Triton, whose initial bid for the assets was rejected, has offered to acquire Zurmont’s remaining three assets for approximately Sfr81 million ($ 83 million) – equal to the net asset value of Zurmont’s interests in the businesses as of June 30, according to a person familiar with the matter and a letter from the Triton to Swiss-based Zurmont seen by sister title Private Equity News. The offer would give the companies a combined enterprise value of Sfr281 million, the person added.
Zurmont Madison needs to sell the remaining businesses from its Sfr250 million debut vehicle before the fund reaches the end of its life in May 2017.
The firm has been trying to secure a fund restructuring for about a year, which would give it more time to develop and successfully divest the assets. It appointed secondary advisory firm Park Hill Group to advise on the restructuring.
The remaining assets in Zurmont Madison’s maiden fund are electronic engineering services company CCS Holding, parquet flooring manufacturing Bauwerk Boen and steel products business SMB.
Triton, which is investing its €3.5 billion flagship private equity fund, is keen to merge Zurmont Madison’s portfolio company Bauwerk Boen with Kährs Group, a Swedish wood flooring manufacturer it already owns, according to a person close to the situation.
Triton’s offer, which was made on August 19, came a month after Zurmont Madison rejected Triton’s initial bid. In a letter dated July 22 seen by Private Equity News, Zurmont Madison told Triton that it was “unable to accommodate” the interest “at this time”.
Zurmont Madison said in the letter that it was unable to share “sensitive information with third parties due to strict confidentially undertakings”. One person said that Zurmont Madison did not want to give Triton access to the accounts of Bauwerk Boen because that would give Triton’s Kährs Group insights into the performance of a direct competitor.
In its renewed offer, Triton attempted to reassure the firm by stating that the offer for Bauwerk Boen was not subject to any due diligence “as we have understood that a concern has been raised by the adviser or Zurmont regarding information sharing between Bauwerk Boen and Triton”.
Triton added that it appreciates that “Zurmont does not want to sell the companies and rather explore a fund extension that buys out certain [investors] at 30% discount to net asset value”. The firm added that it understands that Zurmont Madison is keen to complete the fund restructuring “quickly” and indicated that it could do the acquisition swiftly.
A spokesman for Zurmont Madison said in an emailed statement: “Zurmont Madison is running a professional [restructuring] process in order to serve all investors and not only some investors. All parties are informed about this process in detail and will be informed about any news directly by ZM and not via a newswire.”
Some investors have urged Zurmont Madison to consider selling the companies to Triton. The performance of Zurmont’s one and only fund was at 0.65-times its original cost as of June 30, 2016, according to a quarterly performance update seen by Private Equity News. The firm has not confirmed these numbers and did not immediately respond to a request for comment on this at press time.
One investor said: “The fund comes to an end in 10 months; Triton is offering a fair price, now we have a proposal. They should enter into negotiations.” Two investors said in July that secondaries buyers had offered prices that were significantly lower than the bid made by Triton.
Some of the investors who are in favour of the sale to Triton are invested in both Zurmont Madison’s and Triton’s funds, two people familiar with the matter said in July. Not all investors believe Zurmont Madison should sell to Triton. Some would like to give the firm more time, one investor said in July.
Zurmont Madison is currently being run by five team members, according to its website. It is charging investors Sfr 3.78 million annually to look after the assets, according to the quarterly performance update. That fee income will stop if the firm, which has not raised a new fund since 2008, sells to Triton.