Exits – HSBC Private Equity makes paper profit

Sweden’s SCA Group has acquired AM Paper Group (AMPG) of the UK for Skr2.55 billion ($308 million), providing HSBC Private Equity with a 68 per cent IRR on its investment in the soft tissue supplier.

HSBC Private Equity’s involvement with AMPG dates from late 1997, when the private equity group’s Manchester office led a GBP145 million ($234 million) refinancing package for the company, including debt facilities arranged by JP Morgan. As a result of the investment, AMPG was able to double its existing capacity by adding new plant and machinery, including a new GBP30 million ($48 million) mill. The new mill incorporates Through-Air-Dry (TAD) technology, which produces a tissue that is softer and more absorbent than paper produced using traditional methods.

Last October, AMPG further increased its capacity through the acquisition of Pennington Paper Products, a deal that HSBC Private Equity supported with a further GBP15 million ($24 million) of funding. This acquisition boosted AMPG’s presence in the facial tissue sector.

AMPG now enjoys a 13 per cent share of the $1 billion UK market for bathroom and facial tissue and household towels. Through the acquisitions, SCA has doubled its UK market share – founded on the Velvet and Double Velvet toilet tissue, Wipe & Clean towel and Bodyform sanpro brands – to 26 per cent.

Phil Goodwin, who led the deal for HSBC Private Equity, expresses satisfaction at AMPG’s sale to a responsible long-term owner which is very keen to develop the business further’.

AMPG was the third exit scored this year by HSBC’s Manchester private equity team, which earlier completed profitable disposals of its holdings in EJA Engineering of Wigan and CCA Group of Preston.