Bain Capital has struck a deal to give rival buyout fund BC Partners joint ownership of Italy’s Fedrigoni in a transaction valuing the paper manufacturer at 3 billion euros ($3 billion), the companies said on Tuesday.
Bain acquired Fedrigoni in 2017 and has since grown the maker of self-adhesive labels and fibre-based packaging products with a string of domestic and international acquisitions, doubling its adjusted sales and nearly tripling adjusted core profits.
Under Bain’s ownership, Fedrigoni has diversified its portfolio and expanded its international presence, working with customers to help their plastic-to-paper transition while investing in research on sustainable materials as part of its environmental, social and corporate governance (ESG) push.
New sustainability rules proposed by the European Union require packaging to be reusable or recyclable by 2030, putting pressure on companies to ditch plastic materials.
“Fedrigoni is a business with a real ESG focus,” said Ivano Sessa, co-head of industrials at Bain and chairman of Fedrigoni Holding. “It could be a potential candidate for an initial public offering (IPO) in the next few years as investors are keen to gain more ESG exposure.”
BC Partners is also focused on sustainability-driven growth in packaging, having last year bought Bologna-based IMA Group, the world leader in the production of automatic packaging machines.
The Fedrigoni family will remain invested in the business, as will the entire management team.
Bain Capital and Fedrigoni were advised by Rothschild and Morgan Stanley, while Nomura and Canson Capital Partners acted as lead financial advisers to BC Partners, working with JPMorgan.
Canson will also co-invest in the transaction through its merchant banking arm.
The deal, expected to close by the end of 2022 and led by BC Partners senior investment adviser Vikram Chatterjee, is one of the largest private equity investments in Italy this year and defies a tough financing market for buyout funds.
“Fedrigoni has reopened the leveraged finance underwriting market in Europe because of its growth, ability to generate cash and ESG commitment,” Bain’s Sessa said.
A pool of seven banks including Nomura, Goldman Sachs and Morgan Stanley agreed to underwrite a bond to finance BC Partners’ investment.
Reporting by Valentina Za and Pamela Barbaglia; Editing by Kirsten Donovan, Keith Weir and Jan Harvey
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