Cinven buyout third largest secondary since crunch

Cinven has carried out the third largest secondary transaction since the credit market difficulties began, acquiring Coor Service Management. The seller, 3i, doubled turnover and profits at Coor over three years.

European buyout firm Cinven has bought service provider Coor Service Management from global private equity firm 3i for around €540 million ($781 million), according to a statement.

Coor Service
Doubled profits

The enterprise value was 17.5 times EBITDA, according to someone close to the deal.  

Coor helps manage, develop and streamline offices, properties and factories across the Nordic region. It has doubled in turnover, profits and staff since 3i bought the company in 2004 from construction company Skanska for Skr1250 million (€135 million; $195 million).

3i’s sale of its 87 percent stake is the third largest secondary exit by a private equity firm since 1 August. Last month, 3i carried out the largest transaction, buying gardening equipment company Global Garden Products from European buyout firms AAC Capital Partners, formerly the captive arm of ABN AMRO, and the Dutch bank’s Italian fund for €730 million. Today, Dubai International Capital carried out the largest secondary with a deal underwritten by $1 billion of debt from UBS.

The Coor deal is just above Cinven’s minimum enterprise value of €500 million. Cinven’s last deal was the acquisition of independent healthcare operator USP Hospitales from Spanish mid-market buyout firm Mercapital for €675 million in late July.

The liquidity problems in the credit markets have substantially constrained the ability of firms to pull off large buyouts because of the rising price of credit and the constrained debt to EBITDA multiples offered by banks. Most deals with financing secured since August inside Europe have generally been limited to below €500 million.

Gustav Bard, the managing director of 3i Nordic, said: “We’re happy with this. The market is active and open for high quality deals. What we don’t know is what will happen to the rest of the market. Yet this company has grown for many years and it should continue to grow nicely.”

Coor had sales of Skr3972 million for the year to December 2006, according to a statement issued by Cinven. 3i’s spokeswoman said the firm had expanded the company’s product range and also entered the Norwegian market.

Bard said there was plenty of bid interest and 3i also considered an IPO for the company.

3i was advised by Linklaters and it was advised on corporate finance by UBS and the Swedish bank SEB Enskilda.