Hg Capital buys German clutch maker

Hg Capital has agreed to acquire the FTE brake and clutch product division of Ohio-based auto parts manufacturer Dana Corp, for an undisclosed sum.

(PrivateEquityCentral.net) Hg Capital, the private equity firm with offices London and Frankfurt, has agreed to acquire the FTE brake and clutch product division of US-based auto parts manufacturer Dana Corp.

Terms of the deal were not disclosed, according to a press release. Debt financing was arranged by Barclays Capital.

FTE manufactures clutch and brake systems for most US and European automobile manufacturers. The company, based in Germany, has five manufacturing plants, 2,800 employees, and expects revenue of E280m this year.

“FTE has a long track record of product quality and innovation which is the envy of its peer group,” Trevor Bayley, a director at Hg Capital’s Frankfurt office, said in the statement. “The resulting platform wins and new product launches have enabled FTE to continue to grow sales even through recession.”

This is Dana Corp’s second asset sale to a private equity firm in the past month. Last month, the company sold four divisions to The Riverside Company. All four companies combined have sales of approximately $81m. Both sales are part of Dana's plans to sell non-strategic assets.

The deal is Hg Capital’s fourth investment in Germany since it opened the Frankfurt office in 1999. Hg Capital was advised by the PWC Corporate Finance team, comprising Chris Hemmings, Chris Thorne and Toby Harris.

In July, the firm acquired Castlebeck Care, a specialist provider of residential healthcare for adults with learning difficulties, from UK private equity firm 3i. 3i originally invested £5m in the company in 1998. In March, Hg Capital completed the sale of PII Group, an oil and gas pipeline integrity services and monitoring company, to GE Power Systems for £310m.

Hg Capital has also been linked with a possible joint £250m bid alongside UK-based leisure and gaming company Stanley Leisure for London Clubs International, the UK casino operator. Stanley plans to acquire the LCI’s flagship operations, including the London-based 50 St James casino, with Hg Capital taking on some of LCI's casinos to be run by former LCI chief Alan Goodenough.

Hg Capital has funds in excess of E1bn under management, and invests in companies with enterprise values of between E15m and E400m, committing a minimum of E5m to any one transaction in the business services, healthcare, information technology and media sectors. In addition, a leveraged buyout team invests in other industry sectors, in businesses with minimum enterprise values of E5m. The firm is in the process of raising its MUST 4 European fund, which has a target of E670m.