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Advent writes off €140m Spanish investment

The firm’s portfolio company, Hune, which rents and sells construction equipment, was sold back to management for €1 after suffering from broad industry contraction.

Advent International has written off its entire €140 million investment in Spanish construction equipment rental company, Hune, after selling it to management for €1.

Hune, which provides construction equipment sales and rentals, has been struggling in the bleak Spanish construction sector for about 18 months, according to a source. Advent first invested in Hune in 2006.

The firm supported Hune’s management team “to keep the business running and helped … with their cash management tools as well as helped … finalise refinancing talks with their banks and creditors”, the source said.

Advent grew the company through add-ons and built up the company’s debt load, which stands at between €400 million to €500 million. A 40 percent decline in the market for construction machine rentals took its toll on the company.

Advent opened its first office in Madrid in 2002. The firm has no more exposure to the Spanish housing market, but does have investments in Parques Reunidos, a Spanish leisure park operator, and Alcala Farmsa, a diversified pharmaceuticals business.

Another firm, 3i, lost its stake in concrete pumping company Gebomsa as part of a restructuring agreement with Gebomsa’s creditor, Banco Espirito Santo S/A. 3i acquired Gebomsa in 2005. 3i has operated in Spain since 1990, sinking €1.2 billion into more than 130 businesses in the country.

Mergers and acquisitions activity in Spain has dropped off a cliff this year, after slowly sinking from a peak of about 62 deals valued at $15 billion in 2005. In 2007, 72 deals tallied about $7 billion, while 2008 saw the first significant decline in the number of deals to 41, with a total value of about $3 billion. This year, 28 deals were announced valued at about $688 million.