3i sells €72m stake in Formel D to Citic Capital

Oscar Geen
17 July 2017

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3i Group has sold a €72m stake in portfolio company Formel D to Citic Capital to introduce the GP as an investment partner in the deal.

Citic made the investment from its $1.6bn buyout fund Citic Capital China Partners III. It is the GP's first investment in Germany.

3i retains an investment of €155m, having originally injected €247m into the company with a view to bringing in co-investors to reduce its investment to around €150m.

The introduction of Citic brings Formel D a strategic partner with a broad network in China, with the aim of helping to build its regional operations. The company generated 8% of its €250m revenues in Asia in 2016.

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

Previous funding
3i acquired Formel D from Deutsche Beteiligungs AG (DBAG) in May 2017 for an enterprise value of €401m. The deal was backed by a €134m term loan B facility arranged by IKB, ING, CA-CIB, SocGen and Raiffeisen.

DBAG made a 5.5x return on its original investment. It invested €3.7m from its balance sheet for a 17.8% stake in the company in 2013, taking a further 71.2% stake in the buyout through DBAG Fund V. The company's management took the remaining stake.

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).
Citic Capital – Boon Chew (senior managing director).
Formel D – Juergen Laakmann (managing director).

Advisers
Equity – Harris Williams & Co (corporate finance); Shearman & Sterling (legal).
Vendor – Baird (corporate finance); Willkie Farr & Gallagher (legal).