3i makes 2.1x on Hilite exit

Private equity firm 3i has made a 2.1x return on its investment in automotive engine and transmission component supplier Hilite International, after expanding the business heavily in China, according to a statement.

3i, which invested in the company in 2011, has now sold the business to a subsidiary of the Aviation Industry Corporation of China (AVIC), AVIC Electromechanical Systems, one of the largest industrial conglomerates in China, according to the firm.

AVIC acquired the business for about £384 million ($643 million; €473 million), which in sterling terms represents a 2.1x money multiple on its original investment of €190 million (£172 million).

Proceeds to 3i from the transaction will be £155 million, representing a 32 percent premium over the £117 million the stake was valued at on 31 December 2013 and a 17 percent premium over its value of £133 million on 31 March 2014.

During its ownership, 3i refocused Hilite’s strategy on its core business of highly-engineered products, investing over €100 million in research, development and capital expenditure.

The firm also used 3i’s global network to accelerate its expansion into China, which is the fastest growing automotive market in the world, according to the firm. Prior to the investment, Hilite had limited exposure to the Chinese market, however in 2014, China is expected to contribute more than 15 percent to total sales.

“We identified Hilite’s potential long before we invested in the company in 2011 as it offered highly differentiated technology in the industry’s fastest growing subsector: components for fuel efficiency and emissions reduction,” Ulf von Haacke, 3i managing director, commented.

“Over the last three years, we have supported the management of Hilite in refocusing the company, fostering its technological leadership and expanding its geographic reach through 3i’s international network to drive sustainable, above-market and profitable growth.”

Karl Hammer, Hilite chief executive, added, “3i has supported us through a vital phase in our development. We are now a more focused company with global presence, particularly in the important China market. In AVICEM we have an ideal new shareholder who will help us capitalise on our strengths and position in China and other markets around the globe.”