Business Irish

Sunday 19 November 2017

Investor cashes out of Smurfit Kappa with shares at five-year high

John Mulligan

John Mulligan

For the first time in over a decade, Irish packaging group Smurfit Kappa has no major private equity giants as stakeholders in the firm.

Private equity giant Cinven confirmed yesterday that it had offloaded its entire remaining stake in Smurfit Kappa. The sale came with the Irish group's shares trading at a more than five-year high.

The company told the Stock Exchange yesterday that Cinven, which held its stock through a fund called Cinven SK Feeder, sold just under 7.4 million shares on Monday, bringing to nil the number of shares it now holds.

Those shares would have been placed with institutions. Smurfit Kappa stock closed up 1.9pc in Dublin yesterday at €10.19, having earlier been more than 3pc higher.

The company also said that it had sold €400m of senior secured notes that mature in 2020.

That's more than the €300m it had said on Tuesday that it hoped to raise.

Cinven's sale means that three private equity groups that had been stakeholders in Smurfit Kappa have now exited.

The other two are CVC and Madison Dearborn.

Chicago-based Madison Dearborn backed a €3.7bn move to take Smurfit Kappa's predecessor, Jefferson Smurfit, private in 2002.

In 2005, it acquired Dutch packaging group Kappa, becoming Smurfit Kappa.

That brought Cinven and CVC into the shareholder fold.

Two years later, Smurfit Kappa was floated on the stockmarket, with Madison Dearborn holding a 21pc stake and CVC and Cinven owning a total of 23pc.

In the past two years, the private equity groups have begun exiting their investment.

All have now done so.

Just before Christmas, Madison Dearborn notified the Stock Exchange that it had distributed the 17.6 million remaining shares it held in Smurfit Kappa to underlying investors.

That left it with a near negligible 0.007pc direct stake in the packaging group.

Bank of America Merrill Lynch yesterday confirmed its 'buy' rating on Smurfit Kappa, saying it remains one of its "top picks" in the sector, with "best in class" near-term earnings growth.

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