Permira said to make 2.5x its money with Netafim

Permira is expected to nearly triple its money with the sale of Netafim Ltd, a source said.

Mexichem has agreed to pay $1.52 billion for an 80 percent stake in Netafim, the source said. This includes the 61.35 percent held by Permira and 6 percent owned by Kibbutz Magal. Kibbutz Hatzerim, the founder, is also offloading 12.7 percentage points of its 32.7 percent holding, the source said.

Founded in 1965, Netafim, Tel Aviv, provides irrigation technology, like drippers, sprinklers and micro-emitters, for sustainable agriculture and other applications. The company has 17 plants in 10 countries and employs about 4,300. Netafim is expected to produce 2017 revenue of $966 million to $999 million and adjusted EBITDA of $131 million to $136 million, executives on a call said.

The sale to Mexichem, a Mexican chemical company, values Netafim at almost $1.9 billion, according to a statement. Permira stands to make 2.5x its investment with the sale, the source said.

“We’re excited about increasing the profitability [at Netafim] and generating synergy,” said Antonio Carrillo Rule, Mexichem’s CEO, on a conference call.

Permira’s investment in Netafim dates to 2011 when it acquired 61 percent of the company in a deal valued at $870 million, including $160 million in debt.

The European PE firm used its fourth fund, which collected $14 billion in 2006, to invest in Netafim. The firm’s fifth pool closed with 5.3 billion euros ($7.2 billion) in 2014. Last year, Permira’s sixth flagship fund weighed in at 7.5 billion euros ($8.8 billion), according to Permira’s 2016 annual report.

The European buyout shop focuses on sectors including consumer, financial services, healthcare, industrials and technology. Permira this year has invested in Klarna, DiversiTech and Alter Domus. The firm last month inked a sale of its stake in Spanish retailer Cortefiel.

Goldman Sachs, Centerview Partners LLC and Bank of America Merrill Lynch provided financial advice to Permira  and Netafim. Skadden, Arps, Slate, Meagher & Flom and EBN & Co were legal advisers.

Netafim could not be reached for comment. Mexichem referred questions to the company’s management presentation on the Netafim acquisition.

Action Item: Call Mexichem CEO Antonio Carrillo Rule at +52 55 5366 4000

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