L Catterton places BRL 600 million in CantuStore, chief in tire gross sales
- November 11, 2022
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CantuStore, owner of the largest tire retailer in Brazil, has just received an investment of R$ 600 million from the L Catterton fund. The private equity manager has a minority stake in the group and is expected to occupy two seats on the board. It is the first institutional investment received by the company, which even registered for an IPO in 2021, but with the turn of the market, it will now gain momentum to grow with the private transaction to a new window.
The holding company controls CantuPneus, the largest importer and distributor of tires in operation in the country, and the ecommerce PneuStore, also the largest in the segment in Brazil. The company has five distribution centers and 39 stores in all regions of the country, with the 40th scheduled for December, totaling around 1,000 employees.
“One of the things that attracted us was the strong governance, despite being a private company and without corporate investors until now. Cantu is an isolated leader in its segment, has brand awareness and a highly scalable business”, said Farah Khan, managing partner of L Catterton in Latin America, to Pipeline. “And Brazil, of course, is one of the main markets in the region. It is a huge retail consumer”, adds Julio Babecki, also a partner at L Catterton in the region.
Founder and CEO, Beto Cantu has just turned 40 and 15 years ago created CantuStore with an investment of BRL 300,000. He left the city of Pato Branco, in the interior of Paraná, to study at FGV, in São Paulo, when his father called him back to help run the family transport company. But there Beto understood that the three biggest costs of a business in the segment are fuel, labor and tires – basically the only item in which the company can better manage costs with planning.
It was a market basically in the hands of manufacturers, like Pirelli and Bridgestone. Beto rotated what changed – annually he goes to countries like Japan, India and South Korea to negotiate with manufacturers and guarantee more than 40 brands in the portfolio, without depending on a few suppliers.
Despite his connection with Pato Branco – his father, Robson Cantu, is also the current mayor -, Beto chose the port city of Itajaí, on the coast of Santa Catarina, as the company’s headquarters, for its logistics. The family is also the founder of Cantu wine importer, which was sold to Wine last year.
The segment moves more than R$ 45 billion per year just in spare tires and is still very pulverized. Cantu estimates it has less than 10% market share, and yet it is twice as large as the second player. With the capital injected, the company will invest in store expansion – which are almost mini CDs, since the point needs to have a part for immediate exchange, since a relevant part of demand is urgent replacement – but also engage in M&As. There are conversations in progress.
In the last 12 months, the group earned more than R$ 2 billion and 40% of that comes from online sales. CantuPneus is the biggest seller in marketplaces such as Magalu and Mercado Livre, and has expanded its sectors of activity. If previously the focus was on truck tires, the company accelerates sales to motorcycles and heavy machinery in the construction, agribusiness and forestry segment.
In conversations with investors, the retailer was advised by Itaú BBA, who was the leader of the union set up for the IPO last year. AL Catterton has gained the upper hand in the competition for its retail experience and global presence, which can help the chain in a planned international expansion.
“Some of the reasons that led us to choose L Catterton were the manager’s international influence and structure, in addition to the extensive experience with mergers and acquisitions. He is an active, participatory investor that will help us build strong brands. This is in their DNA”, says Beto Cantu. “Besides, they have a local team, which makes a difference.”
AL Catterton, which focuses on consumer goods companies and has invested $33 billion, has invested in other automotive retailers such as Vroom and RealTruck. The manager also has the know-how of the region: its Latin American fund, now with 16 companies in its portfolio, has Brazilian companies such as Espaçolaser, Femme, PetLove, OdontoCompany and Saint Marché.
The legal advisors were Matos Filho, on the CantuStore side, and Demarest, on the fund side.
The Brazilian auto parts sector, made up mostly of private and family companies, has drawn the attention of foreign funds. Recently, Advent took control of Fortbras and HIG Capital bought automotive filter manufacturer Tecfil. Carlyle and SPX also surveyed retailers this year.
Source: Value Pipeline