief financial officer Allan Hadid said on the firm’s second quarter earnings call. The firm is currently on the road with Fund V.

GP Investments is listed on the Brazilian and Luxembourg Stock Exchanges and was one of the first private equity firms to go public in 2006.