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3i increases its stake in AES Engineering to 40 per cent

3i has made a further investment in AES Engineering, the holding company of the AESseal Group, bringing to 40 per cent its equity stake in a business in which it first invested in 1996 and

3i has made a further investment in AES Engineering, the holding company of the AESseal Group, bringing to 40 per cent its equity stake in a business in which it first invested in 1996 and valuing the group at GBP100m. Founder and chief executive Chris Rea will retain a majority interest and control of the business.

The new funding will allow AES, which was founded in 1979 and a leader in the mechanical sealing industry, to continue its growth and consider acquisition opportunities worldwide. Over the past 25 years, the business has achieved an unbroken track record of turnover and profit growth.

Coinciding with 3i’s fresh investment, non-executive director Hamdi Conger will become chairman of AES and Richard Bishop of 3i will join the board as a non-executive director, while former UK Conservative Party leader William Hague remains a non-executive director. Neil MacDonald, previously finance director at engineering group Firth Rixson, has joined AES in the same role.

‘AES is a world-class business with a fantastic track record of profitable growth, an entrepreneurial leader supported by a strong team, and international growth prospects,’ says 3i’s Gordon Hague.’ I’m delighted that 3i is able to provide significant further investment to help the company achieve its growth potential.’

Adds Rea: ‘3i has been a fantastic partner, so the board of AES is extremely happy that it will help us with the next stage of our development.’

3i was advised by Yunus Seedat of Addleshaw Goddard of Leeds and due diligence was carried out by PricewaterhouseCoopers, while the AES management was advised by Deloitte Corporate Finance and by Kevin Cunningham of Irwin Mitchell.

Martin Jenkins, corporate finance partner at Deloitte, says: ‘AES has developed from a start-up 25 years ago to a business operating from more than 60 sites in 30 countries and is now the fourth largest mechanical seals company in the world with exports to 83 countries.’

Private equity and venture capital investor 3i focuses on buy-outs, growth capital, venture capital, infrastructure and quoted private equity investments in Europe, the US and Asia, typically investing between EUR10m and EUR250m to help businesses grow, restructure shareholdings, release equity or change the balance of equity to debt. 3i Growth Capital is the world’s largest growth capital fund, investing over EUR1bn every year in businesses in Europe, Asia and the US.

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