Goldman Sachs eyes €15b investment in ice-cream giant Froneri in major deal

WEB DESK: Goldman Sachs prepares to invest in an ice cream company at a €15 billion valuation, supporting a deal that could allow French private equity firm PAI to execute one of the largest transactions of its type.

The deal, which could value Froneri — a joint venture with Swiss consumer goods group Nestlé — at about €15bn including debt, would involve Goldman’s asset management division becoming the lead investor in a continuation vehicle established by PAI, according to people familiar with the matter.

The Froneri deal could sign as soon as September.

Continuation funds allow buyout managers to hold on to portfolio companies beyond the typical 10-year lifespan of a private equity fund by bringing in new investors and offering existing ones the chance to sell their holdings.

Such transactions have become more popular in recent years as buyout groups have struggled to exit older investments and as money has poured into professionally managed secondaries funds dedicated to investing in these types of deals, said the Financial Times.

Industry insiders argue that continuation vehicles are increasingly being used for strong investments where buyout groups want to remain invested, as well as for weaker companies that firms cannot sell or list at the desired valuation in a difficult market.

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The continuation deal would be the second for PAI’s investment in Froneri, which was founded as a joint venture between the Paris-based firm and Nestlé in 2016 and ranks as the second-biggest ice cream producer in the world after Unilever’s spin-off the Magnum Ice Cream Company.

Froneri, which houses brands such as Häagen-Dazs in the US and Oreo and Cadbury ice creams as well as a large white-label business, has increased its revenues from €2.6billion in 2019 to €5.5billion in 2024.

PAI had already put part of its 50 per cent stake into a continuation vehicle in 2019, in an attempt to benefit from the joint venture’s growth as Nestlé’s US brands were brought under its umbrella. The life of that first continuation fund is now coming to an end.

PAI turned down approaches from rival buyout firms who were interested in buying its Froneri stake, according to people familiar with the process. The deal would ultimately see PAI’s stake in the joint venture shared between its latest flagship fund and the continuation vehicle, one person familiar with the matter said.

Nestlé would keep its own 50 per cent stake, the people said, and the next few years may be used to bring further Nestlé brands into Froneri.

Goldman Sachs is deploying a $14bn secondaries fund, which buys stakes in traditional private equity funds from existing investors as well as funding continuation vehicles.