Electra Private Equity PLC ("Electra") is pleased to announce it has entered into a conditional agreement for the sale of its interest in Capital Safety Group (“CSG”) in a $565m secondary management buyout arranged by Candover Partners Limited.
On completion of the transaction, Electra will receive net proceeds of US$174m (circa £87m depending on exchange rate movements) for its investment in CSG, representing an uplift of circa £62.9m, or 260%, over the valuation of CSG at 30 September 2006. This would give rise to an increase in net asset value of 168p per share.
Completion of the transaction is conditional upon competition clearance. It is presently expected that competition clearance decisions will be made within 6 weeks.
In 1998 Electra led the £98.3m buyout of CSG. Under Electra’s ownership CSG has evolved from a business with a regional-based focus into an international business selling under two global brands, DBI-Sala and Protecta. Today the company is the world’s leading manufacturer of height safety equipment. Its products are used by workers across a number of sectors such as oil and gas, telecommunications and construction.
A refinancing was put in place in 2005, with Electra realising £58.3m from which it reinvested £12.75m in the equity and £5.65m in the mezzanine loan of a new holding company, Capital Safety Group II. Since 2005 the profitability of the business has grown considerably.
Based on anticipated net proceeds of £87m Electra will achieve a multiple of over 5 times its original investment with an IRR over 9 years of 23%.
David Symondson at Electra Partners commented: “The key aspect of this investment is the amount of time we have held it, backing the leadership of CSG’s CEO Paul Trinder over the long term. Because of our flexible structure we have not been obliged to sell the business within a pre-determined timescale. This has enabled us to benefit from strategic decisions implemented in the early years. CSG is now of a size whereby it will benefit from a change of shareholder as it looks to consolidate its position in the personal protection equipment market.”
Close Brothers acted as sole financial adviser to Electra.