Graphite exits auto parts business

ABN AMRO Capital has agreed the secondary buyout of UK automotive refinish manufacturer U-POL from Graphite Capital.

ABN AMRO Capital, the private equity arm of Netherlands bank ABN AMRO, has agreed to acquire U-POL, a UK manufacturer of automotive refinish products, from London-based mid-market specialist Graphite Capital.

The transaction, which values the business at £75 million (€110 million; $131 million), will provide ABN AMRO Capital with a 71 percent stake in U-POL, with the remainder held by the management team, which will reinvest part of their sale proceeds, according to ABN AMRO Capital.

According to a source, Barclays Bank provided approximately £50 million in senior debt and mezzanine to finance the deal.

Graphite Capital led the management buyout of U-POL in 2002 for an undisclosed sum. The company has grown its turnover by 31 percent under Graphite Capital’s ownership, according to ABN AMRO Capital. Graphite Capital was not immediately available for comment.

Paul Southwell, head of ABN AMRO Capital’s UK buyout team, said that the equity used to fund the purchase of U-POL came from the bank’s balance sheet.

The primary motivation for the purchase was U-POL’s growth potential, added Southwell. “There is a good opportunity to grow this business, not just in the UK but also in its European operations. The management team have also been very good at producing a range of new products and have more ideas on how to grow the business in that direction too.”

Established in the mid-1950s, London-based U-POL produces fillers, coatings, aerosols and adhesives for the professional automotive repair market.

Including the U-POL transaction, ABN AMRO Capital has completed 14 European buyouts since the beginning of 2005, totalling an aggregate deal value of €2.8 billion. Previous investments in the automotive sector include automotive parts distributor FPS Distribution, which it sold to UK motor dealership Lookers for £31 million, generating a 5x return, in July 2004; and Dutch spray paint manufacturer MoTip, in which ABN AMRO Capital sold a 27 percent stake in January 2004.