Doughty makes 3.5x money on ATU sale

Following last month’s aborted IPO, Doughty Hanson has agreed to sell German automotive operator Auto-Teile-Unger to Kohlberg Kravis Roberts for $1.75 billion, returning $850 million to its fund.

Global private equity house Kohlberg Kravis Roberts (KKR) has entered into a definitive agreement to buy 100 percent of the issued share capital of Auto-Teile-Unger (ATU) for $1.75 billion (€1.45 billion). The German operator of automotive parts stores and repair shops is majority owned by pan-European private equity firm Doughty Hanson.

London-headquartered Doughty Hanson acquired a 72 percent equity stake in ATU in July 2002 for $250 million. The sale to KKR will return approximately $850 million, or 3.5x investment according to a source close to the firm. Another source familiar with the situation said the firm would achieve a near 90 percent IRR from the disposal, adding that proceeds from the deal would enable it to return to investors close to 40 percent of the €2.2 billion of capital drawn from Fund III to date.

The deal was led for Doughty Hanson by German-based senior principal Claus Felder. Johannes Huth acted for KKR.

Doughty Hanson had been running the disposal as a dual-track process to ensure a competitive sales situation, but last month the firm pulled the planned IPO of ATU scheduled for June 16th, citing adverse market conditions.

Commenting on the transaction in a statement, Huth said: “We are delighted to acquire this well managed, innovative market leader. With the recent IPO of Wincor Nixdorf we have shown that we can well prepare high growth, market leading firms for a successful IPO.”

KKR floated Wincor Nixdorf, the Germany-based cash machine maker, in May on the Frankfurt stock exchange in a €327 million IPO which priced the shares at the bottom of the proposed range.

The transaction comes at a busy time for Doughty. Last month the firm received £42 million from its partial exit via IPO of Umbro, the UK sportswear maker. The firm is also preparing another portfolio company, Dunlop Standard Aerospace, for sale. US buyout firm The Carlyle Group and British engineering company Meggitt Plc are reportedly close to finalising a deal for the company in the region of £800 million.

Doughty Hanson is currently in the process of raising a new €3 billion buyout fund, which held a first close on €700 million last year.