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Stirling Square Special Opportunities takes control of Viscolube

Private equity firm Stirling Square Capital Partners has acquired a majority interest in Italy’s Viscolube, a major European player in the used oil recycling sector.

The stake is being acquired from Giorgio Carriero and his family, who will retain a minority interest. Carriero, who had previously acquired a minority stake owned by ENI S.p.A., will continue as President of Viscolube. The acquisition is the first for Stirling Square’s recently appointed Special Opportunities team, which is led by Manilo Marocco. The Special Opportunities team shares the same pan-European outlook as the First and Second Fund team at Stirling Square but concentrates on transactions which by size, type or governance are considered as Special Opportunities. Last week Stirling Square, which has made several investments in Italy with the First and Second Fund, was awarded the 2011 Private Equity Transaction of the Year (buy-out category) prize for its investment in Microtecnica by the Italian Private Equity Association (AIFI).

Established at Pieve Fissiraga in 1963, Viscolube has grown as demand for the regeneration of used motor oil has grown. In 2001 the company acquired the Ceccano regeneration plant from ENI and through best in class operations and significant capital investment has grown both its refining plants to become the largest used motor oil regenerator in Italy. The company transforms collected used motor oil originating from both automotive and industrial uses into regenerated base oil whose properties, thanks to Viscolube’s state of the art technology, are of equivalent quality to virgin base oil.

The Italian used motor oil market is regulated and involves motor oil producers, blenders, regenerators and the Mandatory Commission for Used Oils [“COOU”], the industry body which coordinates the collection, storage, analysis and disposal of used motor oil. Regeneration is the most environmentally acceptable solution for dealing with used motor oil and, on average over the last five years, Italy achieved an 80% regeneration rate, the highest of any European country.

Regeneration avoids the need to burn used motor oils which is a less environmentally acceptable solution for the treatment of such waste.

Stirling Square plans to grow Viscolube through further capital investment in its plants, most immediately with the development of a pre-treatment facility in Pieve Fissiraga and the enhancement of the hydrogen and hydro-treating units in Ceccano. In addition, growth of the company through geographic expansion outside Italy is planned as more and more countries introduce environmental legislation that promote the regeneration of used oil.

Manilo Marocco, of Stirling Square Special Opportunities, says: "Viscolube operates two world-class plants utilising innovative technology to regenerate a toxic waste product into usable oil. We see good opportunity for domestic growth of the business as well as the opportunity for international expansion as more countries seek to access this technology to provide an environmentally sustainable solution for the treatment of waste oil. We are delighted to have completed the acquisition and look forward to working as partners with Carriero and supporting the existing management team, led by CEO Mr Antonio Lazzarinetti.”

Carriero, President of Viscolube, says: "Today marks a significant next step in the development of Viscolube and I am pleased to be partnering with Stirling Square to support the management and staff of the company in its future development. We see a number of exciting developments ahead for the company, both in Italy and abroad, and we have chosen a respected institutional partner to work with."

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