PARIS, FRANCE: Wendel has entered into exclusive negotiations with a view to acquiring a controlling stake in IK Partners from its partners who would also reinvest a portion of their proceeds in future IK funds as part of the envisaged transaction.
IK Partners is a leading European private equity (PE) firm specializing in European mid-market buy-outs. For Wendel, this transaction will constitute the foundation its new third-party asset management business, which is aimed at generating additional sources of recurring income and intrinsic value creation.
Subject to consultation with the relevant works council and satisfaction and finalization of negotiations as well as the conditions for completion (including regulatory approvals), the acquisition of a controlling stake in IK is expected to be completed in the first half of 2024.
Founded in 1989, IK Partners is one of Europe’s most recognized PE firms, with teams across a number of Northern European countries focusing on the mid-market segment. The company invests in the Business Services, Healthcare, Consumer and Industrials sectors in Benelux, DACH, France, Nordics and the UK.
IK manages 11.81 billion euros of private assets on behalf of third-party investors and since inception, has invested in over 180 companies.
By 2024, IK Partners’ activities are expected to generate around 150 million euros in management fees and around 60 million euros in pre-tax Fee Related Earnings (FRE).
The envisaged transaction would lead to the full acquisition of IK over time.
As part of the initial transaction (expected to be finalized in the first half of 2024), Wendel would invest 383 million euros, or 12.5 times the estimated 2024 pre-tax Fee Related Earnings (FRE), to acquire 51% of IK Partners’ shares and rights to 20% of the carried interest generated on all future funds raised by IK Partners.
The 383 million euros would be paid by Wendel in two stages including 255 million euros at the time of closing, and 128 million euros 3 years after closing, subject to certain conditions.
The remaining 49% of IK Partners’ capital would be acquired by Wendel in subsequent transactions, which would take place between 2029 and 2032. These subsequent acquisitions of IK Partners shares by Wendel would be payable in cash or in Wendel shares, at Wendel’s discretion. The price of these additional transactions would depend on the growth of FRE over the period.
In addition, Wendel would participate in future fundraising activities up to a maximum of 10% of the capital raised, thus diversifying its investments in asset classes whose past performance has regularly exceeded 20% IRR, thereby further accelerating IK’s growth. IK Partners’ team would remain autonomous in its day-to-day management and its Investment Committee would remain fully independent.
The present negotiations pertaining to the acquisition of IK announced today are part of Wendel’s 2 billion euros investment target over 24 months announced on March 16, 2023.
Wendel also announces today that it intends to launch a 100 million euros share buyback program. The shares repurchased under this program will be used to cover Wendel’s long-term incentive plans and to finance potential strategic acquisitions paid with Wendel shares.
