Sagard books 6x Kiloutou return

Buyout group Sagard Private Equity Partners has scored a more than 6x return in French company Kiloutou after selling its controlling stake to PAI Partners.

Sagard, which acquired a 51% stake in Kiloutou in 2005 for €170 million using €70m in equity from its 2003 debut buyout fund Sagard I together with €100m of debt financing, sold its holding to French private equity peer PAI Partners. The €535 million deal comprises about €100m debt with the rest in equity, a source with knowledge of the process said. Based on Private Equity International calculations, Sagard has generated a 6.1x return on its investment.  

Sagard has reinvested in the business using its second fund, however, paying €75m for a 25% minority stake in the company. Sagard II, which raised €808m in 2006, has deployed about €500m to date, a source close to the firm said. A new fund could be launched towards the end of next year, the source suggested. 

Executives from Sagard will occupy two seats on the board of Kiloutou, with PAI also holding two.

The firms have worked together before on clothing retailer Vivarte, with Sagard acting as a minority co-investor alongside PAI to acquire the company in 2004. The pair sold their stakes in the business in 2007 to Charterhouse Capital Partners.

Antoine Ernoult-Dairaine, a partner at Sagard who sits on the board of Kiloutou, said: “We have spent more than five years with the business, and we have been very happy with the management team and its business model. There are a number of drivers which suggest the company will continue to deliver growth. We are also re-investing at the bottom of the cycle as far as the construction industry is concerned, so all in all, there is high growth potential.

We are re-investing at the bottom of the cycle as far as the construction industry is concerned, so there is high growth potential.

Antoine Ernoult-Dairaine

“Since we acquired a majority stake in the business, we have opened a significant number of shops, which take two to three years to reach their full potential, so we are likely to see the fruits of that in due course,” Ernoult-Dairaine added.

Since 2005, Kiloutou has increased its branch numbers from 157 to 283, sales from €188 million to €292 million, and earnings before interest, tax, depreciation and amortisation from €43 million to €76 million, according to Sagard.

Nicolas Holzman, a partner at PAI, said: “Together with the management and all the stakeholders, we plan to help Kiloutou enter into its next phase of development, notably by accelerating its external growth and by launching its activities at the international level. PAI is pleased to be able to accompany this new development project.”

The company plans a number of initiatives, including launching new business lines, opening more branches, proposing a fleet outsourcing offering, building an internet platform, and potentially making acquisitions, the buyout firms said.