Information on the Target

La Compagnie des Desserts (CDD), established in Lézignan-Corbières (Aude) in the 1980s, specializes in the production and distribution of artisanal ice creams and frozen pastries, catering to both independent restaurants and hotel chains. The company has a unique hybrid business model in France that combines manufacturing and distribution activities. CDD stands out in the market, achieving 45% of its revenue from international sales, thanks to successful expansions into Spain as well as significant operations in the UK, bolstered by the acquisition of Destiny Foods in 2016. Furthermore, the company has been engaging in commercial activities in the United States since 2014.

In December 2016, the company underwent a management buy-in (MBI) led by Argos Fund, in partnership with the founders and the historical financial shareholder CM-CIC. This restructuring not only facilitated the acquisition of the UK-based Destiny Foods but also allowed for an investment to support the development of the group. Cerea Dette provided financing during this capital restructuring and subsequent acquisition.

Industry Overview in France

The food industry in France has consistently demonstrated resilience and innovation, particularly in specialized sectors such as artisanal food production. As consumer preferences shift towards high-quality and unique products, there is a growing demand for artisanal ice creams and gourmet pastries. The frozen desserts market in France has seen significant growth, driven by trends such as convenient yet premium food options.

Additionally, the restaurant sector in France continues to flourish, with a notable increase in the number of independent restaurants. This growth presents a substantial opportunity for suppliers like CDD, enabling them to cater to a diverse clientele while maintaining quality. The trend towards gourmet dining experiences has also encouraged restaurants to seek premium dessert products that can enhance their offerings.

France's geographical location and its reputation as a culinary hub have further solidified its position within the European food industry. The proximity to other European markets allows companies like CDD to easily expand their footprints across borders, as evidenced by their successful operations in the UK and Spain.

Moreover, the impact of tourism has strengthened the demand for desserts in France, particularly in the bustling restaurant and hospitality sectors, creating continuous opportunities for companies that combine production and distribution effectively.

The Rationale Behind the Deal

This refinancing effort of €10 million is intended to streamline La Compagnie des Desserts' capital structure and bolster its operations for future growth. By refinancing existing convertible bonds, the company positions itself for enhanced financial flexibility, which is essential for investing in new product lines and expanding its market presence further, especially in international markets.

Moreover, with CDD's successful track record of international growth, especially in the UK and Spain, efficient refinancing catalyzes continued expansion and consolidation within the competitive marketplace, ensuring that the company remains agile and responsive to market trends.

Information about the Investor

Cerea Partners, founded in 2004, is an investment management firm focusing on small and medium-sized enterprises (SMEs) in the agribusiness sector, which encompasses food, agro-industry, distribution, hospitality, and logistics. The firm has raised approximately €1.4 billion since inception from institutional investors and has successfully executed over 120 transactions.

As a leading player in the agribusiness investment space, Cerea Partners aims to accelerate growth for its portfolio companies through dedicated support in industrial, product, and geographical development projects. The firm typically employs strategies involving transmission capital and various types of financing, including mezzanine, unitranche, and senior debt, to support the growth of its investee companies.

View of Dealert

This investment in La Compagnie des Desserts can be considered strategically sound due to its established position in the growing artisanal and frozen desserts market. The company’s successful international expansion signifies a robust business model that can adapt to various market conditions.

Additionally, CDD’s hybrid operational approach, combining manufacturing and distribution, allows for optimized supply chain management and control over product quality. This inherent flexibility positions the company effectively against potential competitive pressures.

Furthermore, the ongoing demand for high-quality food products, particularly in the context of France's culinary reputation, underscores a positive market environment for CDD. Given its established relationships with independent restaurants and hospitality chains, the likelihood of sustained revenue growth is high, making this refinancing a prudent move.

In summary, the strategic refinancing arrangement enables La Compagnie des Desserts to navigate upcoming opportunities and challenges effectively, solidifying its growth trajectory in both national and international markets. This deal is likely to strengthen investor confidence, positioning Cerea Partners favorably in the evolving agribusiness landscape.

View Original Article