PAI Partners has restructured its shareholding in ice-cream group Froneri with a minority investment from the Abu Dhabi Investment Authority (ADIA).
The London-headquartered private-equity firm bought a 50% interest in Froneri in 2016 through a joint venture with Nestlé, when the food giant merged its European ice-cream operations with UK-based R&R Ice Cream, owned by PAI Partners.
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ADIA, which invests on behalf of the Abu Dhabi government, is acquiring a minority, undisclosed portion of PAI Partners’ 50% share via a wholly-owned subsidiary as a co-investor with the private-equity firm.
Meanwhile, Goldman Sachs, via Vintage Strategies at Goldman Sachs Alternatives, is reinvesting in UK-based Froneri through a so-called single-asset continuation vehicle (CV).
The combined transactions, described by PAI Partners as an “equity transaction to reinvest into Froneri”, are valued at €3.6bn ($4.2bn), according to a statement. There is no change in Nestlé’s investment.
In terms of the CV side of the transaction, PAI Partners said: “The CV constitutes one of the largest single-asset CV transactions in Europe to date. The CV was oversubscribed, reflecting strong demand from both existing and new investors, and confidence in Froneri’s long-term growth prospects.”
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By GlobalDataFrédéric Stévenin, a co-managing partner at PAI Partners, added: “Since we first partnered with Nestlé in 2016, the business has successfully expanded into new markets, strengthened its branded portfolio and established itself as a global leader.
“We are proud to continue our journey with Froneri and Nestlé, and to welcome ADIA and other leading global institutions as shareholders for Froneri’s next phase of growth.”
The 2016 partnership combined Nestlé’s and R&R’s ice-cream operations in Europe, the Middle East, Argentina, Australia, Brazil, the Philippines and South Africa. While the US and Israel were not included in 2016, three years later the latter was also pulled under the Froneri umbrella.
Nestlé then sold its US ice-cream operations the same year to Froneri.
Froneri is a branded ice-cream manufacturer but also produces private label. The business generated a 4.5% increase in sales last year to €5.53bn.
It booked a profit before tax of €432.8m, compared to a corresponding loss of €56.6m. Net profit turned around to deliver a positive €344.6m versus a €47.3m loss.
Hamad Shahwan Aldhaheri, an executive director of the private-equity department at ADIA, described Froneri as “a leading global consumer business with strong prospects for the future”.
He added: “This transaction offers a compelling opportunity to support the company for its next phase of growth alongside experienced and proven partners.”
Froneri houses brands such as Cadbury, Connoisseur, Drumstick, Extrême, Häagen-Dazs (US), Maxibon, Milka, Mövenpick, Nuii, Oreo and Outshine, according to its latest annual report, some under license with the parent companies.
In a trading update for the new financial year issued in September, Froneri said it completed an acquisition in December for Crufi, a family-run ice-cream business in Uruguay under its own brand name.
Earlier this year, Froneri signed a deal with Lotus Bakeries and Mondelez International to produce Lotus Biscoff ice creams in select European markets.
Performance figures for the first half to 30 June were not provided last month but Froneri said it had “delivered growth”, despite “unavoidable” prices increase in the opening quarter and final three months of 2024 linked to cacao fruit prices.
It said the business recorded “volume growth outside of the US”, where it saw some “elasticity in demand”, which recovered in the second quarter.
Froneri CEO Phil Griffin said: “The renewed commitment of our partners, combined with the addition of new investors and capital, reflects confidence in our business and reinforces the strong partnership that underpins our growth.”
Gabriel Mollerberg, a managing director at Goldman Sachs Alternatives, added: “We are excited to continue the journey with Froneri and partnership with PAI. Froneri’s market positioning, attractive financial characteristics, exceptional operational execution and strong alignment with all key shareholders made it a strong continuation vehicle candidate.”
