First Swiss Deal for LGV

In its first Swiss deal, Legal & General Ventures (LGV) has acquired a majority stake in the Burkhalter Group of companies, the leading Swiss electrical contractor and network engineering provider, via a CHFr 122 million (ecu 76.3 million) MBO.

The transaction was sourced via its German joint venture, LGV-Candover, which co-operates on an informal basis with Canto Consulting, the M&A and corporate finance arm of the Cantonal Banks, on opportunities in Switzerland.

Burkhalter, which consists of a holding company with 34 subsidiaries operating throughout its domestic market, provides a full range of electrical contracting services for commercial users, encompassing: electrical installation and services; telematic and network engineering; electrotechnical consulting; control and management systems; communications and telecommunications networks; security systems; building services planning; and switchboard design. With a 7% share of the Swiss market and sales of CHFr 215 million last year, Burkhalter leads the extremely fragmented Swiss electrical installation market. The group has an operational EBIT of CHFr 12 million in 1996; profitability is expected to improve substantially as the Swiss construction sector emerges from the protracted downturn it has seen during the recession.

Zellweger Luwa, the group that acquired Burkhalter in 1986, put Burkhalter up for sale in order to concentrate on its other business areas; management approached Canto Consulting, which then introduced the deal to LGV-Candover.

LGV-Candover and Canto Consulting jointly arranged and led the funding, which comprised CHFr 38 million of equity and mezzanine, a CHFr 26 million sale and leaseback arrangement and CHFr 58 million of senior debt and working capital facilities, which were underwritten by Credit Agricole Indosuez, Frankfurt. The institutional equity was provided by the Legal & General Ventures 1997 Private Equity LP, Legal & General Assurance and Group Trust, which together subscribed for a majority holding, and by Canto Consulting. Mithras Investment Trust, also managed by Legal & General Ventures, provided the mezzanine tranche. Eight members of Burkhalter senior management and 75 local managers and employees invested alongside the institutions for a combined 25% holding.

According to LGV-Candover, Candover decided not to invest in this instance since the Burkhalter MBO was a small deal in the context of the Candover funds.