Private equity buys food ingredients group IMCD

Related tags Private equity Kohlberg kravis roberts

Private equity moves deeper into food ingredients industry, with
European equity provider ABN AMRO Capital buying up ingredients
distributor IMCD from AlpInvest Partners, reports Lindsey

ABN AMRO Capital, with a main focus on mid-market buy-outs, said the purchase forms part of its strategy to back bolt on acquisitions in the still fragmented distribution market.

IMCD, that rolled over a turnover of €550 million last year, provides sales, marketing and distribution services to suppliers and users of specialty chemicals, among them enzymes, flavours, anti-caking agents, humectants and colours.

"IMCD has a strong market position in a broad range of specialty chemical niches and a strong brand name to suppliers."​ said Marc Staal, managing director of ABN AMRO Capital in the Netherlands.

The IMCD deal is the latest in a string of acquisitions that suggests private equity is on the hunt for food and drink firms.

According to a report from 3i, private equity and venture capital invested in Europe's food and drink companies nearly doubled from €2.7 billion in 2001 to €4.5 billion in 2002.

The largest industrial sector in the EU, with a turnover of €799 billion in 2003 on 1.9 per cent growth on the previous year, the food and drink industry is attracting new investors through private equity.

Stocks in the industry have outperformed other industries in the past two years to 2003, but the industry is safe rather than exciting, claims the report.

Despite this, while overall investment volumes fell, the European food and drink industry has consistently pulled in more private equity funding than other industries, technology aside.

Reflecting the fundamentals of the report, the European food ingredients sector has already been marked by private equity acquisitions.

Earlier this year PAI partners paid a considerable €1.1 billion for a leading ingredients player, Chr Hansen. And in April a €197.5 million deal saw food and pharma group DSM shed low growth bakery ingredients operations to private equity firm Gilde.

Private equity fund EQT bought two dominant German-based flavour and fragrances manufacturers, Haarmann & Reimer and Dragoco in 2002, acquiring to fulfill top three player ambitions.

And in 2003, Henkel, the German group providing branded consumer products and industrial systems, agreed to sell its chemical division Cognis to a consortium of financial investors comprised of Schroder Ventures, a European private equity specialist, and Goldman Sachs Capital Partners, the private equity branch of Goldman Sachs.

In 2004 3i's European buy-out business deployed €842 million in 20 mid-market European buy-outs, as well as generating €1.3 billion in proceeds from 20 sales.

ABN AMRO Capital's acquisition is the third in the Netherlands this year. Total funds under management (as at end March 05) by ABN AMRO Capital were €2.0 bn, of which €140 mn of capital is provided by international investors in ABN AMRO Capital managed funds in the UK and France.

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