Polaris Private Equity, a Scandinavian-focused mid-market firm, has acquired HTC Sweden from London-listed 3i Group and the company’s founding partners.
Polaris bought a 60 percent stake in HTC, a floor grinding system manufacturer, from the founders and a 36.5 percent stake from 3i. It is understood that 3i sold its stake for approximately £40 million (€47 million, $61 million).
Both firms declined to comment on the financial details of the transaction.
The deal came after Polaris held exclusive talks with the company and 3i for the last two months, Peter Ankerst, a partner at Polaris, told Private Equity International.
The firm used its third fund, Polaris Private Equity III, a €365 million 2009 vintage, for the transaction, which had a 50-50 debt-equity component, Ankerst said. Following the investment, Polaris Private Equity III is now just over 50 percent deployed, having invested in 11 companies.
The company is not particularly affected by the economic downturn, as it has an exposure to a broad customer base in many different parts of the world
3i, which acquired HTC Sweden in August 2006, supported the company’s international expansion in Germany, France and the UK. Between 2006 and 2012, HTC more than doubled its revenues and profits. In 2012, revenues grew by 10 percent to SEK 370 million (€43 million, $56 million) and EBITDA grew to SEK 55 million, a 36 percent increase, the firm said in a statement.
Polaris, which typically invests in companies with a turnover of €25 million to €200 million, plans to continue the company’s international expansion strategy. “One third of sales are coming from the US and this is a very attractive market with good growth prospects. We will also continue to focus on the UK, France and Scandinavia and we see good opportunities in emerging markets like Brazil and China,” Ankerst said.
Although the company is dependent on the subdued construction market, it has good growth prospects, according to Polaris. “The company is not particularly affected by the economic downturn, as it has an exposure to a broad customer base in many different parts of the world. All the big [supermarket] retail chains like Sainsbury’s and Asda use HTC’s product to get their shop floors shiny. A clear floor is very much linked to sales. The more gloss you have, the more you sell.” On the back of its success in the UK, the company is now entering into China, he added.
3i didn’t disclose its return multiple, but pointed out that the proceeds of approximately £12 million represent a 119 percent uplift over the March 2012 value of £6 million and a 47 percent uplift over December 2012 value of £8 million.
It is 3i’s seventh divestment so far this year. Last week it generated a 2.1x return when it sold IT provider Civica to OMERS Private Equity. In March, it generated another 2.1x return when it sold its 22.8 percent stake in insurance intermediary group Hyperion to General Atlantic. A few weeks earlier, it sold UK restaurant chain Giraffe to Tesco for £48.6 million. In February, it generated a 2.6x return on the CAD$975 million (€751 million, $960 million) sale of Canadian manufacturer Mold-Masters and it sold Enterprise, a UK provider of infrastructure related services, to Spanish infrastructure group Ferrovial for £385 million. The firm also divested German engineering business Norma Group in January, which reportedly netted a 5.5x return.