Sagard and Euromezz support French MBO

The mid-market leveraged deal was backed by a €120m loan from a club of European banks and subordinated bonds provided by new shareholder, Euromezzanine.

The management of French-headquartered chemical distribution firm Safic-Alcan have bought out previous owners, Parquest Capital, with the support of Sagard and Euromezzanine, according to a statement. The new owners committed €130 million in equity and borrowed €120 million in senior debt to leverage the company four times, a source close to the situation told PDI

Management plus around 300 of the firm’s 400-strong workforce put up part of the equity, with French mid-cap-focused funds Sagard and Euromezzanine making 50 / 50 equity commitments, added the source.

Euromezzanine has also provided the company with fresh subordinated debt to back the deal, according to a statement by the firm.

The management team opted to keep the leverage level conservative as the company plans to grow through acquisitions and wanted to keep some debt headroom, said the source.

With a strong track-record as a leveraged borrower and the reasonable leverage multiple, senior debt from a club of banks was the cheapest financing option, the source said.

Euromezzanine had a relationship with the company as a lender, providing subordinated debt. When Parquest put the company up for sale, the management buy-out was proposed, the source said. 

The sale process was competitive with seven bids in the first round.

For Sagard and Euromezzanine, the investment is a longer-term bet on consolidation within the chemical distribution market in Europe. The firms have a six- to ten-year exit horizon and will, conditions allowing, list the firm, the source added.

HSBC and Natixis were bookrunners on the senior debt financing with Société Générale joining ahead of syndication.

Sagard invests in medium-sized companies based in Belgium, France and Switzerland.

France-based Euromezzanine is primarily a mezzanine investor.