3i, Europe's largest venture capitalist which last year launched its fourth pan-European buyout fund, has sold its stake in full load and bulk traffic road transport group Transalliance to management in a secondary buyout led by chief executive Philip Michel.
The exit provides 3i with an 80 per cent IRR on its investment. As part of the deal, SNBV Participations, a division of financial services group CIC, also sold a 7 per cent position in Transalliance.
The transaction, valued at E100m, will increase management’s stake in the company from 53 to 80 per cent, with venture capitalists Robertsau Investment, Sade, Europe Capital and Institute Lorrain de Participation holding the remaining 20 per cent. Senior debt, valued at E31.5m, is being arranged by French banks SNVB, CIAL, Crédit Lyonnais, Bank Général de Luxembourg, Société Générale, Crédit Agricole and Banque Popular de Lorrain.
3i backed the original $46m management buyout of Transalliance from the French government in December 2000, with an E7m equity investment. According to Richard Campin, who is responsible for 3i's French buyout activity, structure and quality of the business have improved considerably since the buyout: 'Non-core subsidiaries were sold, truck financing was changed from debt to finance leases and considerable de-gearing took place,' he said.
Under the ownership of 3i, Transalliance, whose core business centres on industrial sectors such as steel, automotive and foodstuffs, has broadly doubled its earnings to E17m in 2001.
Management approached 3i early last summer, according to Hampin, to see whether a sale might be on. 'Philip Michel and family thought they wanted to increase their majority ownership of the firm and we felt it was the right time to sell,' he explained.
The sale of Transalliance follows a number of recent deals by 3i in the transport and logistics sector, including 2001's £110m buyout of Go-Fly from British Airways, which was later sold to EasyJet for £374m. In November 2002, 3i backed the E100m buyout of Rotterdam-based tank container operator United Transport Tank containers (UTT) from United Transport International of the UK.