(Reuters) – Atlas Mara, the investment vehicle of former Barclays boss Bob Diamond that is aiming to be Africa’s leading bank, will re-list on Wednesday after raising $300 million and completing a pair of acquisitions. Atlas Mara said last week that it had closed deals to purchase BancABC and ADC African Development Corporation and would apply for the re-admission of its shares, which were suspended when the deals were announced in April. It said on Tuesday that trading in the shares on the London Stock Exchange would restart on Wednesday at 0700 GMT. Diamond teamed up with Africa-based entrepreneur Ashish Thakkar last year to set up Atlas Mara, a vehicle through which they planned to buy up assets to help build it into a powerful force in African banking. Atlas Mara last week said it had raised $300 million from a private share placement to fund the acquisitions, on top of the $325 million from its initial public offering (IPO) in December. It agreed to buy BancABC in March to give it a platform in several countries including Botswana, Mozambique and Tanzania. Atlas Mara shares were suspended after its purchase of BancABC was treated as a reverse takeover. The company should have a market value of near $800 million when it re-lists. The shares last traded at $11.40, up from their December IPO price of $10. American Diamond, 62, is one of the world’s best-known bankers after spearheading the growth of Barclays’ investment bank before being forced out from his job as CEO in 2012 by UK regulators after the bank was fined for attempted rigging of Libor interest rates. His plans in Africa could put him in direct competition with Barclays, which has had a presence there since 1925 and is one of the biggest international banks on the continent. Barclays Chief Executive Antony Jenkins is under pressure to improve profitability and has pinpointed Africa as one of the key areas for future growth. The prize both are chasing is sub-Saharan Africa’s mostly unbanked 1 billion population and the companies there looking for capital to grow, to take advantage of economies growing on average at 5-7 percent a year.
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Atlas Mara to re-list after $300 million fundraising-Reuters
Well, this is impressive. Kelso & Co, which is in the market targeting $2.5 billion for its ninth fund, is kicking in a $500 million GP commitment, or 20 percent of the target, according to public documents obtained by peHUB. This level of GP commitment is almost unheard of in the private equity industry, with GP commitments hovering around an average of 2 percent of committed capital. Several firms such as Bain Capital and The Carlyle Group have received accolades for their double digit GP commitments. (It’s not clear if the $500 million is in the form of cash, or waivers of management fees. More on that below.) “This level of commitment exceeds the typical amount managers commit in percentage terms and provides a strong alignment of interest,” according to an investment memo from the Maine Public Employees Retirement System. Maine PERS board approved a $60 million commitment to Kelso Investment Associates IX LP at its meeting this month, subject to negotiations. The pension system provided the public documents to peHUB after an open records request. “Kelso has a long history of heavily investing in its own funds,” the memo said. An investment memo from the Los Angeles City Employees’ Retirement System from 2007 said Kelso was contributing around 5 percent to its eighth fund, though it’s not clear if that remained the level of GP commitment by the time the fund closed. “Their GP commitment has always been huge,” one limited partner with knowledge of the firm told me in a recent interview. Kelso did not respond to requests for comment. The GP commitment is usually one of the top issues on which LPs focus when considering backing a manager. About 60 percent of the 137 respondents to placement agency Probitas Partners’ 2014 institutional investor trends survey cited GP commitment level as the top issue they considered when assessing an opportunity. GP commitment eclipsed other important issues in the survey such as distribution of carried interest among professionals, management fee level and structure of key-man provisions. Trade organization the Institutional Limited Partners Association recommends GPs kick in their own money for the GP commitment, rather than using management fees to pay for their commitments to their own funds. Management fee waivers, however, have the double advantage of funding the GP commitment and converting a portion of the management fee, which would be taxed as ordinary income, into fund capital, to be taxed at the lower capital gains rate. Along with the GP commitment, several other terms caught Maine PERS’ fancy. The investment staff liked Kelso’s carried interest distribution, which is “spread broadly throughout the firm,” according to the memo. Every employee at Kelso participates in the carried interest pool, including administrative assistants, the memo said. The fund is charging a 0.75 percent management fee on committed capital during the investment period, according to a separate memo from investment adviser Cliffwater, which recommended Maine commit to the fund. Also, the management fee will be offset by 100 percent of all transactions, investment banking, break-up, monitoring, directors’ as well as 100 percent of all placement agent fees and excess organizational expenses, Cliffwater said. Kelso also plans to make available to LPs $500 million in co-investment opportunities, the Maine investment memo said. Kelso, which began investing in private equity in 1980, is targeting much less for Fund IX than the prior fund, which closed on $5.1 billion in 2008. Fund VIII was generating a 1.1x investment multiple and a 6.3 percent internal rate of return as of Dec. 31, 2013, according to performance information from the Nevada Public Employees’ Retirement System. Since inception, Kelso has produced a net internal rate of return of 22.9 percent and a net multiple of invested capital of 2.1x on fully invested funds, the Maine memo said. Fund VIII started out slowly but has improved over time. “It’s possible that Kelso’s best performing funds are in the past,” the Maine memo said. However, “Kelso is highly motivated to redress the perceived issues with Fund VIII, it has the experience to execute, and now has a more favorable fee structure,” the investment memo said. “Kelso’s eighth fund is anticipated to deliver solid returns on a cash-on-cash basis, despite taking a little longer to do so.” Photo courtesy of Shutterstock.
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Kelso offers market-beating terms to help raise Fund IX
Global Franchise Group, a portfolio company of Levine Leichtman Capital Partners, has closed its buy of fast food chain Hot Dog on a Stick. No financial terms were disclosed. PRESS RELEASE LOS ANGELES, Aug. 21, 2014 /PRNewswire/ — Levine Leichtman Capital Partners (“LLCP”), a Los Angeles-based private equity firm, announced today that Global Franchise Group, LLC (“GFG”; www.globalfranchise.com), a portfolio company of Levine Leichtman Capital Partners IV, L.P., has successfully completed the strategic acquisition of Hot Dog on a Stick (“HDOS Enterprises” or “HDOS”) through the purchase of HDOS’s operating assets. Since its founding in California in 1946, HDOS has been serving its famous hot dogs on a stick and lemonade and now has 92 locations in the U.S. and select countries worldwide. The addition of HDOS to GFG’s existing portfolio of brands will allow HDOS to leverage GFG’s vast resources, particularly on the franchising side, to accelerate growth and bring the HDOS brand into new territories and markets. Lauren Leichtman, Co-Founder and CEO of LLCP, commented, “The HDOS acquisition is an important strategic addition to the GFG platform, which will strengthen the company’s geographic footprint and provide yet another growth avenue for GFG. The transaction will be highly accretive and generate significant synergies that will ultimately provide value to all of GFG’s stakeholders.” “The transaction with HDOS will add another strong brand to GFG’s already existing robust quick service restaurant portfolio,” said Chris Dull, President and CEO of GFG. “Utilizing GFG’s strength in brand management, marketing and franchising, along with the iconic brand and long heritage of HDOS, we can greatly accelerate growth while providing HDOS’s loyal customer base with even greater service and menu offerings in the years to come.” About Global Franchise Group GFG, based in Atlanta, GA, is a strategic brand management company that owns and manages a portfolio of franchised brands in the quick service restaurant industry. These brands include Great American Cookies®, Pretzelmaker®, Marble Slab Creamery®, and MaggieMoo’s Ice Cream & Treatery®. Combined with Hot Dog on a Stock, GFG has over 1,100 company-owned and franchised locations worldwide, primarily located in the United States, Canada, Latin America and Asia. About Levine Leichtman Capital Partners Levine Leichtman Capital Partners is a private investment firm with offices in Los Angeles, New York, Dallas, Chicago and London. LLCP manages approximately $7.0 billion of institutional capital for investment in U.S. middle market companies. LLCP invests through private equity partnerships and various debt and leveraged loan funds. LLCP is currently making new investments through Levine Leichtman Capital Partners V, L.P., Levine Leichtman Capital Partners SBIC Fund, L.P., and Levine Leichtman Capital Partners Private Capital Solutions, L.P. Prior investments by Levine Leichtman Capital Partners include Santa Cruz Nutritionals, CiCi’s Pizza, Hackney Ladish, Jon Douglas Real Estate Group, and Luminator Technology Group. For further information please see www.llcp.com
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LLCP’s Global Franchise Group completes Hot Dog on a Stick acquisition
(Reuters) – Axalta Coating Systems Ltd, a paint coatings company backed by buyout firm Carlyle Group LP, filed with U.S. regulators on Wednesday for an initial public offering of common stock. The company listed Citigroup, Goldman Sachs, Deutsche Bank and JP Morgan among the underwriters for the IPO. Reuters reported last week that Carlyle had hired banks for an initial public offering of Axalta that could raise as much as $1 billion. The filing, which included a nominal fundraising target of about $100 million, did not reveal how many shares the company planned to sell or on which exchange it intended to list its common stock. The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different. Carlyle bought the performance coatings unit of chemical maker Dupont for $4.9 billion in 2013 and later renamed it Axalta Coating Systems. Philadelphia-based Axalta makes liquid and powder coatings for the automotive and general transportation industries. It operates 35 manufacturing centers and does business in more than 130 countries.
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Carlyle-backed Axalta Coating files for IPO-Reuters
Shake Shack, the fast-food restaurant chain that has developed a cult following for its ‘Shackburgers’, ‘flat-top’ hot dogs and eponymous shakes, has selected JPMorgan Chase & Co (JPM.N) and Morgan Stanley (MS.N) to lead a proposed initial public offering, according to people familiar with the matter. The potential offering, which could come as soon as this year according to the people, would be the biggest public event for a company that started out of a hot dog kiosk in New York’s Madison Square Park in 2004. While Shake Shack is expected to post earnings of around $20 million next year and the size of the IPO is likely to be small, underwriting one of the biggest burger names in the United States is a plum assignment for investment banks JPMorgan and Morgan Stanley. Shake Shack’s majority owner, Union Square Hospitality Group LLC, interviewed investment banks in recent weeks to appoint underwriters for the IPO, Reuters first reported last week. Representatives for Shake Shack, Union Square Hospitality, JPMorgan and Morgan Stanley did not immediately respond to requests for comment. Shake Shack would likely be the most-followed IPO out of a string of casual dining chains that have gone public this year. They include El Pollo Loco Holdings Inc (LOCO.O), Zoe’s Kitchen Inc (ZOES.N) and Papa Murphy’s Holdings Inc (FRSH.O). Shake Shack is present in many U.S. states including New York, New Jersey, Connecticut, Pennsylvania, Florida and Massachusetts. It has also expanded internationally in cities such as London, Istanbul, Moscow and Dubai. The company does not franchise and says it has no plans to do so in the future. Shake Shack’s chief executive is Randy Garutti, a Cornell University graduate who worked his way up at Union Square Hospitality from general manager at its restaurants to lead Shake Shack. Union Square Hospitality was founded by restaurateur Danny Meyer in 1985. It also runs other popular New York eateries, including Blue Smoke, Gramercy Tavern and Union Square Cafe. Private equity firm Leonard Green & Partners LP agreed to acquire a 39.5 percent stake Union Square Hospitality in 2012 for an undisclosed amount. (Reporting by Olivia Oran. Editing by Soyoung Kim and Chizu Nomiyama)
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Shake Shack picks JPMorgan, Morgan Stanley to lead IPO: Reuters
Recipharm has agreed to acquire Milan-based Corvette Pharmaceutical Services Group from LBO Italia Investment for SEK 1.1 billion (120 million euros). Rothschild is serving as financial advisor to LBO Italia on the deal. The transaction is expected to close on October 1. PRESS RELEASE STOCKHOLM–(BUSINESS WIRE): The contract development and manufacturing organisation, Recipharm AB (STO:RECI) has signed an agreement to acquire Milan based Corvette Pharmaceutical Services Group (Corvette) from Italian private equity Group LBO Italia Investimenti s.r.l. Highlights Corvette had 2013 revenue and EBITDA of EUR 57.7 million (SEK 499 million) and EUR 15 million (SEK 130 million) respectively. The combined entity will enhance Recipharm’s scale and profitability. Based on 2013 proforma financials, the combined entity’s revenue and EBITDA would have been SEK 2.6 billion and SEK 408 million respectively. The transaction values Corvette at an enterprise value EUR 120 million (SEK 1.1 billion) with estimated net debt of EUR 20 million (SEK 183 million). The estimated equity consideration of EUR 100 million will be paid for by 50% cash and 50% in the form of a convertible bond. No additional financing is required. The deal provides access to highly interesting geographical areas including Italy and a number of emerging markets, many of which are new to Recipharm. Recipharm will have an asset base in each of the five largest European pharmaceutical markets. Corvette has a stable and reputable customer base with little overlap with Recipharm thus presenting significant cross-selling opportunities. Increases manufacturing capacity and strengthened capability in the highly sought after technology of lyophilisation. Corvette will contribute to Recipharm’s Intellectual Property (IP) backed manufacturing business as Corvette’s IP portfolio supports circa 40% of their sales. Accretive to profitability and EPS with both set to increase already in 2014. Closing expected on 1st October 2014 following Recipharm’s Extraordinary General Meeting (“EGM”) to authorise the Board of Directors to issue the convertible bond. Thomas Eldered, CEO: “The acquisition of Corvette is very much in line with our strategic plan and we are very excited to have secured such a high quality company. We will be gaining access to a first class and largely new customer base as well as new capabilities and capacities that will add to our technology base. Italy is an extremely interesting market made up of many small and mid-size companies where Recipharm currently has little presence. This combined with the significant sales in emerging markets represents an exciting opportunity. We are therefore looking forward to combining the assets of both organisations and working together with the management of Corvette to deliver benefit to all of our stakeholders.” About Corvette Pharmaceutical Services Group Corvette Pharmaceutical Services Group (consisting of Corvette Group SpA and LIO Immobiliare s.r.l.) has three manufacturing facilities located in the Milan region of Northern Italy. Each facility specialises in a different technology and business area: Masate – Sterile injectable manufacturing facility with capabilities for both lyophilisation and liquid filling of vials and ampoules including hormones supplied to numerous territories including Japan. Paderno Dugnano – API and finished dose form development and manufacturing facility with a number of owned product rights including Erdosteine, an important mucolytic product. The facility supplies the global market including the US and Japan. Lainate – Bulk lyophilisation of sterile beta lactam antibiotics supplied to numerous markets including Japan. Around 265 people are employed across the three facilities and over 100 customers are served including big pharma, mid-size speciality pharma as well as global generic companies. Reported net sales in 2013 amounted to EUR 57.7 million with an EBITDA of EUR 15.0 million giving an EBITDA margin of 26% and operating profit (EBIT) of EUR 11.4 million. The net asset position at 31st December 2013 was EUR 25.2 million. The first six months of trading in 2014 is performing well with an improvement in both net sales and EBITDA compared to the same period last year. All reported numbers are according to Italian GAAP. Transaction rationale Enhanced Reach, Scale and Profitability. Access to new and highly interesting geographies including Italy and emerging markets. 45% of Corvette’s sales are in Italy. 20% of sales are to Emerging Markets. Recipharm will now have manufacturing assets in the five largest European pharmaceutical markets. Access to a new customer base presenting significant opportunities for cross selling. Approximately 80% of Corvette sales are to customers new to Recipharm. Increased lyophilisation capacity and capabilities. Strengthens Recipharm’s leadership in lyophilisation. Addresses current and short term capacity shortage whilst new capacity comes on stream in Recipharm’s existing facility. Ability to handle hormones in both vials and ampoules. Significant Intellectual Property. Some 40% of Corvette’s sales are backed by own IP (including marketing authorisations, product rights and patents) with a promising pipeline of new products. Supports Recipharm’s ambition to include more IP in its offering. Future potential royalties from the possible approval of Erdosteine as an orphan drug in the US for the treatment of bronchiectasis. Vertically integrated development. Development and small scale manufacturing of niche active pharmaceutical ingredients integrated with finished dose form development Provides access to new manufacturing contracts derived from development pipeline. Attractive financial impact. Corvette’s profitable business having 26% EBITDA margin will increase average combined margin. Corvette has many years of strong development in both sales and EBITDA and will contribute to combined organic growth. The acquisition is expected to be accretive to EPS Additional, non-quantified benefits from commercial synergies, cross-selling to customers and operational optimisation. Transaction terms Consideration and financing. The equity consideration, estimated to EUR 100 million, is to be paid 50% in cash and 50% in the form of a senior unsecured convertible bond issued to the sellers. Corvette will have approximately EUR 21 million in interest bearing debt which will be repaid after closing. The cash for the transaction is already available and no additional external financing is required. The sellers will be entitled to 15% of any potential Erdosteine net royalties yielded from its US orphan drug indication for a period of ten years from closing. Senior unsecured convertible bond terms. Issued to seller, LBO Italia Investimenti s.r.l. Issue size: Preliminary EUR 50 million. Issue price: 100% of par. Coupon: None. Security: Unsecured. Maturity date: 30th September 2015. Lock-up on shares: Until 31st March 2015 Conversion period: From closing until 9th September 2015. Conversion terms: Partial or full conversion into new Recipharm Class B shares. Conversion price is SEK 91.10, calculated based on a volume weighted average of the ten trading days before Aug 19. At full conversion, with a fixed exchange rate of 9.168 SEK/EUR, this would represent approximately 5 million new shares, close to 12% of share capital and 3.2% of the voting rights. Redemption price: 90% of par, equal to EUR 45 million. Listing: None. Other terms and conditions as customary to convertible bonds. Values are preliminary and will be finally determined at closing. Proforma Financial Summary Timetable The closing of the transaction is expected to be 1st October 2014. There are no material conditions to closing. To obtain authorisation for the Board of Directors to issue the convertible bond, Recipharm will convene an Extraordinary General Meeting, scheduled for 11th September 2014. B&E Participation AB, owned by Thomas Eldered and Recipharm Chairman Lars Backsell, that controls 44.6 % of the Recipharm total share capital and 86.4 % of the voting rights, will vote in favour of the convertible bond issue. The joint lead managers in Recipharm’s IPO, Carnegie and SEB, have, for this transaction, given their written consent to release Recipharm from the lock-up on carrying out new share issues. The lock-up was undertaken in the placing agreement in the IPO. For the avoidance of doubt, the lock-up agreement undertaken by B&E Participation AB in connection with the IPO will remain. This information is published in accordance with the Swedish Securities Market Act, the Swedish Financial Instruments Trading Act and/or the regulations of NASDAQ OMX Stockholm. This information was submitted for publication on 19th August, 2014, at 7:45 am CET. About Recipharm Recipharm is a leading CDMO (Contract Development and Manufacturing Organisation) in the pharmaceutical industry based in Sweden employing some 1,500 employees. Recipharm offers manufacturing services of pharmaceuticals in various dosage forms, production of clinical trial material and pharmaceutical product development. Recipharm currently manufactures more than 200 different products to both Big Pharma and smaller research- and development companies. Recipharm’s turnover is approximately SEK 2.1 billion and the Company operates development and manufacturing facilities in Sweden, France, the UK, Germany and Spain and is headquartered in Jordbro, Sweden. The Recipharm B-share (RECI B) is listed on Nasdaq OMX Stockholm. For more information on Recipharm and our services, please visit www.recipharm.com Recipharm has retained White & Case and Setterwalls as legal advisors for the transaction. About the LBO Italia Investimenti Srl The sellers of Corvette Group are LBO Italia Investimenti Srl (“LBO Italia”), as controlling shareholder, and some private investors, holding minority interests. LBO Italia is a holding company controlled by Europe Capital Partners V S.C.A., SICAR (“ECP V”) a private equity fund raised with institutional as well as private investors. LBO Italia targets investments in Italian mid-sized companies. Its experience runs from finance to industry and management. Europe Capital Partners began working in private equity in the 80s and pioneered the field in continental Europe. ECP V follows four other funds which collectively completed over sixty private equity investments throughout Europe. ECP V’s general partner and the LBO Italia management team are significant co-investors in the firm’s acquisitions. For further information visit www.lboit.com For further information on Corvette visit www.corvette-group.com In the sale of Corvette Pharmaceutical Services Group, LBO Italia has retained Rothschild as financial advisor and d’Urso, Gatti e Bianchi and Gernandt & Danielsson as legal advisors.
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LBO Italia to sell Corvette to Recipharm