Deal in Focus: Triton sells down final Stabilus stake

Triton Partners sold down its 100% stake in three stages: the IPO of a 59% shareholding took place at the end of May last year, awarding the company a €460m market cap at the time; followed by a listing of a 21% stake in December; and the subsequent private placement in mid-March. Ten months after the IPO, Stabilus is now worth €660m.

Although Germany's IPO news in 2014 was dominated by Zalando, the online fashion retailer's October listing heralded the end – rather than the start – of the country's IPO window in a troubled 12 months for the exit route. Stabilus was quick off the starting block, becoming only the second private-equity backed company to list after Deutsche Private Equity's SLM Solutions in mid-May. "When we started to prepare we single-mindedly focused on the IPO and that's why we were quick on the market window," says Andi Klein, investment partner at Triton Partners.

The IPO also marked the beginning of the end of Stabilus's association with private equity. Initially part of KKR-owned Demag Holding from 2002, the Koblenz-based company was sold to Montagu Private Equity in 2004. US-based Paine & Partners bought the company in early 2008 in a deal thought to be worth around €510m. The acquisition of Stabilus was the GP's first foray into the European market. "Stabilus very quickly became financially distressed," says Klein. "The downturn really hit and given it was relatively highly leveraged, the company went into default." He claims that by February 2010, two months before Triton acquired the company, Stabilus was loaded with almost €500m in debt. Its EBITDA in 2009 was €30m, meaning debt amounted to an eye-watering 16.5x EBITDA.

Four-pronged attack
Triton's turnaround strategy for the company followed a four-pronged approach. "First, the balance sheet needed to be fixed. A substantial debt cut was implemented and we infused incremental cash into the company," says Klein. Second, European operations were streamlined. Smaller operations in Spain and Italy were integrated into the larger German plant, where manufacturing capabilities increased. Conversely, production volume at the lower-cost Romanian site was expanded. On a global scale, expansion in Asia was high on the list of priorities, with capacity at Stabilus's Chinese plant more than trebling under Triton's ownership.

Central to the Asia strategy was the recruitment of new CEO Dietmar Siemssen, who had previously led the joint venture between German automotive manufacturer Continental and Japan-based Nisshinbo Industries. "Triton recognised the potential of both the core business – gas springs – and the new business idea. They allowed the company to open up investment again, which paid off very well in the end," he says.

Putting the boot in
The new idea was Powerise, an electrical drive system that automatically opens and closes the boot of a car. Compared to traditional gas springs which cost €6-7, a Powerise system is worth around €40. "Reigniting R&D in that area was the key growth strategy. It really exceeded our expectations," says Klein. The system is expected to account for approximately €100m of Stabilus's turnover this year – around a fifth of its €520m revenues.

"We always knew if we wanted to create value, we had to step-change growth," Klein adds. "As soon as we started to achieve extraordinarily high top-line and bottom-line growth, then it became obvious that we had a company ripe for an IPO. Previous owners had looked into this and advisers had told them it wouldn't work because Stabilus wasn't growing and it was a single product company. It wasn't straightforward to get to this endpoint – it required numerous organisational changes and a completely different investment strategy – but it's a great opportunity for a company that was in essence bankrupt when we acquired it." Stabilus posted an EBITDA of €92.5m in 2014.

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• Topics
• Exits
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• Deal in focus
• Triton Partners
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• Unq2015May