HSBC Private Equity has completed its first exit since re-launching in 2007, with the sale of Transmission & Distribution Group for an undisclosed amount. The deal represents an internal rate of return exceeding 40 percent.
The in-house private equity group backed the company's management buyout in January 2008, which was a deal sourced and debt financed by HSBC's corporate banking arm in Scotland.
“It's a great tick in the box for us in terms of business model,” said the group's head, managing director Mahmoud Atalla, who noted the firm tries to leverage its bank relationships to source and support deals. “Separately, it's always pleasing to have a good return” particularly when, in the current economic climate, many other firms aren't exiting investments at all, he said.
The company's subsidiary, Glasgow-based Diagnostic Monitoring Systems, supplies products that detect fault and breakdowns in electrical transmission and networks. It has offices in the UK, Sweden, the UAE, Australia and China, with a majority percentage of its client base in emerging markets in Asia and the Middle East.
HSBC supported an add-on acquisition, PD Tech Engineering, in May 2008.
HSBC Private Equity had been absent from the UK mid-market since 2003 when the prior captive group spun out to become Montagu Private Equity. Atalla rejoined HSBC from Montagu to lead the efforts.
HSBC Private Equity makes investments of £10 million to £50 million, mainly partnering with management teams and HSBC clients.