French private equity firm NiXEN is to to acquire a controlling interest in Babeau Seguin Group, a builder of single-family detached homes. Management is making a substantial re-investment in the business alongside historical financial partners Siparex (lead financier of the previous transaction), CM-CIC, Carvest and Somfy Participations. Pechel and Avenir Entreprises will also support the company.
NiXEN signs an LBO to acquire a controlling interest in Babeau Seguin Group, following friendly discussions that were enabled by NiXEN’s excellent sector knowledge and close ties to the company’s manager and historical shareholders.
Babeau Seguin Group has a diversified product line of single family, affordable and environmentally friendly houses. With an order book of 1,500 homes, the Group doubled its revenues during the 2005-2010 period to nearly 100 million euros ($133.2 million) in 2010.
In a market driven by structural demand for housing and the appeal of single-family homes, the Babeau Seguin Group has noteworthy strengths that include (i) a totally flexible cost structure, (ii) strong visibility on its sales and earnings streams (thanks to an existing order book equivalent to around 15 months sales) and (iii) a client base made up mainly of first-time home buyers. In a rapidly consolidating industry, the company is looking to act as a cornerstone for growth and again double its revenues over the next five years. This strong growth is based on the opening of new sales branches and a targeted external growth policy in order to enhance its local and regional market coverage. In particular, the Group is in advanced talks to make new acquisitions.
“During the summer of 2011, as we were carefully monitoring possible changes in the Babeau Seguin Group’s ownership, we had the opportunity to work alongside Bruno Babeau to sketch the outlines of a potential transaction that would provide liquidity to some shareholders while giving the Group the resources to speed up its growth. Having successfully navigated the economic crisis in 2008-2009, the Group has a remarkable growth and profitability profile that currently enables it to act as a cornerstone for growth in a consolidating industry. This consolidation could even accelerate if the economic environment were to deteriorate. With Bruno Babeau offering his support, we therefore proposed a balanced solution for the Group’s financial partners,” said Pierre Rispoli, the Chief Executive Officer of NiXEN Partners.
Bruno Babeau, Chairman of the Babeau Seguin Group, affirmed: “I was convinced of the advantages of a partnership with NiXEN given that company’s perfect understanding of the sector and know-how as regards a build-up industry consolidation strategy. Our Group therefore has the resources to play a major role in the industry consolidation and sharply accelerate its ambitious growth project through both acquisitions and organic growth.”
Conducted by NiXEN, this transaction is structured around management, which is making a substantial re-investment alongside historical financial partners being namely Siparex (lead financier of the previous transaction), CM-CIC, Carvest and Somfy Participations. In addition, Pechel and Avenir Entreprises will also support the company, as they are impressed by the Group’s potential to take advantage of the current industry consolidation.
The Group’s historic banking partners are backing NiXEN for this transaction, as they have expressed their strong interest in participating in a conservatively structured buyout conducted by a company that they have financed over many years. Idinvest is participating for the first time as a mezzanine financier.
The transaction is subject to the approval of the French competition authorities.