Eurazeo abandons Fraikin IPO for €1.4 bn sale to CVC

Eurazeo has cancelled plans for an initial public offering of truck rental business Fraikin and is selling the company to CVC Capital while reinvesting $60 million in the new entity.

CVC Capital Partners, a private equity firm, is buying 100 percent of Eurazeo’s French commercial vehicle hire business Fraikin Group for €1.4 billion ($1.8 billion) after being granted exclusivity over the dual track deal.  Fraikin’s initial public offering, which it planned in November, has been cancelled.  Fraikin, which said it would not make a suitable private equity target as recently as last week, adds to CVC’s existing automotive-focused investments.

Fraikin: Eurazeo will reinvest €60 million

The offer is worth €14 per Fraikin share. Eurzeo is making €340 million, a multiple of 3.4 times the initial investment, representing an internal rate of return of more than 35 percent during the period.  Eurazeo bought Fraikin from Italian transport manufacturer Iveco in February 2003 for €764 million and currently holds a 55 per cent stake in the company.  Eurazeo will reinvest €60 million in the new entity, reflecting the recent trend to put money back into an exit. 

In September Astorg Partners, a French private equity fund, partially exited its investment in Sebia, an in vitro diagnostics specialist, by selling a 50.1 percent stake to Montagu Private Equity for an undisclosed sum.

The deal is expected to complete in the first quarter of 2007.

CVC’s legal advice comes from Linklaters.  Eurazeo’s lawyers were Paris-based Darrois Villey and Sherman & Stirling.  Eurazeo’s financial advice came from Lazar and HSBC bank.

Fraikin operates in Belgium, France, Luxembourg, Spain and the UK, and manages a fleet of more than 50,000 vehicles.

CVC currently has five other investments in the automotive sector, including Novem, a German car interior manufacturer, Rhiag Group, a Swiss automotive parts distributor, Metzeler Automotive Profile Systems, a German automotive sealing products manufacturer, Kwik-Fit, a UK chain of mechanics, and AA, a UK roadside assistance and insurance company.

In October CVC and its affiliate CVC Asia Pacific paid €3.32 billion for half the assets of Packer’s Australia-listed Publishing and Broadcasting.

CVC Capital Partners manages funds totalling $15 billon and its fourth fund, European Equity Partners IV, closed in July 2005, raising $7.2 billion. The current European portfolio totals 41 investments. 

Last month Eurzeo portfolio company Europcar, a car rental business, bought the North American operations of Vanguard Car Rental for €670 million to build Vanguard’s European franchise.

Eurazeo is a European listed investment company with almost €6 billion of assets under management and a market capitalisation of €5.4 billion.

In September Eurazeo reported €1.165 billion of acquisitions in the first half of 2006.  The investor said that net profits reached €93.3 million, an increase of 11 percent from the same period in 2005.