Mitsubishi affiliate in UK buyout

Red Diamond Capital, the New York-based affiliate of Mitsubishi, has backed the management-led buyout of UK-based Avon Rubber’s automotive division with £63m.

Red Diamond Capital, an independent private equity partner of Mitsubishi Corporation formed in 2002, has led a management-led buyout of Avon Rubber’s automotive group. The purchase price is £63 million ($119 million).

Avon Automotive makes low-pressure hoses for air-induction, fuel and coolant systems, as well as vibration-management products. The division serves the automotive, heavy truck, small engine and recreational vehicle industries.

The buyout, which is expected to be completed within three weeks, will separate the Cadillac, Michigan-based unit from the rest of the Avon Rubber company, based in Melksham, Wiltshire.

Red Diamond has made one other rubber investment, Hi-Tech Group Companies, an Anaheim, California-based company involved in the molding of precision elastometic components. Red Diamond acquired Hi-Tech in March 2004 in a joint venture with Los Angeles-based Century Park Capital Partners.

Red Diamond managing director Mark Kammert says the firm plans to use Mitsubishi’s connections with car manufacturers to expand the rubber companies in its growing portfolio.

“We use the resources of the Mitsubishi network to benefit the companies we make investments in,” he said. “We’ve been looking at investing in automotive rubber suppliers for awhile,”

Avon Automotive has more than 3,500 employees and has annual revenue of approximately $349 million. The company has moved operations to several low-cost countries and today operates 12 manufacturing facilities in the US, UK, Mexico, France, Spain, Portugal, the Czech Republic, India and Turkey.