HgCapital acquires German tech firm

The London, Amsterdam and Frankfurt-based mid-market buyout investor has agreed its third deal in Germany in 2005.

European mid-market private equity firm HgCapital has agreed to acquire German measuring and processing technology solutions provider Schenk Measuring and Process Technologies (Schenk MPT) from Dürr for €205 million ($246 million).

The management of Schenk MPT will take a minority stake in the transaction, which is expected to complete by the end of the year.

Schwalber: Looking to raise new funds within the next year

Philipp Schwalber, associate director in HgCapital’s Frankfurt office, told PEO that the investment had been made from HgCapital’s fourth fund, MUST 4, which was raised in 2001. He added that around 70 percent of the financing facility supporting the deal was comprised of debt.

Funding for the deal was arranged and underwritten by Mizuho Corporate Bank. Metzler, Lovells, PwC and LEK acted as advisors to HgCapital.

Following completion of the purchase, MUST 4 will be roughly 70 percent invested, said Schwalber, and the company will be looking to raise a new fund within the next year.

Schenk MPT is HgCapital’s third acquisition in Germany in 2005, following the €78 million management buyout of Addison Software in June, and the acquisition of frozen food firm Hofmann-Menü Group for an undisclosed sum in October. The combined value of the three transactions totals more than €400 million, according to HgCapital.

“Although deal flow is average, Germany has been a very good market for us,” said Schwalber, “especially in the industrial sector, where Germany’s traditional strength lies.”

Schwalber added that Schenk MPT’s growth opportunities had been a major factor in the acquisition. “They have very high quality products, but also a very widespread international customer base, with a number in China, India and Eastern Europe. There is a real growth story here.”

Schenk MPT develops, manufactures, assembles, markets and sells solutions, products, systems and turnkey systems in industrial weighing, feeding and automation. The company is part of Carl Schenk, a fully-owned subsidiary of Dürr, with headquarters in Darmstadt, Germany, and operations in over 40 countries and 11 assembly facilities globally.

In 2005, Schenck MPT estimates sales of approximately €225 million, of which more than 40 percent are generated in China, India, South America and Eastern Europe.