3i Group will acquire German automotive testing company GIF in a deal valued at €100 million.
The firm will invest €77 million alongside GIF co-founder Ulrich Rohs, who is investing €23 million for a minority stake in the company. 3i will make the investment from its balance sheet, as the firm cannot invest from its funds, which are all past their investment deadlines. The firm may syndicate out part of the all equity deal to co-investors.
GIF provides transmission testing for automotive equipment manufacturers and has operations in Germany, China, Japan, and North America. 3i is attracted to the sector in part due to stricter global emissions regulations and projected growth in China related to the increasing number of newly registered vehicles.
In a statement, 3i chief executive Simon Borrows praised GIF’s “strong international footprint which operates across two sectors where we have extensive experience and a strong track record; testing and inspection and automotive”.
The deal marks 3i’s first European investment in nearly 18 months. The firm invested approximately €100 million in Geka, a German cosmetics packaging business, in February 2012.
During a conference call in May following the publication of 3i’s annual results, Borrows attributed the firm’s lack of deal flow down to “a quiet M&A market”.
“In recent months, we came close to two transactions in Europe. In both cases the prices got pretty fruity, and we decided we would pass,” he said at the time.
“The number and quality of potential investments is growing, but pricing is still an issue in Europe; there are lots of people with cash in private equity and lots of corporates with cash.”