Riverside Europe has exited its investment in Richter Chemie-Technik for an undisclosed sum, realising a return of around 2.5 times its original investment. Riverside acquired Richter, a producer of pumps, valves, controls and related services, in January 2006, winning a competitive auction involving 15 parties, around half of which were private equity buyers.
The transaction was financed with around 60 per cent debt, arranged by LandesBank Rhein Pfalz.
During Riverside’s period of ownership, Richter achieved Ebitda compound annual growth of 19 per cent.
The initial challenge was rebuilding distribution capabilities lost when the business was carved out from US food processing parent ICT. “In the process of carving out the business it lost some of its distribution capabilities – this was a challenge,” said Kai Köppen of Riverside. “We built up the distribution network in the US and invested in the modernisation of facilities. We also launched production facilities in India to service the US market and initiated several projects on product development.”
Riverside had initially planned to fuel growth further with add-on acquisitions, but it soon became clear that this path was untenable. “It was our target to make add-ons – and we retained our investment bankers for this purpose – but the industry was so bullish that we were unable to complete acquisitions. Prices were too high,” explained Köppen.
Despite this setback, the company still outperformed expectations. “We sold because the add-ons didn’t materialise, but also because we had a business plan for five years and were there after two,” said Köppen. The company also grew from 220 to 260 employees during the course of Riverside’s investment.
Richter serves customers in the chemical and pharmaceutical industries such as Akzo Nobel, BASF, Pfizer Uhde and Sanofi Aventis. Riverside sold the company – which manufactures high-performance fluoro-polymer lined pumps and valves for handling corrosive and high-purity fluids, involved in the processing of chemicals and pharmaceuticals – to Idex Corporation, a strategic buyer. The auction process received strong interest from strategic and private equity buyers, according to Köppen.