Buffett’s favoured advisory firm takes stake in Italian machinery maker IMA

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A US investment and advisory firm with ties to billionaires including Warren Buffett has agreed to buy a 45 per cent stake in Italian machinery maker IMA in a deal valuing the company at about €6.5bn, according to people familiar with the matter.

BDT & MSD Partners’ investment, which is expected to be announced on Monday, is a sign of its dealmaking ambitions and the latest big money transaction to take place in an otherwise slow market.

“We believe BDT & MSD’s long-term view and deep expertise in supporting family enterprise makes it an ideal partner to help us reach these goals and accelerate global growth, including in the US market,” Alberto Vacchi, chair and chief executive of IMA, said in a statement.

The IMA deal provides an exit for its current private equity backer BC Partners and marks the firm’s second sale in the past week after it agreed to offload a minority stake in US pet care retailer PetSmart to Apollo Global Management.

BC Partners will more than double its money on IMA after taking a 45 per cent stake in the company back in 2020, one of the people said.

The IMA transaction is one of the largest to take place in Europe year to date, according to Standard & Poor’s data, at a time when rising inflation and concerns over the state of the wider economy have weighed on dealmaking. Buyout firms have been hit particularly hard as the cost of the debt they use to fund their deals has increased significantly.

The number of $1bn-plus deals globally so far this year is on track to be the lowest since 2019, the S&P data shows. There have been signs of increasing activity in recent weeks, however, with GTCR agreeing to buy a stake in Worldpay in a deal valuing the payments company at up to $18.5bn.

Founded in 1961, IMA designs and manufactures machines for the processing and packaging of pharmaceuticals, cosmetics and food, among other things. 

The business is majority-owned by the wealthy northern Italian Vacchi family who built the company through a series of acquisitions.

BC Partners invested in IMA during the early stages of the Covid-19 pandemic in 2020, in a deal valuing IMA’s equity at about €3bn, the Financial Times previously reported. The company had €2bn in revenues in 2022, according to a press release.

“The company is widely considered a jewel in the manufacturing world in Europe and northern Italy,” Stefano Ferraresi, a partner at BC Partners, said in an interview with the Financial Times.

BC started exploring options to exit earlier this year after IMA’s strong performance and received approaches from corporates, as well as other private equity firms, Ferraresi said. The company also had portable debt which means that it will not need to raise new financing in a tough market.

The deal signals the clout of BDT & MSD Partners, a firm founded last year by the merger of Byron Trott’s BDT merchant bank with the Michael Dell-backed investment group MSD Partners.

“This investment is emblematic of our flagship strategy of providing long-term, aligned capital to family business owners and founders to help them achieve their objectives,” co-chief Trott said in a statement.

The firm is currently raising its latest flagship fund and has gathered $13bn from investors, according to a person familiar with the matter.

Trott, a senior former Goldman Sachs executive, is known as the billionaires’ banker and is a close adviser to Warren Buffett.

BDT & MSD is also co-led by former Goldman rainmaker Gregg Lemkau who joined MSD in 2021 after a successful investment banking career in which he advised a host of Silicon Valley executives including Elon Musk. The combined entities have invested more than $50bn since 2010.

Since the merger, BDT & MSD has invested in companies including Under Armour and software business Qualtrics.

The firm also owns assets including a minority stake in advisory firm Brunswick Group. Earlier this year, BDT & MSD did another deal in the packaging sector when it bought a stake in US company ProMach.

BDT & MSD Partners also recently hired former Goldman Sachs partner Dina Powell McCormick as a vice-chair.