PAI Partners has restructured its shareholding in ice cream group Froneri, welcoming a minority investment from the Abu Dhabi Investment Authority (ADIA).
In 2016, the London-headquartered private equity firm acquired a 50% interest in Froneri through a strategic joint venture with Nestlé. This move merged the food giant’s European ice cream operations with UK-based R&R Ice Cream, which is owned by PAI Partners.
ADIA, which invests on behalf of the Abu Dhabi government, is acquiring a minority share in PAI Partners’ 50% stake through a wholly-owned subsidiary, positioning itself as a co-investor with the private equity firm.
In parallel, Goldman Sachs, via Vintage Strategies at Goldman Sachs Alternatives, is reinvesting in Froneri using a single-asset continuation vehicle (CV).
The combined transactions, characterized by PAI Partners as an “equity transaction to reinvest into Froneri,” total €3.6 billion ($4.2 billion), as revealed in a recent statement. Notably, there is no change in Nestlé’s investment.
Regarding the CV aspect, PAI Partners commented: “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.”
Frédéric Stévenin, a co-managing partner at PAI Partners, stated: “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 united operations from Nestlé and R&R in Europe, the Middle East, Argentina, Australia, Brazil, the Philippines, and South Africa. While the US and Israel weren’t included initially, the latter market was brought under Froneri three years later.
Nestlé subsequently sold its US ice cream operations to Froneri in the same year.
Froneri is a prominent branded ice cream manufacturer that also produces private label products. The business experienced a 4.5% increase in sales last year, reaching €5.53 billion.
Profit before tax improved to €432.8 million, up from a loss of €56.6 million in the previous year. Net profit also reversed from a €47.3 million loss to a positive €344.6 million.
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 continued: “This transaction offers a compelling opportunity to support the company for its next phase of growth alongside experienced and proven partners.”
Froneri manages notable brands such as Cadbury, Connoisseur, Drumstick, Extrême, Häagen-Dazs (US), Maxibon, Milka, Mövenpick, Nuii, Oreo, and Outshine, according to its latest annual report, with several brands under license from parent companies.
In a trading update issued in September for the new financial year, Froneri revealed its acquisition of 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 across select European markets.
While performance figures for the first half ending June 30 were not disclosed, Froneri stated it had “delivered growth,” despite “unavoidable” price increases in the opening quarter and the final three months of 2024 due to rising cacao fruit prices.
The company also recorded “volume growth outside of the US,” where some “elasticity in demand” was noted, but recovered in the second quarter.
Froneri CEO Phil Griffin remarked: “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, 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 make it a solid continuation vehicle candidate.”
