3i reaps 2.6x return from Canadian exit

The $967m sale of plastic equipment maker Mold-Masters has delivered a good exit for the UK-listed firm, after a subdued 2012 – and it hopes there are more to come.

London-listed 3i has sold Mold-Masters, a Canadian manufacturer of melt delivery and control systems, to CCMP Capital Advisors-backed Milacron for CAD$975 million (€720 million; $967 million). 

The proceeds of CAD$347 million, a 90 percent increase on the company’s March 2012 opening value, will deliver a 2.1x return on 3i’s investment. Converted into British pounds, that equates to a multiple of 2.6x. 

Georgetown-based Mold-Masters manufactures hot-runners systems, temperature controllers and auxiliary equipment. Founded in 1963, it has production facilities in North America, South America, Europe, India and China, as well as a sales and service network spanning 70 countries. 

3i first invested in the company in 2007. The firm then internationalised Mold-Masters’ operations, supporting organic growth in Asia, Europe and South America, said Ken Hanau, managing partner at 3i. The company’s annual revenues grew from CAD$168 million to CAD$271 million between 2009 and 2012, amounting to a compound annual growth rate of 17 percent. 

The transaction, expected to close by April 2013, is still subject to regulatory approval. It concludes an auction process initiated in late 2012, which involved both private equity and trade buyers.

This exit comes shortly after 3i revealed mixed interim Q4 results. While the firm posted a 4.8 percent increase in NAV in the last quarter of last year, private equity realisations slowed to £210 million (€244 million, $328 million) in the nine months to 31st December 2012, down from £741 million the year before. 

The firm has gone through a drastic restructuring programme since Simon Borrows took over as new chief executive in June 2012, as part of which it cut its workforce by a third and closed or reduced operations at 11 offices last year. 

This progress in cost reduction and deleveraging will allow 3i to refocus on realisations and new investments in 2013, Borrows explained when announcing the Q4 results. “Over the last six months, in addition to implementing the re-organisation and cost reduction programme, we have been busy preparing for realisations within private equity. We expect to see the benefits of this coming through over the next 18 months, with a number of key realisations as well as an increasing level of investment activity.”

Mold-Masters was one of the first companies acquired by 3i in North America. It was entirely financed off the firm's balance sheet, Hanau said.