IDI M&A /CORP. ACTION
2023 is shaping up particularly well for IDI, which, after selling Freeland in March, is preparing to sell its stake in Flex Composite Group to Michelin for a total EV of €700m. The move should not only replenish IDI’s pockets, but it also demonstrates IDI’s ability to create value, with a return on investment of over 12x.
FACT
- IDI made its first investment in Flex Composite Group for €23.2m back in 2015.
- IDI and Andera Partners have announced an agreement to sell the entire Flex Composite Group to Michelin for an enterprise value of €700m.
- This amount corresponds to an investment multiple 12x higher than the initial investment.
ANALYSIS
IDI kicked off 2023 on the right foot in terms of investments and divestments. Indeed, as of mid-2023, IDI had already completed four deals: the external growth of Talis Education into the Fore group and two disposals, including that of Freeland, the French leader in services to the self-employed, to MML Capital, enabling IDI to achieve a solid investment multiple of 2.2x and an IRR of c. 24% in less than four years. It is worth noting, however, that Freeland’s story is a little different, as IDI reinvested a significant part of the proceeds from the sale.
This morning, IDI announced that it is now the turn of Flex Composite Group to leave its portfolio. IDI and Andera Partners have signed an agreement to sell the entire Flex Composite Group (FCG) to Michelin for an enterprise value of €700m. This transaction would correspond to a substantial return on investment of 12x the initial outlay. As a reminder, FCG joined the IDI portfolio in 2015 for €23.2m. As of December 2022, IDI held 63.4% of the group alongside Andera Partners as minority investor.
Flex Composite Group is a European leader in the design, manufacture and distribution of advanced composite materials. The Group is now made up of three divisions: i) Engineered fabrics, the technical coated fabrics division, ii) Carbon fabrics and technical composites Composite Materials, and iii) a thermoplastic films division, Technical Films, all of which have enabled it to achieve sales of c.€200m in 2022. Starting in 2015 up to 2022, through IDI’s support of its development, FCG has generated an operating margin of between 25% and 30% and average organic growth of 11%.
The transaction is set to close in Q3 23, subject to approval by the competition authorities, and is further proof of IDI’s ability to create value.
