The Carlyle Group has closed its second European technology fund, Carlyle Europe Technology Partners II, at EUR530m, beating its initial target of EUR500m, and the new fund has completed i
The Carlyle Group has closed its second European technology fund, Carlyle Europe Technology Partners II, at EUR530m, beating its initial target of EUR500m, and the new fund has completed its first acquisition in Gardner Group, a Nuneaton, UK-headquartered supplier of metallic aerostructure details, equipment and engine components to the aviation industry.
Carlyle now manages EUR15.4bn in 17 dedicated European funds invested in corporate private equity, real estate and other alternative investments. The identification and development of assets will be undertaken by Carlyle’s technology team of 11 investment professionals drawn from seven European nationalities.
The new fund builds on the team’s five-year track record, with EUR458m invested in 18 acquisitions since 2003 including Inmedia, Personal & Infomatik, Cameca, NP Aerospace, bigmouthmedia, Transics and Mill Digital Media.
Carlyle Europe Technology Partners II will invest between EUR20 and EUR60m in small- and mid-cap buyouts and expansion capital, focusing on technology companies operating in Carlyle’s core sectors of aerospace and defence, automotive and transportation, business services, consumer and retail, energy and power, financial services, healthcare, industrial, infrastructure and telecommunications and media.
‘The close of CETP II demonstrates that investors remain confident in the outlook for established small- and medium-sized technology companies across Europe,’ says David FitzGerald, a managing director and head of Carlyle Europe Technology Partners. ‘It will target unique businesses that have the potential to become global leaders. Carlyle offers those businesses a compelling combination of deep, local expertise and insight, partnered with extensive geographic coverage and experience.
‘CETP’s returns are based on value creation; we are able to be flexible in the development of capital structures, which is essential when working with growing businesses. We believe this gives us a distinct advantage in today’s challenging financing conditions. During these difficult times, we have the capacity to support the ambitions of entrepreneurial businesses that will benefit from the resources of a globally diversified investor.
‘The successful closing of CETP II is a great endorsement of the strategy we have refined over the past five years. Investors have enjoyed excellent returns from a variety of exits over a relatively short period. We are very excited about the prospects for the new fund and the completion of its first acquisition, Gardner Group.’
Financial terms of the acquisition of Gardner from UK mid-market private equity house Dunedin and Rolls-Royce were not disclosed. GE and HSBC provided debt financing, while Carlyle’s advisors included KPMG, Latham & Watkins and CSP Associates.
Gardner Group, which has revenues exceeding USD100m, produces a wide range of machined and fabricated components for airframes and aircraft engines, ranging from small detail parts to full-length aircraft wing skins and complex jet engine casings. It also provides aerospace component repair services and fast-turnaround ‘late definition’ services, and manufactures transmission components for truck gearboxes.
Its customer base in the civil and military sectors includes Airbus, BAe Systems, Boeing, Bombardier, GKN, Rolls-Royce and Vought. With seven sites throughout the UK and in Poland, Gardner employs more than 800 people.
‘In recent years, Gardner has grown into one of Europe’s most important aerostructure manufacturers, with a market leading position in the supply of metallic details to a blue-chip aviation client base,’ says president and chief executive Patrick Grady.
‘The Carlyle Group is one of the world’s most experienced aerospace investors, and with its financial backing and industry expertise, we will solidify our leadership position and prepare for the next phase of growth in line with the expanding aviation market.’ Carlyle’s existing aerospace investments include Aerostructures Corporation, Sequa Corporation, Vought Aircraft Industries and Wesco Holding.
Adds FitzGerald: ‘Our confidence in the long-term prospects of the components and equipment segments of the aerospace industry is underpinned by the strong backlog of orders for strategic commercial aircraft platforms. With embedded positions on these platforms, Gardner Group is poised to grow despite the challenging environment we are currently observing at the operator end of the supply chain.’
Commenting Nicol Fraser, a director of Dunedin who was on the board of Gardner Group, says: ‘Gardner has established itself as a centre of manufacturing excellence for the aviation industry and has become a truly global player. Dunedin invested in Gardner in 2003 for GBP16m and brought in Rolls-Royce as a [minority] investor in 2005. Since our ownership it has seen a dramatic growth in profit. The business is now in a position to benefit from further industry consolidation.’
Dunedin, an independent private equity house with offices in Edinburgh and London, provides equity finance for management buyouts and management buy-ins with a transaction size of between GBP10m and GBP75m. It also manages the quoted Dunedin Enterprise Investment Trust.
The firm invests in established companies in the construction and building materials, consumer products and services, financial services, healthcare, leisure, specialist manufacturing and support services sectors. Its recent investments include Capula, Fernau Avionics and Gissings Advisory Services, while exits have included Letts Filofax, Caledonian Building Systems, Celtic Inns, Travel & General Insurance, Portman Travel, Zenith Vehicle Contracts and Buildspan.
The Carlyle Group is a global private equity firm with USD89.3bn in assets under management committed to 64 funds as of the end of June in buyouts, venture and growth capital, real estate and leveraged finance investments.
Since 1987, the firm has invested USD49.2bn of equity in 836 transactions for an aggregate purchase price of USD218bn. Carlyle employs more than 900 people in 21 countries, while its portfolio companies have more than USD109bn in revenues and employ more than 415,000 people worldwide.
