03 Mar 2021

Carlyle's acquisition of Swiss watch industry supplier Acrotec ‘powered by sustainable financing’

Linklaters’ leveraged finance co-head, Oliver Sceales, flags ESG’s role in deal’s funding

By Madeline Anderson

Photo courtesy of Linklaters
Linklaters banking partner Oliver Sceales led the team

The Carlyle Group’s acquisition of Swiss watch industry supplier Acrotec Group from Castik Capital was underpinned by ESG-linked finance, according to Linklaters, which advised on the deal’s financing.

The UK Magic Circle firm, which was among a host of law firms that advised on the deal, said this week the $449.6m (CHf413.5m) financing package involved an ESG-linked margin ratchet with metrics including energy usage, pollution, carbon footprint and AI. 

Linklaters London-based co-head of leveraged finance Oliver Sceales, who led the team advising Carlyle, said: “There has been a substantial rise in sustainable finance which is driven by investor and shareholder demand and the availability of a diverse range of innovative products.

“This deal was an example of how progressive organisations are powering sustainable financing and supporting businesses to improve their carbon footprint or making progress towards other sustainability objectives.” 

Linklaters was advising Carlyle alongside lead legal counsel, fellow UK Magic Circle law firm Freshfields Bruckhaus Deringer, as well as Latham & Watkins, Luther Law Firm, PwC Société D’avocats and Ropes & Gray. Lenz & Staehelin also advised on the deal in matters concerning Swiss law. Zurich-based firm Bär & Karrer acted on behalf of Castik Capital.

On Sceales’ team were managing associate Daniel Peach and associates Hannah Brellisford and Shruti Subramaniam. The London-based team was supported by lawyers in the firm’s Luxembourg office on local law matters. 

As a result of the deal, Acrotec will gain access to Carlyle’s existing global healthcare infrastructure, increasing its reach in the medtech industry. The partnership will seek to expand Acrotec’s presence to new jurisdictions in Europe and the US. 

Headquartered in Develier, Switzerland, Acrotec has most notably been active as a leading supplier in the Swiss luxury watch market, manufacturing components of mechanical watch movements for major luxury watch brands. 

In the medtech sector, the company recently expanded its global customer base through leveraging its sophisticated engineering services. Under Carlyle, Acrotec will be able to accelerate its growth agenda by developing its existing offers as well as through new acquisitions. 

Acrotec founder and CEO François Billig said the deal represents an “important milestone” in the company’s history, as the acquisition places Acrotec in a position to “significantly” accelerate its growth and diversification plans. 

Jonathan Zafrani, managing director of the Carlyle Europe partners advisory team, said they were drawn to Acrotec for its “attractive growth opportunity” in the global medtech contract manufacturing market, as well as its market-leading position in the well-established Swiss mechanical watch market and the various applications of its high-tech precision parts technology. 

Earlier this year, Carlyle secured the largest ESG-linked private equity credit facility in the US for $4.1bn. The “first-of-its-kind” facility is structured to support the firm’s goal of advancing board diversity to 30 percent across its portfolio companies.

The deal comes hot on the heels of Carlyle’s acquisition of mechanical and electrical drive technology company Flender from Siemens. The firm has a long-standing dual focus on the industrial and healthcare industries, having deployed more than $35bn in these sectors since its founding in 1987. 

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