European buyout firm HgCapital has completed a take-private of SLV Group, a German-listed lighting company with a market capitalisation of €320 million ($442 million), and immediately set its sights on re-listing the company in three years’ time.
Owner and managing director Franko Neumetzler will keep a 19 percent stake, while Detlef Harms and Toni Stumpf, the two other members of SLV’s senior management team, will also retain their roles and their shares in the company.
SLV sells lighting systems for use inside and outside homes and shops, and in funfair construction. In 2006, it had sales of €73 million, up 65 percent from 2004, with earnings of €25 million. It is predicting a further increase in revenues to about €90 million this year, and expects to hit almost €150 million by 2010.
Neumetzler, who has run the company for nearly 30 years, will gradually be withdrawing from day-to-day management to take up an advisory role. He said: “I am 56 years old and my son is seven years old and I do not want to predict what he will do in 20 years time. This deal is the perfect solution, with HgCapital paying a very good price. I will help Hg in its plans to take the company public in around 2010.”
Neumetzler’s decision to resolve succession issues with a sale to private equity is slowly becoming a more popular choice for the small and medium sized German businesses collectively known as the Mittelstandt. Justin von Simson, a director at Hg, said the deal reflected “the mounting acceptance of private equity as a source of finance for German mid-size enterprises”.
The deal is expected to close in around one month, assuming it is approved by the German Federal Cartel Office.
Ironically the deal comes just one day after Hg moved to solve its own succession issues by promoting TMT sector head Nic Humphries to chief executive, with current boss Ian Armitage moving upstairs to take the role of chairman. The firm also made seven other senior promotions – including von Simson, who was made a director of the firm.
Sal. Oppenheim advised HgCapital, while Dresdner Kleinwort advised SLV Group.