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Private equity groups Advent International and CVC Capital have teamed up to bid for a pet food company owned by Cinven, leaving one consortium seeking to buy an asset that the UK buyout group has held for six years.
Advent and CVC were the remaining investors competing in the acquisition of Partner in Pet Food, a Hungary-based animal food manufacturer. But the two groups have now made a joint bid, according to people familiar with the matter.
The sources said that the two sides are still holding talks and there is no certainty that an agreement will be reached. Cinfin had previously sought a valuation of around €2 billion for the company, one of the people said.
Private equity groups are under pressure to exit investments so they can return capital to investors. However, a slowdown in deal making means they are sitting on a record number of unsold businesses.
Last year, there was a particularly sharp decline in the value of portfolio companies sold to other private equity owners, as rising interest rates opened a gap in valuation expectations between buyers and sellers.
PPF, founded nearly 25 years ago, operates across Europe including France, Italy and Germany. Its products are distributed to more than 600 customers including supermarkets, pet stores and veterinarians in dozens of countries, according to its website.
It was bought by Cinven in 2018, after already spending several years in private equity ownership. Advent had previously acquired Partner in Pet Food in 2011, before selling the company to another private equity investor Pamplona Capital Management in 2015 for €315 million.
Buyout investors have been pouring money into the pet sector in recent years, driven by trends showing strong spending on pets that many people acquired during the pandemic.
Veterinary clinics have been the focus of interest, with private capital groups such as EQT and KKR making significant investments in the sector.
But the sector is now facing increased regulatory scrutiny. The UK's competition watchdog this month announced plans to conduct an in-depth investigation into the veterinary medicine market and whether a “gross” of thousands of small clinics has driven up the prices of treatments and medicines for the UK's 16 million pet owners.
Since Cinven acquired PPF six years ago, it has expanded its business through acquisitions. PPF had sales of €690 million in 2022 and €800 million last year, underscoring its continued growth, according to a person familiar with the accounts.
Advent, CVC and Cinven declined to comment.
