ARX Equity Partners has made a first investment from its fourth private equity fund, entering into a binding agreement to acquire Nutricia Deva from Danone Group through a joint venture with food industry entrepreneur Keith Dilworth.
The fund, which typically invests in companies valued between €10 million and €50 million, held its first close on €54 million in July of 2016. A source familiar with the firm told Agri Investor that the fund is targeting a €100 million hard-cap and net internal rates of return of 20-plus percent, net of fees.
Nutricia Deva is a Czech Republic-based producer of baby fruit desserts and fruit drinks, with a total annual capacity of 24,000 tons, and holds bio and organic certifications. The source referred to the company as a “non-core” component of Danone, which the multinational company preferred to sell rather than develop.
As part of the transaction, Deva will enter into a contract to continue manufacturing baby food desserts under the Danone brands, but this will be effective for just three years, the source said.
Dilworth, who has worked out similar carve-outs before, including a company tied to Nestle, is investing his own money into the deal, giving ARX confidence to ultimately “diversify away from the Danone relationship,” the person added.
Together with Dilworth, ARX aims to expand the existing business via further organic growth and complementary add-on acquisitions. One initial goal, in addition to this broader growth, will be to develop additional packaging outside of the current use of glass.
ARX supports the growth of mid-sized companies in Central Europe, with investments mainly targeting the Czech Republic, Hungary, Slovenia and Slovakia, with a preference towards manufacturing deals.
The company has been investing in the region for two decades and has experience in private label baby food ventures as well as other fruit-based products. One of its other portfolio companies, Gramex, is bottler of soft drinks and fruit juices for retailers and A-brand producers utilizing PET packaging.
ARX declined to comment.