Silverfleet Capital

Orefi

Business overview

Headquartered in Lyon, Orefi (now renamed Orexad), is a leading multi-specialist distributor of industrial supplies in France and in Europe. Orefi distributes a wide range of industrial products such as power transmission supplies, cutting tools and abrasives, fixings and adhesives and personal protection equipment.

Investment rationale

We invested in Orefi with the aim to further consolidate the market which was highly fragmented in France and in Europe at the time. We identified Orefi as a solid platform with a proven track record of identifying and integrating small and medium-sized industrial supplies companies. Also at the time Orefi was in many respects a federation of semi-autonomous businesses and there was a need to effect a transformation into a fully integrated group.

Value creation

Following our initial investment, we swiftly embarked upon a buy and build strategy and during the period of our ownership, a total of 23 acquisitions were made in France. In addition, in 2000 the company entered the Dutch market with the acquisition of Biesheuvel.

In parallel, we worked with management on the integration of the existing business, with tangible improvements at various levels, notably purchasing and logistics, which resulted in a positive impact on working capital.

In order to address the next stage of the Company’s development, and as planned at the time of our investment, in 2002 we recruited a new CEO, Pierre Pouletty, who replaced Marcel Sengelin, who became semi-executive Chairman.

Silverfleet Capital put in place a financing structure to fund acquisitions, which contributed to the success of our buy and build strategy. We refinanced banking facilities to allow more flexibility in the financing of small acquisitions, and through the 2002-04 down-turn we also provided an equity facility to continue to fund acquisitions.

Outcome

Having successfully executed our buy and build strategy, having addressed the management succession plan, and having demonstrated that the internationalisation of the business was achievable, in January 2006 we initiated a sales process involving both trade and private equity.

The scale and network coverage of Orefi made it an attractive target for the main trade players in the French market, and in June 2006 the business was bought by AD Group, a leading French competitor, in a transaction which triggered another wave of consolidation deals. From Silverfleet Capital’s standpoint, Orefi was sold for €117.3m or the equivalent of 1.8x cost.