Sunday, June 4, 2023

CVC activates Deoleo’s exit with search for an industrial partner

CVC explores the culmination of nearly a decade of journey under Devlio’s leadership. The venture capital fund, which controls 57% of the parent company of the owner of brands such as Carbonell or Koipay, is looking for an industrial partner for the company’s exit, according to financial sources. It once managed to channel the company’s accounts, return it to profit and reduce debt.

CVC acquired Deoleo in 2014, when it outbid other large venture capital funds to buy a company controlled by a group of savings banks. Nearly a decade later, a Javier de Jaime-led fund in Spain hired Lazard to find an industrial partner, marking, ultimately, the beginning of an orderly exit from the oil company’s funds.

This corporate movement is part of the context of the persistent drought that Spain is experiencing and which has had a crippling effect on the oil sector. Sustained rise in raw material prices opens an ideal spigot for companies in this sector for corporate operations and mergers to strengthen themselves. “The mandate for Lazard is to map, analyze and consider prospecting projects and industrial scenarios that allow overcoming current and future problems across the sector, and assess options and alliances with the largest operators in the value chain “, indicate the sources. Exchange.

Sources consulted indicate that CVC has already received first indications of interest from industry groups. There is also a fund on the list of potential buyers. A non-binding offer is expected before the summer, with a view to completing the transaction before the end of the year. Devlio’s valuation has reached 122 million euros as of yesterday’s stock market close.

The company will be able to demonstrate how it has managed to straighten out the business and record three consecutive years of profits, as its current executive chairman Ignacio Silva did at this Wednesday’s shareholders’ meeting. Since 2019, Devaleo has accumulated 191 million Ebitda, 93 million cash generation, net financial debt has decreased from 557 million to 101, and it has recorded a corresponding net profit in each of the last three years, something that Devaleo has achieved since 2005. The period was not achieved since – 2007.

“We are poised to take advantage of the sector’s recovery moment,” said Silva, with whom CVC has achieved long-awaited stability in the company, both in its governance and its results: since the fund took over the company, and went through four different CEOs, until the appointment of Ignacio Silva in April 2019. In that time, the accumulated losses were 560 million.


That 2019 was critical of the group, which filed for dissolution after losing 291 million in the previous year. A situation that forced a rescue plan between the CVC and its creditors: they converted 283 million euros into shares, practically half of the group’s debt. Something that led to the next step, a deep corporate reorganization with the creation of a holding company, 49% owned by creditors. The other 51% is in the hands of the remaining shareholders, led by the CVC, under the company Deoleo SA, which develops the group’s business, and of which the fund holds 57%. Asura has another 5%.

The last step was a capital raise of 50 million, which was covered for the most part by CVC. The plan guaranteed the conglomerate’s survival by drastically reducing debt and interest payments, but crushed small shareholders and preference investors.

The process also paved the way for a possible handover of the company. The partners’ agreement, signed in 2020 after completing the capital increase, gave a period of 4 years and six months to promote the block sale for shareholders holding more than 20% capital. caught, But it could be activated earlier with two conditions: that there is a change of control, which means the CVC ceasing to control at least 50% of the capital; and that the debts of creditors are amortized.

Two scenarios that would be true: The CVC would lose control of the group after it finds a partner, which would automatically activate the second position, as the renegotiation signed with creditors earlier this year calls for all of this debt to be written off soon. Repayment is contemplated, 157 million by 31 December, “when there is a change of control”. In other words, all possibilities will open up once the new investor enters the capital.

Its main competitors in Spain

Borges, The company is embroiled in a business plan with which it is expected to reach 1,000 million in revenue before 2027, up 40% from the 701 million billed in the 2021-2022 fiscal year. About 60% of its annual turnover is generated by the oil business.

migasa, With roots in Extremadura, it is the world’s largest oil producer. Its turnover already exceeds 1,000 million and is in the hands of the Gallego family. Its main brand is La Masia, a brand it acquired from giant Unilever in 2021. In addition, it owns half of the Ybarra Group.

duckup, Cooperative is one of the main players in the sector, especially in distribution brands. In 2022, it raised 1,237 million euros, up 21% and setting a new record. Of that amount, about 700 million corresponded to the oil business.

Here, The owner of Coosur has enjoyed several years of growth, with a turnover close to €700 million and a strong international presence. It is a shareholder of Devlio with 5%.

oleostepa, Smallest on this list, but it has grown as it has become Mercadona’s preferred supplier of virgin olive oil. Its turnover is around 100 crores.

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