Vestar Capital Partners, the US private equity firm dealing primarily in traditional mid-market buyouts, has completed its second European acquisition, acquiring brake systems firm SAB WABCO from Swedish-listed company Cardo for E230m.
Rob Rosner, European president of Vestar, described the E300m turnover firm as a classic deal for the company. “For Vestar this is a classic MBO, acquiring a successful division of large multinational company that is selling profitable non-core operations. We target ‘traditional’, long-standing companies with quality management. Companies that are well-known within their local markets.”
The local approach is something the firm is keen to cultivate. When the firm decided to enter the European market last year, it was agreed that it would avoid following the standard route of setting up shop in London first. “We wanted to have a ‘get local’ approach. We were completing US deals that were opening up opportunities for us in Europe but we’ve always believed that the best dealflow is the sort that comes locally.”
Vestar established offices in Paris and Milan last year and Rosner, one of the original seven partners who left First Boston’s buyout team in 1988, moved over to Europe to become the firm’s European president. The firm currently has ten professionals working across the two offices.
The firm’s first European deal was the E140m acquisition of Zanussi Metallurgica from Electrolux in late June. Both deals fulfil the firm’s target acquisitions, although were slightly smaller than the firm’s US activity. “We’re looking at businesses in the E100m to 1bn turnover range. SAB WABCO has the potential to capitalise on the growing demand for train-based transport and the deregulation of former nationalised state transport systems.”
Rosner believes the European market presents the firm, which is currently investing from its $2.5bn Vestar Capital Partners IV fund, with a broad range of opportunities for further investment. “The current trend for European companies is to develop from a regional heritage to a more pan-European scope- similar to that seen in the US ten years ago when firms looked to develop a national – rather than state – footprint.”
He says that the climate for investment in Europe is ‘terrific’, particularly when compared with the current public market situation which has seen M&A activity more or less dry up. “There is a broad scope for getting involved in deals where family businesses are looking to expand but lack the capital to move forward. At the other side of the things you have the larger French and Italian groups looking to divest non-core assets. The single largest source of dealflow at present is non-core divestments.”
Founded in 1988, Vestar has completed over 40 acquisitions with a total valuation of approximately $12bn across a broad range of industries. The firm has offices in Europe, in Paris and Milan, and in the United States, in New York and Denver. Vestar manages approximately $4bn of capital.