Alpha Has Active End to Year: Five Deals Close

The Alpha Group has ended 1997 on a high note, with five deal completions announced since mid-September. These took the firm’s tally of investments for the year to seven, involving direct investment of FFr 340 million (ecu 51.4 million) by Alpha Group funds alongside FFr 643 million of co-investment by its fund participants. The group’s current fund, Alpha Private Equity Fund 2, which closed this April on FFr 750 million, is now 28% invested.

Alpha’s German office, which opened at the beginning of 1996, now makes a significant contribution to the group’s deal flow. In Germany, as in its domestic market, France, Alpha focuses on mid-sized companies with a leading position in niche markets and potential for international development.

The first of the recent crop of deals was a buyout of Suss, a German manufacturer of photolithography equipment, in mid-September. Suss Group, which was acquired from family owners, is the world leader in medium resolution (5′ critical size) photolithography equipment. Sales for 1997 are forecast to reach DM140 million (ecu 71 million), compared with DM112 million in 1996; Suss’s 1996 EBIT was DM14 million. Historically, the bulk of Suss’s products have been sold to the semiconductor industry, however, new applications developed by the group are decreasing its dependence on this highly cyclical sector.

Through the buyout, Alpha acquired 52% of the group holding company. Management has taken an 11% stake and the Suss family has retained a 37% share.

This deal was followed in late September by the LBO of Sebaldus, a German media group, which was co-led by Alpha and DBAG. Sebaldus is active throughout Europe in publishing, printing and direct marketing. The company ranks Number One in the European direct marketing and is the third largest independent European printing group. In 1996, it made an EBIT of DM27 million on sales of DM932 million (ecu 472 million).

The group is currently undergoing a restructuring which will involve divestment of its publishing, packaging and card businesses together with further acquisitions in the direct marketing area. This process should further increase group profitability, which has already improved by over 50% in 1997. Alpha and DBAG each acquired a 40% shareholding in Sebaldus. Alpha has subsequently syndicated half of its stake to its co-investors.

Next, at the end of September, came the acquisition by Alpha and its co-investors of a 70% stake in Alain Affelou, a French optician chain and eyewear distributor. Alain Affelou currently operates a network of 437 stores throughout France, 13 of which are directly owned and the remainder operated by franchisees. Forty new franchise store openings are scheduled for next year, and management is also aiming to expand the franchise concept abroad to acquire stores in other European markets. In 1996, the Alain Affelou network made sales of FFr 1.7 billion (ecu 257 million), generating net profits of FFr 42 million.

Mid-October saw Alpha venturing into the Netherlands for the buyout of Depron from Hoecht Holland. Depron produces a range or expanded polystyrene based products including food packaging, which accounts for 50% of sales, insulation and renovation materials, foamed film on reels, product display aids and construction materials. Sales of DFl 60 million (ecu 27 million) are forecast for the current year and Alpha says that new products and technologies developed by Depron, “represent significant value for the future”. Alpha has taken a 22.5% holding in the buyout company alongside Alpinvest of the Netherlands, which owns 45%, and Oranje-Nassau Grop with 22.5%.

The last of the five deals to complete, in November, was a buyout of Eurodatacar. This French company provides car window marking services, for identification in case of theft, and sells car insurance. It is France’s leader in this field, with sales of FFr 90.8 million (ecu 13.7 million) in 1996 and a market share of over 50%.

Alpha and its co-investors each acquired holdings of 33.3% in this deal, which has enabled Eurodatacar’s owner-managers both to unlock a proportion of value and diversify their assets and to continue with the company to pursue its further development.