DBAG sells Formel D to 3i

Oscar Geen
15 May 2017

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Deutsche Beteiligungs AG (DBAG) has sold its investment in industrial support services company Formel D to 3i.

The acquirer has agreed to invest up to €247m in the company initially but aims to bring in co-investors to reduce its total commitment to around €150m. The company's management have also invested as part of the deal.

The acquisition was backed by a €179m senior secured debt package including a €25m RCF, resulting in a total enterprise value of €401m.

The purchase price was not disclosed but DBAG's share of agreed sales will result in an income contribution of around €10m for the third quarter of the company's most recent financial year, according to a statement.

The transaction is the third divestment from DBAG Fund V in the past three months, after the sales of Romaco to Truking and FDG to CM-CIC.

Formel D has achieved revenue growth of 20% per year between 2013-2016, resulting in a turnover of €250m. The number of employees has more than tripled in this time to 7,200.

DBAG board member Rolf Scheffels said in a statement that he was pleased with how the GP has supported the family succession arrangement while simultaneously growing the company and preparing it to pursue further market opportunities.

Debt
The acquisition was backed by a €179m senior secured debt package which included a seven-year €134m term loan B, a €20m ACF and a €25m RCF arranged by IKB, ING, CA-CIB, SocGen and Raiffeisen.

Previous funding
DBAG originally invested £10.4m from its balance sheet for 15% of Formel D in the MBO in which DBAG Fund V and the company's management also invested.

Company
Founded in 1993, Formel D is a support services company based in Munich. It provides quality assurance, re-tooling and post-processing services to automobile manufacturers and their suppliers.

The company employs 7,200 people (2,500 of whom are based in Germany) and generates sales of €250m. In total, 50% of the company's revenues are generated in Germany, 25% in the rest of Europe and 25% in the Americas and Asia.

People
3i Group – Ulf von Haacke (partner).
Deutsche Beteiligungs AG – Rolf Scheffels (board member).
Formel D – Holger Jené, Juergen Laakmann (managing directors).

Advisers
Vendor – Latham & Watkins, Rainer Traugott (legal); Rothschild, Martin Suter, Pascal Mühlberger (M&A); Roland Berger, Thomas Schlick (commercial due diligence); EY, Wolfgang Taudte, Ulrich Gold (finacial due diligence); Tatiana Beuth (tax).