Warburg buys Caradon in £227m secondary

Global buyout firm Warburg Pincus has acquired the heading products company and announced the hire of Rajiv Ghatalia as managing director in the Hong Kong office.

Warburg Pincus has acquired pan-European heating group Caradon Plumbing from a consortium led by European mid-market firm Montagu Private Equity in a deal valued at £227 million ($430 million; €334 million). The terms of the transaction were not disclosed.

Caradon sells domestic heating products to the European market under brands including Ideal Boilers, Stelrad Radiators, Henrad and Termo Teknik. The company is headquartered in Newcastle-upon-Tyne, UK, and last year had sales of £243 million.

Montagu Private Equity, then operating under the name HSBC Private Equity, acquired Caradon in October 2000 in a deal worth £496 million. The firm has since divested the company’s bathroom and shower subsidiaries.

A spokesman for the firm told PEO that Warburg Pincus had been attracted to the company by the combination of a strong and committed management team, a proven track record, and a favourable position in the UK boiler market due to the current shift towards high efficiency products.

The firm plans to keep the existing management team in place, and hopes to benefit from the ongoing consolidation of the sector.

Debt financing was underwritten by Royal Bank of Scotland and BNP Paribas. Ernst and Young advised the sellers, and Merrill Lynch and Clifford Chance the buyers.

Warburg Pincus has also announced the hire of Rajiv Ghatalia as managing director in the firm’s Hong Kong office.

Ghatalia comes to Warburg Pincus from Goldman Sachs, where he was a partner and co-head of investment banking, Asia Pacific (excluding Japan) and a member of Goldman Sachs’ Asia Management Committee.

He first joined Goldman Sachs in 1994 in New York, and relocated to Hong Kong in 1995 to commence a career in Asia. Ghatalia headed Goldman Sachs’ Asian convertible business in the Equity Capital Markets division before moving to investment banking in 1998 where he led the effort to build the leading financial institution’s banking franchise in Asia.