Apheon is doubling down on niche food sectors after moving French exotic food supplier Haudecoeur into a GP-led secondary. The deal, which came after a five-year holding period, lays out a new value creation path and more capital to grow as the flagship fund, Apheon MidCap Buyout IV, was fully deployed, managing partner Wolfgang de Limburg said.

Last month, the firm announced that it secured EUR 435m for its brand new multi-asset continuation fund, Apheon TMC HDC Long Term Value Fund SCSp (ATH LTVF). The vehicle will be entirely invested in two assets – Haudecoeur and TMC Group – to support their growth, as per the same report.

Following the creation of ATH LTVF, Apheon will keep its majority stake in Haudecoeur, with La Financière Patrimoine d’Investissement (LFPI) joining as a minority investor, he said. The family and the company’s management also reinvest in Haudecoeur, he added.

Apheon aimed to find a sparring partner and determine a market price for both assets, he said. The auctions would enable the sponsor to establish its first multi-asset continuation fund, he added.

HarbourVest Partners, a new limited partner (LP) for Apheon, holds around half of the continuation vehicle, while the rest is owned by the firm’s current LPs, he said, adding that most of them had already invested in its fourth midcap buyout vehicle.

Apheon mandated Evercore to lead the continuation fund’s fundraising, with support from Rothschild.

The fund was also raised in conjunction with minority stake sales in both businesses. In France, the sponsor mandated Rothschild and Raphaël Financial Advisory to work on Haudecoeur while in the Netherlands, Rothschild advised the sponsor on Dutch recruiter TMC Group to MML Capital Partners, he said.

The intention behind the sponsor’s debut GP-led secondary was to further support both assets’ growth. However, raising two continuation vehicles at the same time would not have been welcomed by its investors and would have meant more work for the firm, the managing partner said. It also diversifies the risk for the vehicle’s LPs, which are exposed to different markets, he added.

HarbourVest is well-versed in secondary deals, but was also attracted to the size of the assets, he said. TMC is aiming to register around EUR 275m in revenues this year and Haudecoeur circa EUR 280m, as per the same press release. Both companies have an EBITDA of around EUR 40m, according to a source close to the situation.

HarbourVest was also in line with Apheon’s goal to pursue more value, with the PE firm aiming for both assets to reach EUR 100m EBITDA in the next four to five years, the source familiar with the matter said.

For Haudecoeur, Apheon has identified peers in neighbouring countries, including Germany, the UK and Benelux, which have a similar business model and could be potential targets, he said.

A new exit in 12 to 18 months

Apheon kicked off this year a hybrid process with banks and unitranche funds to refinance Haudecoeur’s debt, he said. The PE firm eventually secured leverage at around 4.25x the company’s EBITDA with its historic banks through senior debt with a tranche A and a tranche B, the source familiar with the matter said.

De Limburg declined to specify how much Haudecoeur was valued. Before the creation of the continuation fund with Haudecoeur and TMC, the fund which owned both assets, Apheon MidCap Buyout IV, carried out three exits and reported an average of 3.3x MOIC realised, as per an official press release.

The vehicle now has carried out five exits with six more to go over the next three years, the managing partner said, adding that a sale is pencilled in for the next six to twelve months. The fund currently registers a 1.4x DPI, the source said.

Apheon will pursue investments in the food sector, which is one of the main segments of their consumer strategy, the managing partner said, adding that food is a reliant market with overperforming sub-segments.

From family to PE

Established in 1932 and headquartered in La Courneuve, near Paris, Haudecoeur was owned by three members of the Haudecoeur family when Apheon acquired it through its vehicle Apheon MidCap Buyout IV in 2019, he said.

The family planned to welcome an investor to ensure the company’s transmission, he said. During the due diligence phase, Apheon interviewed several potential candidates for the CEO position, he said. When the deal closed, Jean-Jacques Caspari took the role and eventually recomposed Haudecoeur’s management, he added.

The business registered EUR 120m in revenues in 2019 against circa EUR 280m today, the source said.

The pandemic period was a challenging time for the business which had to face an explosion of demand when it was not restructured, the partner said. The sponsor then structured the company, including its management, opened new sites, implemented automation in the historic site of La Courneuve, and carried out small bolt-ons, he added.

Haudecoeur acquired peers Palais Impérial in 2020, Coexo in 2021 and Cepasco this year, as per an official press release.

Haudecoeur benefitted however mostly from organic growth, he said. It operates in a niche market, exotic food, which registers higher growth than the general food sector, with 10% to 12% organic growth on average, the source said.

This performance is partly due to the fact that the items sold by Haudecoeur are food staples sold at a low price and hence very resilient to inflation, he added.