Target Information

Cerea Dette II has made two significant investments in Spain by providing financial support for the acquisitions of the Palacios and Gallo groups. With these additions, the Cerea Dette II Fund has now conducted a total of three investments within the Spanish market, reflecting its ongoing commitment to international expansion. These investments also mark the ninth and tenth private debt commitments made by Cerea Partners this year.

The Palacios group, established in 1960, specializes in the production of ready-made meals, fresh foods, and frozen Spanish delicacies. It is a market leader in Spain for products such as omelettes, chorizo, pizza, and frozen desserts. Although the majority of its revenue is derived from its domestic market, Palacios also has a notable international presence, particularly in countries like France, the U.S., and Portugal.

Palacios boasts a diverse client portfolio built on longstanding commercial relationships, and its robust industrial performance enhances its production capabilities across various sectors. The company's experienced management team has been instrumental in capitalizing on growth opportunities, particularly within the tortilla market, and solidifying its status in the more established chorizo and pizza sectors.

Meanwhile, the Gallo group, founded in 1874 in Barcelona, is the leading producer of dry pasta in Spain. It offers a comprehensive range of food products under its Gallo brand as well as distribution brands, with a focus on dry pasta, flour, and convenient sauces. Gallo has also expanded into fresh products, including fresh pasta and sauces.

The Gallo group has established itself as a notable player in the flourishing Spanish pasta market, enjoying robust industrial performance and substantial production capacity that equips it to leverage future market growth. The Espona family has owned Gallo since 1946, but the group was sold to the Spanish fund ProA in October 2019. Cerea Dette II is actively participating in the financial structuring of this acquisition.

Industry Overview

Spain's food industry remains one of the vital sectors of its economy, characterized by a rich culinary heritage and a diverse range of products. The sector has experienced steady growth, bolstered by increasing domestic demand for high-quality ready-made meals and convenience foods, as well as a burgeoning interest in Spanish cuisine internationally.

The ready-made meals segment, in which Palacios operates, has seen a shift towards healthier, convenient options, thereby enhancing its attractiveness to consumers facing busy lifestyles. This development reflects broader trends observed across Europe where convenience is prioritized without compromising on quality or flavor.

The pasta market, representing a significant part of the Spanish food industry, has also witnessed consistent growth in recent years. Gallo's leadership within this sector highlights the increasing importance placed on local, quality ingredients and production practices. Furthermore, with a growing population and changing demographics, Spain's food sector continues to adapt to evolving consumer preferences, positioning itself for continued expansion.

Recent trends indicate a rising consumer focus on sustainability and health, prompting food producers to innovate and offer products that align with these values. As Spanish consumers become more health-conscious and demand fresher ingredients, companies like Palacios and Gallo are well-positioned to meet these evolving needs while capitalizing on growth opportunities within domestic and international markets.

Rationale Behind the Deal

The acquisitions of Palacios and Gallo groups represent strategic investments for Cerea Dette II, aimed at solidifying its foothold in the thriving Spanish food market. By financing these transactions, Cerea is not only supporting the growth of well-established brands but is also securing a stake in sectors poised for continued expansion.

Moreover, the deal reinforces Cerea's commitment to backing companies with proven track records and strong market positions. Both Palacios and Gallo are recognized leaders in their respective segments, allowing Cerea to benefit from their existing customer bases and production capabilities while driving future growth.

Information About the Investor

Cerea Partners, the managing entity behind Cerea Dette II, is a prominent investment firm specializing in private debt and equity investments across various sectors. The firm has a strong focus on identifying high-potential companies that exhibit robust business models and significant growth opportunities.

With a reputation for successful investment strategies, Cerea Partners aims to foster long-term relationships with its portfolio companies to unlock value and facilitate growth. Their experience in financial structuring and support ensures that the companies in which they invest can achieve their strategic objectives while maximizing their operational efficiencies.

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The investments made by Cerea Dette II in Palacios and Gallo groups appear to be astute decisions reflecting a deep understanding of the Spanish food sector. Both companies have established themselves as leaders in their respective markets, providing a solid foundation for Cerea to leverage its resources effectively.

Palacios, with its diverse product range and strong export capabilities, and Gallo, which stands at the forefront of the growing pasta market, each present unique advantages that can drive growth in a segment that continues to shake off the impacts of economic fluctuations.

Furthermore, Cerea's strategy aligns with current consumer trends emphasizing quality and convenience, indicating a promising outlook for both investments. By selecting recognized brands with proven management teams and market presence, Cerea has positioned itself favorably for capitalizing on future opportunities.

Overall, Cerea Dette II's involvement in these transactions is likely to yield positive returns in the long term, especially as the demand for quality ready-made meals and pasta products continues to rise in the Spanish market and beyond.

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