Silverfleet reaps 3.3x from Danish agri asset

The €310 million sale was unaffected by ‘Brexit’, but there will be a lasting slowdown in the wider M&A market, the firm said.

Silverfleet Capital, the pan European private equity firm, has agreed to sell Cimbria, a Denmark-headquartered agribusiness, to US trade buyer AGCO Corporation for €310 million. 

According to a source with knowledge of the deal, it will generate a return of 3.3x money and an internal rate of return of around 40 percent for investors in Silverfleet’s first fund, which was raised in 2009 and was the firm’s first as an independent firm following its spin-out from insurance company Prudential. Silverfleet declined to comment on the returns. 

Cimbria, which is headquartered in Thisted in Denmark, manufactures equipment used to process seed and grain after harvest. It has production facilities in Denmark, Austria, the Czech Republic and Italy, and employs approximately 900 people globally. Under Silverfleet’s ownership the company expanded into “high growth markets of grain-and seed-importing countries such as Egypt and other Middle Eastern countries” and made a number of new appointments to the senior team in R&D, procurement and after-sales functions, the firm said in a statement.

The sale process was unaffected by the political turbulence engulfing Europe following the UK’s referendum vote to leave the European Union last week, said Gareth Whiley, the partner at Silverfleet responsible for UK and Nordic investments and a board member of Cimbria.

The timing of the sale – announced just days after the referendum result – was “purely conincidental,” said Whiley. “Cimbria is a business that operates far beyond Europe. While it is not brilliant to have uncertainty in the market, people still need to plant seeds, harvest them and feed people.”

Whiley was sanguine on the implications of Brexit for Silverfleet, a Euro-denominated fund headquartered in London. “Our international spread is now very important; our exposure is often outside of Western Europe.”

There will, however, be implications for the wider deal market, said Whiley: “There will be more of a mismatch between buyer and seller expectation, as buyers look to take advantage of the dislocation. This normally takes much longer to settle than an M&A adviser will tell you. I expect deal volumes won’t pick up as quickly as expected.”

Silverfleet is currently investing its €850 million second fund, which was raised in 2015 is currently 30 percent invested. Silverfleet was advised by Baird, Travers Smith, Accura, Deloitte and Roland Berger on the Cimbria transaction.