London based private equity investor Candover has sold its investment in Baxi Group, the European heating company, to BC Partners as part of a refinancing that values the business at £662.5 million ($1.205 billion; €956 million).
Under the deal, co-owner Electra Partners Europe will retain a minority stake in the business. Kidde Plc, which also owned a stake in Baxi, has agreed to sell to BC Partners.
Candover has now fully realised its investment in Baxi, reporting a return of just under two times its original investment.
Electra said the immediate proceeds from the transaction were estimated at £97 million in cash. The total gross aggregate proceeds on completion attributable to Electra and the other funds managed by Electra Partners Europe amount to £120 million.
Candover and Electra first backed a £360 million buyout of 15 businesses from Williams Holdings plc to create an entity called Newmond in 1996. In 2000, both firms backed Newmond’s acquisition of Baxi Holdings to create Baxi Group, one of the leading operators in the European heating and home comforts markets.
Kidde acquired its 25 percent stake in Baxi following the former’s demerger from Williams plc in 2000. Kidde reported proceeds of £87 million from the sale.
In total, Candover invested £49 million of equity in Baxi. The London-based firm said that Baxi was the last holding in the Candover 1991 and 1994 Fund portfolios, both of which are now effectively fully realised.
Electra’s initial investment in Newmond has not been disclosed, although the firm invested £25m into the business at the time of the merger with Baxi in 2000, becoming the leading shareholder in the merged group with a 28 percent holding.
Electra will reinvest £15 million to maintain what it described as “a significant shareholding in the business going forward.”
BC Partners beat off competition from a group of trade and financial buyers in an auction coordinated by Merrill Lynch. Bidders for the business included Bain Capital and The Carlyle Group as well as trade companies Merloni and Termo Sanitari.
New bank finance has been arranged and provided by The Royal Bank of Scotland, currently one of the leading lenders to the group. BC Partners was advised by ABN Amro.
Baxi Group produces equipment such as energy efficient central heating boilers, hot water heating and storage units, space heaters, radiators, showers, and air management systems, which are used to provide homes, workplaces and public buildings with warmth, hot water supplies and clean, fresh air.
The Group has manufacturing operations in the UK, Italy, France, Germany, Denmark and the Netherlands and employs over 5,500 people throughout Europe with a turnover of €1 billion and an operating profit of £54m.