(www.PrivateEquityCentral.net) London-based private equity firm Doughty Hanson has announced it agreed to sell Italian automotive fluid company FL Selenia to New York-based Vestar Capital Partners for E670m ($731m).
Doughty Hanson acquired the company in April 2000 from Italian motor company Fiat. The exit represents a 2.4 times return on the firm’s investment and an IRR of 30 per cent for the firm’s third fund.
Since Doughty Hanson acquired FL Selenia in 2000, the firm created a new management team and led acquisitions that added €130m in revenue. The company supplies lubricants and fluids such as anti-freeze to companies in the automotive and industrial sector. Brands include Selenia, HPX and Paraflu.
“We are delighted to have agreed to this transaction, which is one of the most significant private equity exits in Italy for a number of years,” Michele Russo, a partner in Doughty Hanson’s Milan office, said in the statement. “We are confident that FL Selenia will continue to prosper under its new ownership.”
Doughty Hanson completed two acquisitions in 2002, including the buyout of German car part business Auto-Teile-Unger Group. Also in June, the firm completed the acquisition of Priory Healthcare, the UK's largest independent provider of mental health and rehabilitation services, for £288m.
The exit comes at an opportune time for Doughty Hanson because it is currently raising capital for its fourth fund. The launch of the firm’s fourth fund, targeted at E3bn, was delayed last year by aborted exits at aircraft parts manufacturer Dunlop Standard and Danish wind turbine blade manufacturer LM Glasfiber. Rumors that the firm wanted to list food group RHM also came to naught.
The absence of substantive exits as well as the depressed state of the fundraising environment has prompted some to predict that the firm will have a tough job on its hands to close the new fund anywhere near its mooted target total.
Vestar Capital’s last major acquisition was in June 2002, when the firm acquired a majority stake in Agrilink Foods, a subsidiary of Pro-Fac Cooperative and the largest manufacturer and marketer of frozen vegetables in the US, via a $175m recapitalisation.
Vestar's investment strategy is targeted towards middle-market companies with valuations in the $200m to $2bn range. The firm currently has $4bn under management and has offices in New York City, Denver, Paris and Milan.