Sun pours on realisations with exit to Carlyle

The turnaround firm has exited its seventh investment of 2012 by selling engine manufacturing company Walbro Engine Management.

Sun Capital Partners will sell engine component maker Walbro Engine Management to The Carlyle Group for an undisclosed sum.

Arizona-based Walbro manufactures air and fuel management and ignition systems for non-automotive engines. Sun invested in the company in 2007 using capital from its $1.5 billion fourth fund. Following the acquisition, Sun and Walbro invested more than $35 million to develop new technologies for fuel tanks and engine management products to adapt to heightened emission regulations from the Environmental Protection Agency.

“Through investments we were able to expand the company’s multi-layer tank manufacturing capabilities to meet more stringent EPA standards,” vice president at Sun Jeff Magny told Private Equity International. “Primarily in Asia, governments are increasingly moving toward tighter emissions standards.”

Part of what makes Walbro continue to be attractive is the company's strong growth prospects in both domestic and US markets, Magny added.

engines

The exit marks Sun’s seventh realisation of 2012 and fourth sale to a private equity firm. This year, the firm has sold auto parts businesses ThermaSys and Raybestos to Wellspring Capital Management and Monomoy Capital Partners, respectively. Sun also sold specialty chemicals company Sonneborn to One Equity Partners in April, generating a 20x return multiple.

While Sun has sold more businesses to private equity firms than strategic buyers this year, corporates that have been hoarding cash in the wake of the financial crisis are increasingly competing with private equity firms for deals.

Sun’s steady flow of exits this year is more a result of happenstance than strategic planning, according to Magny, but on the acquisitions side the firm aims to make between 25 and 35 investments per year.

“We are on pace to achieving that in 2012,” Magny said.
 
Carlyle is investing in Walbro using equity from its Carlyle Japan Partners II fund, a 2006 vintage that collected ¥216 billion (€2.2 billion; $2.7 billion). Earlier this month, the firm raised at least $2.86 billion for its sixth Partners fund, according to documents filed with the US Securities and Exchange Commission. Carlyle is said to be targeting around $10 billion for the fund.