3i unearths 4x return with tractor sale

3i has quadrupled its money on Swedish agricultural equipment manufacturer Ålö after a lengthy eight-and-a-half-year ownership period.

UK-listed alternatives manager 3i  Group has sold Ålö, which makes loading equipment for tractors, to Nordic buyout firm Altor Equity Partners for SEK2.2 billion (€240 million). The sale has generated an approximate 4x return for 3i, it said in a statement.

3i acquired a 70 percent stake in Ålö in late 2002. In partnership with minority shareholder Balticgruppen and the company’s management team, 3i said it built the company into a market-leading manufacturer. This year, the company is expected to generate turnover of about SEK2 billion, which represents sales growth of 8 percent year since 3i’s original investment.

At eight and a half years, the holding period was significantly longer than 3i's typical three to five year norm. A spokesperson for 3i said it had backed “a very intensive investment programme”, which had taken “longer than anticipated” to implement.

Currently, Ålö has 25 percent of the world market for its products and is expected to sell a total of 34,000 loaders in 40 countries this year, 3i said.

3i oversaw investment in the company’s production facilities and expansion of its product range. Headquartered in Umeå, Sweden, it also has production facilities in China, the US and France.

Stelio Demark, chairman of Ålö, said: “3i’s financial strength and its international network have been vital to the comprehensive efficiency and internationalisation programmes we have undertaken in recent years.”