Private equity firm EQT AB is in exclusive talks to buy a majority stake in French calibration company Trescal from Canadian pension fund Omers.
EQT’s infrastructure arm is expected to close the proposed acquisition in the first quarter of next year, Omers Private Equity said in a statement Monday. The transaction is set to value Trescal at around €1.4 billion ($1.5 billion) including debt, people with knowledge of the matter said.
Omers plans to reinvest for a 25% stake in Trescal, according to the statement, which didn’t disclose financial details.
Trescal, led by Chief Executive Officer Guillaume Caroit, calibrates measuring instruments for the aerospace, energy and automotive industries. Omers bought Trescal from French private equity firm Ardian SAS in 2018.
The company has since doubled in size, completing 47 acquisitions and entering industries like life sciences and expanding into markets including South Korea and Australia.
“We reinvested in Trescal because we see more opportunities for acquisitive and organic growth,” Jonathan Mussellwhite, head of Omers’ European private equity team, said in an interview. “It’s a fragmented market and we’re just starting to consolidate in countries such as China.”
The transaction is the latest example of infrastructure funds chasing deals offering steady returns outside their traditional playground of regulated assets like utilities, toll roads and telecom networks. The line between traditional private equity buyouts and infrastructure deals is becoming blurred, as infrastructure funds raise ever-larger pools of capital and banks prefer to lend to deals that are seen as less risky.
Bloomberg News reported in September that advisers were sounding out lenders on their willingness to provide debt financing for a potential sale of Trescal.
Omers and Trescal worked with DC Advisory on the transaction.
Razak Musah Baba of IPE Real Assets also reports EQT Infrastructure in talks to buy majority stake in Trescal:
EQT Infrastructure is in talks to buy global calibration services firm Trescal from OMERS, which intends to remain a minority shareholder.
The EQT Infrastructure V fund has entered into exclusive negotiations to acquire the majority stake in Trescal, a company worth around €1.4bn.
IPE Real Assets understands EQT Infrastructure’s latest global infrastructure fund will hold a 75% stake in Trescal.
As part of the proposed deal, expected to close in the first quarter of next year, the private-equity arm of OMERS will re-invest for a 25% stake in Trescal. OMERS Private Equity first invested in Trescal in 2018.
Trescal, established in 2004 and headquartered in France, provides essential and regulated calibration services for testing and measurement equipment in a diverse range of critical end-markets such as transport, healthcare, telecom and other sectors. The company has a global network of more than 380 facilities spanning 29 countries.
EQT Infrastructure said it will support the continued development of Trescal and its growth plans in current and new markets.
The acquisition of Trescal is EQT Infrastructure’s third investment in France after the European operator of nursing home facilities Colisee, and French water services company Saur.
Once the Trescal deal is completed, the €15.7bn EQT Infrastructure V fund is expected to be 80-85% invested, the manager said.
Christoph Balzer, a partner within EQT Infrastructure’s advisory team, said: “EQT Infrastructure has followed Trescal for a long time. We are deeply impressed by the management team’s achievements in creating a global leader in calibration laboratories with a differentiated one-stop-shop offering to serve its customer’s requirements.
“We believe EQT’s track record of building global companies, industrial DNA, and value-add approach strongly positions us to support the company in its next phase of growth.”
Thomas Rajzbaum, a managing director and head of EQT’s French infrastructure advisory team, said: “Trescal provides mission-critical services to its industrial customers in essential end-markets that are experiencing increasingly stringent requirements.
“We look forward to further strengthening Trescal’s market position through increased investment in the breadth of its laboratories’ capabilities and footprint, commercial excellence, sustainability and cutting-edge digitisation.”
Guillaume Caroit, CEO of Trescal, said: “We at Trescal are very keen to welcome EQT as our new owner and look forward to benefiting from the capabilities and experience EQT offers. We are confident that together with EQT Infrastructure we have the right partner to drive the next phase of our global growth, further cement our leading market position, and continue to best serve our clients.”
Jonathan Mussellwhite, a senior managing director and head of OMERS European Private Equity, said: “Our partnership with Trescal underscores OMERS Private Equity’s ability to support strategic, ambitious growth plans across our sector-leading portfolio companies.
“Throughout our tenure, Trescal delivered sustainable growth as well as solid profitability under the leadership of a seasoned management team.”
Guillaume Caroit, CEO, Trescal, said: “OMERS Private Equity has greatly contributed to our success over the last five years, due to their ‘partnership first’ approach.
“Thanks to our steady collaboration with OMERS, we are today well positioned to deliver on future plans for geographic expansion and segment diversification.”
On Monday, OMERS Private Equity announced it is entering into exclusive negotiations for the sale of a majority stake in Trescal to EQT Infrastructure:
OMERS Private Equity will re-invest in the proposed transaction, retaining a significant minority stake alongside EQT Infrastructure and management to support the Group as it continues to grow internationally
LONDON, 28 November– OMERS Private Equity, has entered into an agreement with EQT Infrastructure V, a fund controlled by purpose-driven global investment organization EQT, which grants exclusivity to EQT to acquire a majority stake in Trescal (the “Group”), the global leader in calibration services. As part of the proposed transaction, OMERS Private Equity will re-invest for a 25% holding in the Group. This will continue OMERS Private Equity’s support of Trescal and its current management team led by Guillaume Caroit, CEO. Financial terms of the transaction were not disclosed.
The proposed transaction remains subject to several conditions including completion of consultations and customary approvals by the antitrust and other regulatory authorities and signing of a definitive agreement. The transaction is expected to close in Q1 2023.
Established in 2004 and headquartered in France, Trescal is the global leader in calibration services offering a comprehensive range of solutions supported by measurement, repair, qualification, validation and asset management. Since OMERS Private Equity’s initial investment in 2018, Trescal has doubled in size, diversified into new high growth market segments such as life sciences, and expanded its geographic footprint into seven new markets including South Korea and Australia. Alongside delivering strong organic growth, Trescal completed 47 acquisitions, successfully integrating these businesses into the global Group and further building on its leading market position across key geographies including France, the UK, U.S., Spain, and the Benelux region.
Jonathan Mussellwhite, Senior Managing Director and Head of OMERS European Private Equity, commented:
“Our partnership with Trescal underscores OMERS Private Equity’s ability to support strategic, ambitious growth plans across our sector-leading portfolio companies. Throughout our tenure, Trescal delivered sustainable growth as well as solid profitability under the leadership of a seasoned management team. I would like to personally thank the Trescal team, led by Guillaume Caroit and Olivier Delrieu, for their strong partnership and wish the new investors well as the Group enters its next stage of growth. We are proud that, thanks to OMERS re-investment in Trescal, we will continue to be a material shareholder in the Group and part of its further evolution.”
Guillaume Caroit, CEO, Trescal, said: “OMERS Private Equity has greatly contributed to our success over the last five years, due to their ‘partnership first’ approach. Thanks to our steady collaboration with OMERS, we are today well positioned to deliver on future plans for geographic expansion and segment diversification.”
The investment in Trescal is illustrative of OMERS focus on investing in market leading businesses, where its unique, permanent and agile capital can partner with management to drive long-term sustainable growth. France is a key market, alongside the UK and Benelux, for OMERS Private Equity in Europe and one where OMERS continues to look for opportunities to deploy capital.
OMERS and Trescal were advised by DC Advisory, Paris.
-30-
About OMERS Private Equity:
OMERS Private Equity manages investments globally on behalf of OMERS, one of Canada’s largest defined benefit pension plans, with C$121 billion in net assets as of December 31, 2021, including approximately C$19.8 billion in net private equity investment asset exposure. With teams in London, New York, Toronto and Singapore, OMERS Private Equity invests across Business Services, Industrials, Healthcare and Technology, deploying an evergreen capital base to partner with strong management teams and transform good companies into industry leaders around the globe. For more information: http://www.omersprivateequity.com
About Trescal:
Trescal is the global leader in calibration services. It offers an array of industries a single-source solution for calibration, measurement, repair, qualification, validation and asset management across the globe. Its technicians and experts carry out accredited and non-accredited services for all measured variables and measuring instruments in all technical domains. About 4,400 people work at Trescal around the world to perform 3.3 million operations per year, including 27,000 repairs across 150,000 types of instruments and 20,000 brands. To learn more visit trescal.com.
A little background to situate my readers.
Exactly five years ago, OMERS Private Equity entered into exclusivity with Ardian to acquire Trescal:
OMERS Private Equity, the private equity investment arm of the OMERS pension plan has entered into an agreement with Ardian, the independent private equity company, which grants exclusivity to OMERS to acquire a majority stake in Trescal (the “Company”), the leading international specialist for calibration services. The proposed transaction, which values the Company at approximately €670 million, is fully supported by Trescal’s management team headed by its CEO Olivier Delrieu. The proposed transaction will see the senior management make an equity reinvestment into Trescal alongside OMERS Private Equity.
The proposed transaction remains subject to several conditions including customary approvals by the antitrust authorities and signing of a definitive agreement.
Headquartered in Paris, France Trescal operates across more than 110 sites in 22 countries covering Europe, North and South America and Asia. Trescal has over 3,000 employees worldwide and serves more than 40,000 customers over a range of sectors, including defence, aerospace, telecommunications, transportation and automotive. The company’s metrology services include calibration and the repair and maintenance of test and measurement equipment. Trescal also offers customised calibration management software solutions, metrology and technical support.
Ardian invested in Trescal in 2013 and since then has supported the Company’s continued organic growth and international consolidation. Over this time, Trescal has completed numerous acquisitions and grown revenue to over €270 million.
OMERS Private Equity will support the management and employees through further development of the Company’s service capability and through strategic acquisitions in what remains a large, but fragmented sector.
Jonathan Mussellwhite, Co‐head of OMERS Private Equity in Europe, said:
"We have followed Trescal since 2014 and have been impressed by the quality and track record of Trescal’s management team lead by Olivier Delrieu. This is our third consecutive bi‐lateral off market transaction and OMERS Private Equity’s first investment in France; a significant and important market for us as we continue to expand our global investment footprint. We look forward to supporting Olivier and the team at Trescal in their continued development as a global market leader in calibration services.”
Thibault Basquin, Managing Director Ardian Mid Cap Buyout, added:
“I would like to thank Olivier Delrieu and his team for our high‐quality partnership. With more than 25 add‐on acquisitions performed under our ownership, Trescal has doubled in size and become a worldwide player with presence on all continents. We are proud of this achievement; this is a clear example of the transformational growth strategies that we aim to support.”
Olivier Delrieu, CEO of Trescal, said:
"With Ardian’s support, Trescal has expanded its footprint to new continents (South & North America and Asia) and completed 25 acquisitions worldwide reinforcing its global customer service offering. We sincerely thank them for their constant support, availability and enthusiasm.
The team at OMERS Private Equity has demonstrated a depth of knowledge and a sincere interest in our future development. We are looking forward to working with OMERS to continue to support our growth and strengthen our international leadership. Undoubtedly they are the right partner to accompany Trescal in our strategy to be ever more efficient in the services we provide to our customers.”
OMERS Private Equity is fully underwriting the proposed acquisition.
Since OMERS Private Equity acquired Trescal, the company has doubled in size, completing 47 acquisitions and entering industries like life sciences and expanding into markets including South Korea and Australia.
The transaction is set to value Trescal at around €1.4 billion ($1.5 billion) including debt, which is more than double what OMERS Private Equity acquired it for, so it is realizing substantial gains here.
But Trescal is a powerhouse, the global leader in calibration services. It has room to grow significantly which is why OMERS Private Equity reinvested to retain a sizable minority stake (25%).
I do find it interesting that EQT's infrastructure arm is acquiring a majority stake in Trescal.
As the Bloomberg article above notes:
The transaction is the latest example of infrastructure funds chasing deals offering steady returns outside their traditional playground of regulated assets like utilities, toll roads and telecom networks. The line between traditional private equity buyouts and infrastructure deals is becoming blurred, as infrastructure funds raise ever-larger pools of capital and banks prefer to lend to deals that are seen as less risky.
If I had to guess, what attracted EQT to Trescal is that it's pretty much a recession-proof company, its calibration services will be needed no matter what happens to the global economy.
It is diversified across many industries which also helps mitigate the fallout from a global economic downturn.
Ardian and then OMERS Private Equity worked with a first-class management team to take this company to the next level and EQT will do the same, focus on strong organic and acquisitive growth, while broadening its market leading geographic and sector coverage.
In related news, Jonathan Mussellwhite, Senior Managing Director and Head of Europe at OMERS Private Equity recently sat down with Carmela Mendoza at Private Equity International to discuss the fiercely competitive PE landscape and how our flexible and nimble approach allows us to support ambitious growth plans, despite challenging market conditions.
You can read this interview here but a subscription is required.
Lastly, I note in September, OMERS Private Equity announced the appointment of Helen Rattee to Managing Director, ESG & Portfolio Thematics:
September 7, 2022 – OMERS Private Equity (“OPE”) today announced the appointment of Helen Rattee to Managing Director, ESG & Portfolio Thematics, a newly created role that furthers OMERS Private Equity’s significant commitment to its environmental, social and governance efforts. OMERS Private Equity manages investments globally on behalf of OMERS, the defined benefit pension plan for municipal employees in the Province of Ontario, Canada.
Rattee will lead the evolution of OMERS Private Equity’s ESG program, ensuring that the portfolio is constructed and managed to mitigate risks while capitalizing on ESG opportunities. She will work collaboratively with the transaction and the asset management teams throughout the investment lifecycle to ensure OPE and its portfolio companies are pursuing and delivering on meaningful ESG value creation initiatives. In addition, Rattee will help develop OPE’s framework for assessing the risks and opportunities associated with broader trends, such as inflation, supply chain issues and interest rates.
“We are thrilled to have Helen lead our critical work on ESG, ensuring we are meeting the evolving needs of OMERS Private Equity and our portfolio companies and helping further define our path forward – from vision to implementation,” said Michael Lank, Senior Managing Director, Operations and Strategy at OMERS Private Equity. “OMERS believes that well-run organizations guided by strong ESG practices perform better over the long run. Helen will play a crucial role in ensuring that OPE and our portfolio companies can fully realize the benefits of dynamic ESG opportunities to deliver meaningful and sustainable results for our pensioners.”
Rattee joins from OMERS Risk group where she had oversight for the Private Markets Investment Risk team which provides independent risk analysis of private equity and infrastructure transactions and portfolios to OMERS Management and Board. She is a graduate of McMaster University and Schulich School of Business.
I wish Helen Rattee and her team much success and I'm confident she will bring much needed perspectives and insights to OMERS Private Equity.
Alright, let me wrap it up there.
Below, global specialist in calibration, Trescal provides a broad range of services for the test and measuring equipment market.Trescal operates in 29 countries and it has over 160 in-house laboratories. It embedded over 220 laboratories on customer sites and supports 60,000+ clients across all industries. Read more about the company here.
By the way, the picture at the top of this post is Christian Sinding, EQT's CEO, who joined EQT Partners in 1998 from AEA Investors Inc., a leading US-based private equity firm.