HgCapital Trust plc Regulatory News (HGT)

9 Mar 2005 09:05

HG Capital Trust PLC09 March 2005 The following is the text from a press release issued by HgCapital, whichmanages the investment portfolio of HgCapital Trust plc alongside those of otherclients. On completion of the sale of FTE Automotive, HgCapital Trust plc, a quotedinvestment trust that participates in all HgCapital's investments, will realisea total of £14.2 million, an uplift of £7.1 million against the 31 December 2004book value. The estimated impact of the realisation on the net asset value ofHgCapital Trust plc would be 28p per share. HgCapital to sell FTE Automotive to PAI Partners for €370 million • Two and a half-year investment to generate an equity multiple of 3.7, capital profit of €145 million and IRR of 90% HgCapital, a leading European private equity group, announces an agreement forthe sale of FTE Automotive ("FTE"), the world's largest manufacturer ofautomotive clutch and brake actuation systems, to PAI Partners, the Paris-basedprivate equity firm, for €370 million (£255 million). The transaction, which is conditional upon the approval of competitionauthorities in certain jurisdictions, is expected to close in the second quarterof 2005. HgCapital acquired FTE for €180 million in December 2002. The firm thenrecruited a new management team for FTE, which set about strengthening thecompany's world leadership in this significant automotive component sector.Investments in China and Brazil were followed by the acquisitions of AutomotiveProducts Inc (US) in December 2003 and the drum brake business of VAP (Slovakia)in May 2004. Turnover in the first two full years of HgCapital's ownership rose by 30% from€286 million to €370 million, with earnings before interest, tax, depreciationand amortisation also increasing significantly. In September 2004 HgCapital recapitalised FTE, recouping 1.7 times its originalinvestment whilst increasing its overall stake in the group. Completion of thesale to PAI Partners will generate a total capital profit of €145m, 3.7xoriginal cost, and an IRR of 90%. Trevor Bayley, a Partner of HgCapital in Germany, commented: "FTE is a good example of the value which private equity can bring to the Germaneconomy. Under our ownership FTE developed from a domestically-focused,high-quality automotive supplier to a true global player serving the needs ofits OEM customer base around the world. The new management team, led by WolfgangBruns, has strengthened the company's commercial focus, growing revenues aheadof the market and investing heavily in new technologies. We are delighted tofind in PAI a new owner, which has strong automotive connections and theresources to take the company to the next level. We wish PAI continued successwith the development of FTE. "Our initial investment in FTE was completed at a time when a number of ourcompetitors were closing their German operations. The success of the FTEinvestment provides just rewards to those investors who have supported us in theexpansion of our German business over the last six years." Craig Donaldson, a London based partner of HgCapital, said: "This transaction demonstrates the substantial rewards available in privateequity for those firms equipped and minded to work for them. "This transaction, our seventh realization event in the last 12 months, furthervalidates the private equity model we have worked so hard to develop since ourspin-out from Merrill Lynch in 2000. In increasingly competitive markets whichrequire deeper industry knowledge, HgCapital seeks to drive investment returnsin mid-market private equity through dedicated sector investment teams, apro-active approach to portfolio management, and the application of significanthuman resources to its investments." Enquiries: HgCapital Trevor Bayley +49 (0)69 2470 3710Craig Donaldson +44 (0)20 7089 7922 Maitland Neil Bennett (UK media) +44 (0)20 7379 5151David Sturken (German media) This information is provided by RNS The company news service from the London Stock Exchange