3i sells Scandlines to First State and Hermes in €1.7bn deal

Kenny Wastell
26 March 2018

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3i has sold Danish-German ferry operator Scandlines to First State Investments and Hermes Investment Management in a deal giving the business an equity value of €1.7bn.

The GP reinvested for a 35% shareholding, with First State holding a 50.1% stake following the deal and Hermes a 14.9% stake.

The deal sees 3i receive net proceeds of €347m and values the 55% stake directly held by the firm at around €945m, an uplift of 27% compared with its valuation as of December 2017.

The transaction marks an exit for Eurofund V, which held a final close in November 2006 at €5bn.

Under 3i's 11-year holding period, the company has sold its Helsingor-Helsingborg routes and focused on expanding its operations across two routes linking Germany and Denmark. It also invested in green technology and built two new ferries for the Rostock-Gedser route to enable increased capacity and frequencies.

3i lodged a complaint with the EU competition authority against the Danish government in 2014, claiming the state acted improperly when it sold Scandlines to 3i and Allianz Capital Partners (ACP) in 2007 for DKK 11.6bn.

Previous funding
Scandlines was acquired by 3i, ACP and DSR from the Danish government and German national rail operator in 2007 for DKK 11.6bn. 3i and ACP bought out DSR's 20% stake in 2010.

In 2013, 3i raised €875m in senior loans to refinance its investment's debt facilities and buy ACP out.

The business completed a refinancing in February 2015, allowing a dividend payment to 3i. It has since completed another €862m infrastructure debt refinancing, reducing the cost of its debt.

Company
Founded in 1998 as a merger between Danish, German and Swedish state-owned ferry operators, Scandlines operates two ferry routes in the Baltic Sea, transporting passengers and freight between Denmark and Germany.

The Rostock-headquartered company had revenues of €505m in 2013 and employs around 2,000 people.

People
3i – Peter Wirtz (partner).
First State Investments – Marcus Ayre (partner).
Hermes Investment Management – Peter Hofbauer (head of infrastructure).
Scandlines – Søren Poulsgaard Jensen (CEO).

Advisers
Vendor – Rothschild (corporate finance).
Acquirer (First State) – Deutsche Bank (corporate finance); Baker & McKenzie (legal).
Acquirer (Hermes) – Macquarie Capital (corporate finance); Baker & McKenzie (legal).