European private equity firm Star Capital Partners has acquired 72 percent of GWE, an independent energy services provider from a group of investors led by London-headquartered 3i. Financial details of the transaction were not disclosed.
Headquartered in Peine, Germany, GWE specialises in providing heat, cooling and power (CHP energy) within the German distributed energy sector. With 50 employees, the company manages a portfolio of 12 CHP generation plants and generates approximately €30 million ($36 million) of revenues.
Following completion of the deal, Star will hold a 72 percent stake in the company, with incumbent management and other existing shareholders, excluding 3i, investing in the new ownership structure to acquire the remaining 28 percent.
Going forward, GWE will be led by incumbent CEO Karl-Ekkehard Sester, who founded GWE and Karl-Heinz Stupperich, the former CEO of Alstom Germany, will become the new chairman.
Star’s investment was made from its first Star Fund, which closed in May 2002 on €581 million. The fund was set up to invest in capital assets and capital-intensive businesses in transportation, energy, oil & gas and telecommunications.
Commenting on the transaction in a statement, Paul Gough, a director of Star, said: “Star’s acquisition of GWE reflects our strategy to provide outsourced financing solutions for a company’s non-core and capital-intensive activities.”
Previous deals by the firm include the joint acquisition with 3i of SR Technics, the aircraft maintenance unit of SAirGroup, the Swiss airline that went into administration in 2002. The €425 million transaction was the largest MBO in the transport and logistics sector in 2002.
Star Fund is described as a low-risk capital outsourcing fund. The firm aims to acquire underexploited capital sitting on a vendor's balance sheet, leverage the asset and build an independent business around it. The vendor will typically retain a stake in the business. The strategy is explicitly risk-averse. Star expects to generate an internal rate of return for investors of around 20 per cent.