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3i invests in products testing company

The firm has acquired product testing business DTL, bringing 3i’s fifth European fund to 83% invested. The sector has attracted growing interest from private equity firms in recent years.

3i Group has purchased product qualification testing business Detroit Testing Laboratory and merged it with existing portfolio company SMT, rebranding the consolidated business as Element Materials Technology. Financial details were not disclosed.

DTL is a more than 100-year old automotive and aerospace product testing company with clients including General Motors, Ford and Continental. Netherlands-headquartered SMT provides tests materials in the aerospace & defense, oil & gas, power and transportation sectors.

In 2007, DTL opened the first hybrid and electric vehicle battery testing lab in Detroit, according to the company. The business continues to focus on emerging technologies that benefit US businesses and consumers.

“One of the sectors we spend a lot of time on is the testing and inspection space globally,” 3i managing director Andrew Olinick told Private Equity International. “More of [DTL’s] business today is in the automotive sector. That is an area in which we weren’t as strong, and we’ve been looking to build out in that sector.”

3i invested in DTL from its €5 billion fifth European fund, which is now 83 percent invested.

3i purchased SMT in January, adding to its list of businesses in the testing and inspection space, such as ESG, a UK-based environmental and food testing company; Labco, a European network of healthcare diagnostic centres; and Carso, a french testing business for the food, environmental and residential sectors.

“There is still an increase in outsourced testing around the world, driven by longer supply chains and increases in regulation,” Olinick said. “It’s a newish sector for private equity. Private equity started to get interested in probably the last five to seven years.”

In 2007, The Carlyle Group purchased Spanish testing and certification business Applus for an enterprise value of €1.48 billion.