Thursday, September 5, 2013

Mandarin Capital Partners exits 7.57% stake of IMA

Sino-Italian buyout fund Mandarin Capital Partners has exited I.M.A. S.p.A. after almost five years in its shareholding, reaping a good capital gain by the disinvestment. Through its subsidiaries Morchella S.r.l. and Rufus S.r.l., the fund specialized in deals between Italy and China communicated the sell of its 7.57% stake at €18.60 ($24.51) for a total of 2,789,393 equity shares (€52 Mln / $69.7 Mln) through an accelerated procedure of order collection from italian and foreign investors. The orders collection was managed by Banca IMI S.p.A. and Equita S.I.M. S.p.A. which acted as Joint Global Coordinators & Joint Bookrunners. 

According to the stocks were placed for two/thirds among foreign investors (London, Switzerland and Germany) and for one third among italian investors with a demand exceeding the offer by 1.6 times  as proof that italian mid caps increasingly attract foreign investors. The stock increased by 20.6% in the last six months and by 46% in the last year, and Mandarin profited of this (total return of 55% including dividends) cashing a good capital gain, reaping a 2.2x multiple and an IRR of 27% on its original investment.

Mandarin bought a 7% stake in IMA in October 2009 when the company
was listed on the STAR segment of Italian Stock Exchange dedicated to medium enterprises with a market capitalization between €40 Mln and €1 Bln) in a transaction valued at around €33 Mln, by buying around 2.3 million share at €14.50 per share from IMA president Alberto Vacchi, general manager Andrea Malagoli and managers Gianluca Vacchi and Luca Poggi. The stake was bought via two vehicles: 1,392,759 equity shares (3.939%) from Morchella S.r.l. and 1,057,241 (5.190% ) equity shares from Rufus S.r.l. In the operation some bank financing was also provided. In this way Mandarin became the second shareholder of the company after the family Vacchi (68%). 

The representative of Mandarin Capital Partners at  I.M.A. S.p.A. , Enrico Ricotta, will keep his place as member of the board of directors. The fact that a prestigious investor such as  Mandarin Capital Partners has met its objectives to satisfaction of its shareholders, confirms once again that the industrial effort of I.M.A. S.p.A. to growth through innovation and a policy of strategic acquisitions was rewarding. The corporate structure of I.M.A. S.p.A. enjoys now a greater openness toward a market with a higher share of free float. 

Mandarin has had an big impact on IMA's business since the partnership signed in October 2009 which foresaw the development of the core business of the company group with the entrance in the chinese market, especially in the pharmaceutical industry. Insomuch as IMA in March of this year bought a 59% stake in Shangai Tianyan Pharmaceutical Machinery Co. Limited through the purchase of shares and an increase in capital for a total of 8 million RMB (approx. €1 Mln), with the target to consolidate, through this strategic acquisition, IMA presence in the Chinese market, which is seeing strong and rapid development, continuing the strategic path geared to becoming global supplier of complete lines for the pharmaceutical industry. The M&A activity of IMA focuses now on Europe and Food which are the two drivers and the lack of in terms of M&A shouldn't really jeopardize the short-term plans of the group.

Mandarin is the leading independent PE firm focused on cross-border operations between Italy and China. Its main shareholders are the second italian banking group (Intesa Sanpaolo)  and two important policy bans of the People's Republic of China (China Development Bank and China Export-Import Bank of China). 

With a total commitment of €327.75M the first company fund was established in May 2007 and operated through an integrated team with established local presence in Italy and China. Since its inception the fund has completed 10 investments in small-medium sized Italian and Chines companies, which in turn have realized 20 add-on-acquisitions and three big Greenfield-Projects. The fund reaped a gross multiple of 1.6x and an IRR of 19%, which is in line with what PE funds did reap in difficult times, with respect to funds from the same vintage year 2007.  

Based on the success of the first fund, the company is currently in fundrasing for its second fund Mandarin Capital Partners II, which is expected to reach a final close of €1B, in the second half of this year, and which has its first close of its second fund on €110.5M The company expanded recently its operation to Germany by establishing an office in Frankfurt headed by Markus Solidieba, ex 3i manager which has now the delicate task to find M&A-targets for the "unkown" Sino-Italian Mid-Cap Fund in Germany.

The fund will mainly invest in healthcare, environmental technologies, oil & gas suppliers, specialty chemicals and specialized industrial companies across China and German-speaking areas of Europe. Target companies will have typically a turnover between €40-50M and €300M in which Mandarin will takes both majority as well as selected minority positions with equity tickets ranging from €30M to €50M focusing on operations of buy-out/buy-in (MBO, LBO, MBI) as well as development capital (Growth/Development Capital).

Overall, Mandarin is by far the most internationalized China outbound investment platform with European offices in Frankfurt (with sub-office in Munich) and Milan (with sub-office in Bologna) that allow Mandarin to source opportunities in medium-sized tech manufacturing segment in the most attractive European investment corridor spanning from Florence to Hamburg.

About  I.M.A. S.p.A.
Established in 1961, and with headquarter in Ozzano dell'Emilia, IMA is the world leader in the design and manufacture of automatic machines for the processing and packaging of pharmaceuticals, cosmetics, tea, coffee and foods. The group has more than 3,400 employees, more than 1,500 of whom overseas, and can count on 21 production plants in Italy, Germany, the United Kingdom, the United States, India and China. IMA has an extensive sales network comprising 16 branches which provide sales and services in France, the United Kingdom, Germany, Austria, Spain, Portugal, Poland, Russia, the United States, China, Singapore, Thailand and Brazil, representative offices in Central and East European countries and over 50 agencies covering a total of more than 70 contries. IMA is also partitipating in one joint-venture in China for production and service. IMA S.p.A. has been listed on the Milan Stock Exchange since 1995 and in 2001 joined the STAR segment (a segment of the Milan stock exchange dedicated to medium enterprises with a market capitalization between €40M and €1B).