ACOVA RADIATEURS

GROUP 8:
DISKHA MIGLANI 19P080
MAYANK ARORA 19P094
PUNEET GARG 19P101
PUNYAJA SWAROOP 19P102
RASHI JAIN 19P105
SUNKARA VAMSI KRISHNA 19P117
COMPANY BACKGROUND
• BEGAN MANUFACTURING BURNERS AND BOILERS IN 1933
• IN 1960, IT SHIFTED ITS FOCUS TO ITS CURRENT BUSINESS, DECORATIVE STEEL
RADIATORS.
• THE DECORATIVE RADIATOR BUSINESS CONSTITUTED 25% OF THE FRENCH
RADIATOR MARKET
• ACOVA HELD A 75% SHARE IN THE DECORATIVE RADIATOR MARKET.
• SEGMENTS:
o HOT-WATER RADIATORS (50%)
o TOWEL DRYING RADIATORS (40%)
o ELECTRIC RADIATORS (10%)
COMPETITIVE OUTLOOK

• THREE PLAYERS DOMINATED THE FRENCH RADIATOR MARKET

o CICH WITH 16% MARKET SHARE (MAINLY WITH CAST IRON RADIATORS)
o FINIMETAL WITH 24% (MOSTLY OF STEEL RADIATORS)
o ACOVA WITH 18.5% (LEADER IN THE DECORATOR RADIATOR SEGMENT
• ZEHNDER, A SWISS COMPANY WITH PRODUCTION FACILITIES IN FRANCE,
WAS ACOVA’S CLOSEST COMPETITOR IN THE DECORATIVE RADIATOR
MARKET.
BARING CAPITAL’S DECISION

• INVESTORS OF BARING CAPITAL REQUIRED 30-35 % RETURN

• THREE RIVAL BIDDERS:
o ZEHNDER-THE SWISS FIRM
o JONESÑAN IRISH LICENSEE OF RUNTAL
o LBOFRANCE, A MAJOR COMPETITOR OF BARING CAPITAL
• NEED TO MAKE A SWIFT DECISION FOR AN AMOUNT THAT WOULD NOT BE
OVERSHADOWED BY OTHER BIDDERS
 P/E Multiple

Ownership
Total Acquisition Cost 340 Baring Capital @
79% 80000 301876.38
P/E multiple
Valuation Initial (Exit) Management 21% 5000 80245.62

Earning 29394
PE Multiple 13
Equity Value 75000 382122 IRR
Add: Transaction
Cost 10000 Baring Capital 39.37%
Initial Cost of
Acquisition 85000
Management 100.15%
 EQUITY VALUE BASED ON TARGET IRR
Target IRR 30% 35%

Equity Value 301876.38 301876.38

Senior Debt 190000 190000
Subordinate Debt 65000 65000
PV of Equity 105695.3118 67322.50868
Equity Value 110695.3118 72322.50868

Total Equity Value 30% 35% Enterprise Value 365695.3118 327322.5087

LBO Fund 105695.3118 67322.50868

Less: Transaction Cost 10000 10000
Management Fund 5000 5000

Total 110695.3118 72322.50868 Amount Paid to seller 355695.3118 317322.5087

THANK YOU