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CVC Capital Partners is buying a minority stake in Hempel, the Danish owner of upmarket British paint company Farrow & Ball.
The deal values the company at more than DKr25bn ($3.6bn), CVC said, and may see the Luxembourg-based private equity firm own as much as 30 per cent of the business over time.
CVC’s investment marks the first time in 75 years that Hempel has had an outside shareholder. The business has been solely owned by the Hempel Foundation, which was set up by coating industry pioneer JC Hempel in 1948, a statement released by the company said.
Hempel, based outside Copenhagen, makes paints and coatings for wind turbines and bridges, as well as paints used in homes, offices and schools.
It acquired Farrow & Ball, known for its eccentrically named hues such as “Hog Plum”, “Raw Tomatillo” and “Shallot”, from US private equity firm Ares in 2021 in a deal valuing the paint company at nearly £500mn.
Ares had bought the company for £275mn in 2014. It was founded in 1946 by John Farrow and Richard Ball. Farrow, a trained chemist, met Ball, an engineer, at a local clay pit in Dorset. Together they shared a passion for making rich colours to original formulations using high-quality ingredients.
“The Hempel Foundation has been the sole owner of Hempel for 75 years,” Richard Sand, chair of the Hempel Foundation board said in a statement. “After careful consideration, the Hempel Foundation has decided to welcome a minority investor that brings both unique experience and capital to support Hempel’s accelerated growth journey.”
CVC is investing through a fund that holds on to assets for longer than the three to five years private equity groups typically seek to own the businesses they invest in. The fund’s strategy focuses on companies worth more than €1bn and looks to hold them for up to 15 years. Other investments have included buying a stake in UK breakdown assistance provider the RAC.
The capital infusion will allow Hempel to grow organically as well as through buying up new brands.
CVC is one of Europe’s largest private equity groups and manages €186bn on behalf of investors. The decision to back Hempel adds another well-known brand to its portfolio of investments that also includes Lipton Teas and Infusions, as well as stakes in the Six Nations rugby tournament and Spanish football league La Liga.
The company went public on the Amsterdam Stock Exchange late last month, following Swedish private equity firm EQT and US peers such as Blackstone and Apollo Global Management.