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Abraaj acquires MCP’s minority stake in CEPRO

In the latest deal for its $375 million second North Africa-dedicated fund, private equity investor The Abraaj Group has acquired a significant minority stake in Cellulose Processing or CEPRO. The deal provides Mediterrania Capital Partners with a full exit of its 35% holding in the Algerian manufacturer and distributor of baby diapers and feminine sanitary pads. Additional terms of the deal were not disclosed.

MCP originally invested in CEPRO in 2009, acquiring a 49% stake and participating in two of the three follow-on capital raises held by CEPRO, diluting the growth investor’s stake to 35%. During the holding period, CEPRO’s revenues more than quintupled, hitting €58 million for 2015, while the company’s EBITDA posted a compound annual return of 50% between 2009 and 2015.

Commenting on the transaction, Ahmed Badreldin said “CEPRO represents an exciting investment partnership for us, as it is a direct beneficiary of the African consumer opportunity driven by market necessity, rapid population growth and the rise of the middle class.”

With robust population growth and low diaper product penetration rates, Algeria represents an attractive market for investment. 2014 marked the high water mark for recorded births in the country, with over 1 million babies born, while the product penetration rate trails that of the average for North Africa and the global average. Abraaj, in partnership with the Mehris, the company’s founding family, will look to increase production capacity and efficiency, diversify CEPRO’s product offering, enhance marketing efforts through a new branding strategy, and expand its network by developing new distribution channels in Algeria and Sub-Saharan Africa.

“We are extremely pleased with the evolution of the company during the time of our partnership.” said Mr. Albert Alsina, CEO and Managing Partner of Mediterrania Capital Partners. “The sale of our stake to The Abraaj Group supports Cepro’s future strategy in terms of product development and geographic expansion”.

The deal marks the fourth full exit for MCP‘s first fund, Fons Mediterrania Capital, which has been fully invested and is currently in realization mode. Three full and two partial investments remain in the fund. In August 2015, the private equity firm closed its second North Africa-focused fund at €120 million.

Law firm Cuatrecasas, Gonçalves Pereira advised MCP on the transaction, while KPMG provided Abraaj and CEPRO with transaction advice on the deal.

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  1. Weekly Wrap,January 18th, 2016; Abraaj, MCP, Vantage and others make private capital news last week | Africa Capital Digest

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