Stirling Square cashes in from GDT sale

Bridgepoint has won the $343 million auction for GDT, an aerospace component maker, generating a big return for previous owner Stirling Square Capital Partners.

Stirling Square Capital Partners, a UK-based mid-market buyout firm, has made a return of almost six times its investment in aerospace component supplier Global Design Technologies, after selling the business to Bridgepoint for $343 million (€255 million).

Stirling Square created GDT in 2005, when it paid $125 million to buy and merge two companies in the sector, US-based Deutsch Metal Component and Permaswage of France. It has since been able to boost revenues from $61 million in 2003 to $93 million in 2006 and increase employee numbers by more than 40 percent to about 630 people.

Bridgepoint beat both private equity and trade players to win the business at auction, which was run by Lazard and corporate finance boutique Steen Associates. The price paid represents a return of almost six times Stirling Square’s initial investment, according to an investor familiar with the firm.

GDT makes “swaged permanent coupling systems”, components that are used to connect different types of tubing. The couplings are used primarily in aircraft manufacture by groups like Airbus and Boeing, but under Stirling Square’s ownership the company has developed a lucrative new market serving US power stations – four of the five biggest utilities in the US now use GDT components. The company has also developed additional revenue streams through maintenance and training contracts.

Bridgepoint believes GDT’s core markets will continue to grow. The buyout firm suggested that the aerospace components market is likely to grow at about 9 percent per annum in the next three years, while the power station market could grow even faster, at about 15 percent per annum.

Bridgepoint’s first move on completion of the deal will be to appoint a new chief executive. Ahmad Diba, previously managing director of the firm’s French operations, will take over from Angelo Farro.

Stirling Square was founded in 2002 with a cornerstone investment from Citigroup. The UK-based firm, which is currently investing a $280 million fund focused on the European mid-market, has since completed ten acquisitions. Partner Martin Calderbank said GDT was a good example of his firm’s focus on internationalising companies with mainly domestic experience, a template it has followed with a number of its other deals.

Another example came in the the firm’s first deal in August 2003, its acquisition of Schoeller Wavin Systems, a Dutch packaging business. It combined the business with Arca in February 2005 to create a global leader in Schoeller Arca Systems.