European buyout fund BC Partners is close to clinching a deal to buy 50% of Italian paper manufacturer Fedrigoni from Bain Capital in a deal that values the company at 3 billion euros ($3.1 billion), two sources close to the matter told Reuters.
The deal, which will see Bain Capital using its latest fund to reinvest in the company, ranks as one of Italy’s biggest buyouts this year and defies a tough financing market for private equity investors.
BC Partners, Fedrigoni and Bain Capital declined to comment.
Fedrigoni, based in the northeastern town of Verona, makes special paper for luxury packaging, graphics and art as well as labels and self-adhesive films for the food and wine industry.
The company employs 4,500 people, operates in 132 countries and has annual revenue of about 2 billion euros, with core profit of roughly 300 million euros, the sources said.
Bain Capital, which took control of the company in 2017, launched an auction process in May to explore options to cash out partially. The sale drew interest from the likes of Partners Group, Onex and Brookfield, the sources said.
BC Partners trumped a binding bid by Onex last week and subsequently entered exclusive talks to co-own the company with Bain, the sources said.
Privaty equity buyouts have suffered a slowdown in recent weeks, with European dealmakers struggling to secure financing to get deals over the line because of rising interest rates and concern that the region’s economies could dip into recession.
To make matters worse, Mario Draghi’s sudden departure as Italy’s prime minister has spooked investors, widening yield spreads between German and Italian debt.
Yet Fedrigoni’s high growth linked to its made-to-measure products has prompted BC Partners to move fast on the deal, the sources said.
Nomura and investment firm Canson Capital Partners acted as lead financial advisers for BC Partners, with Canson also co-investing in the company.
Rothschild and Morgan Stanley advised Bain Capital.
