SAG (Germany) - Dec 2007

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01 December 2007

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EQT V has acquired SAG, a provider of energy-related infrastructure services to utilities, from Advent International for between €650-700m through an auction run by UBS. Other bidders included AXA Private Equity and Pamplona Capital (financed by Russian Alfa Bank). The investor cited excellent preparation, sector knowledge, the ability to act swiftly, and a concept for further development that convinced both the seller and the company as central to winning the deal.

The investor cited the fact that SAG is the German market leader in the segment, its reputation for high-quality services, as well as its long-standing customer relationships with leading utilities providers as important reasons for the acquisition. EQT plans to enhance SAG’s position and geographical spread in the growing market of Western Europe and the Central & Eastern European region. The investor plans to grow the company both organically and through further acquisitions.

Due to considerable infrastructure investments, the market is expected to grow considerably over the next 10 years, and SAG is well-positioned to take advantage of the developments. The most prominent growth opportunities for SAG lie in the field of infrastructure refurbishments and the renewable energies sector. SAG should also benefit from the liberalisation and privatisation of the energy sector in Eastern Europe as well as the expected continued market growth in Western Europe (i.e. Germany and France).

Debt

The senior debt financing is provided by Commerzbank corporates & markets, The Royal Bank of Scotland and BNP Paribas. Intermediate Capital Group provided the mezzanine capital.

Company

Headquartered in Langen, Germany, SAG GmbH provides build and maintenance outsourcing services for utilities in their transmission and distribution grids. Employing 5,900 staff, the company generates cumulative revenues of approximately €770m. SAG is Germany’s market leader and has international subsidiaries in France, Poland, the Czech Republic and Hungary. As Europe’s largest pure-play infrastructure services provider, SAG expects to benefit from the expected growth in Western Europe and CEE for energy-related infrastructure services.

Exit deal

In May 2006, Advent International acquired SAG from German energy provider RWE as part of a diversified portfolio of five industrial energy-related services businesses, called RWE Solutions Group.

Advent planned to develop each company independently and to exit them separately. Press reports valued the transaction at between €500-700m (June 2006, page 24-25). Financial details were not disclosed.

The core strategy consisted of placing the company for further growth in Germany and Europe. Since its investment, Advent has worked with the management to streamline the business and reduce the complexity of its previously conglomerate-like structure. A focus on core infrastructure services and improvements in operations has also increased SAG’s profitability. The investor helped the company grow by creating a new strategy and positioning it for growth by Advent operating partner Uwe Alwardt. Through these measures and with the strong performance of management and staff, SAG developed better and faster than expected.

Exiting the company was due after the repositioning had been completed, leaving the company ready to enter a new phase of European growth, which leaves ample opportunity for further growth under the new investor’s ownership. The investor stated that there was a lot of interest in buying SAG due to positive growth forecasts and the banking market was open for adequate financing.

People

Tomas Aubell led the transaction for EQT Partners, with Jan Janshen acting on behalf of Advent International.

Advisers

Equity - Boston Consulting Group, (Commercial Due Diligence)Equity - Deloitte, Christoph Röper, Ines Leffers (Tax)Equity - Dresdner Kleinwort, (Corporate Finance)Equity - P+P Pöllath + Partners, (Legal)Equity - PricewaterhouseCoopers, Christian Tempich, Dirk Pelzer, Eric Gallerne (Tax)Equity - PricewaterhouseCoopers, Andreas Rizos, Bernd Hackenbroich, Moritz Gärtner, Richard Siedek (Financial Due Diligence)Vendor - Deloitte, Andreas Korten, Christof Dreibholz, Guy Street (Financial Due Diligence)Vendor - Freshfields Bruckhaus Deringer, Felix Blobel, Frank Röhling, Michael Menz, Natalie Vahsen, Stephanie Hundertmark (Legal)Vendor - Freshfields Bruckhaus Deringer, Frankfurt, Carsten Endres, Ulla Rupp, Yorck Jetter (Legal)Vendor - Freshfields Bruckhaus Deringer, Hamburg, Dr Dirk, Moritz Hüsch (Legal)Vendor - UBS , (Corporate Finance)