London-based private equity firm Doughty Hanson has recapitalised Saft, a French designer and manufacturer of high-tech battery systems, in a deal led by Mizuho Bank that hands back €175 million to investors in Doughty's Fund IV.
Doughty Hanson originally invested €120 million in the €410 million buyout of Saft in January 2004. This means investors have already received back almost 1.5 times capital invested without any dilution in their holding. In a statement, Doughty Hanson said Saft had returned a gross IRR of 43 percent based on the refinancing alone.
Doughty Hanson closed its Fund IV in January 2005 on €1.6 billion, short of a revised €2 billion target after setting out initially to raise €3 billion. A source close to the firm said it could have exceeded the final total, but investors who had committed early insisted the vehicle be capped at that level. The Saft recap means that investors have already received back more than ten percent of total fund commitments.
The deal undoubtedly reflects the current thirst for yield in the leveraged finance market. Saft now has a post-transaction debt multiple of around 4.5 times.
“Saft is a cash-generative business and we have used much of the cash to re-invest in the business and help it expand further,” said Yann Duchesne, managing director of Doughty Hanson in France. “We have recently announced the establishment of a plant in China to continue this growth.” During 2004, Saft achieved like-for-like EBITDA growth of 16.6 percent.
Saft was the first investment made by Doughty Hanson’s Paris office, which was launched in January 2003. In June 2004, the office completed its second and most recent deal when acquiring Belgian carpet and rug manufacturer Balta Industries for €600 million.
Fund IV has completed four deals so far. As well as Saft and Balta, it has acquired Tumi, a New York-based luggage company, and ATU, a German car parts and service provider.