Deal in focus: Nordic Capital reaps 3x on FinnvedenBulten exit

Karin Wasteson
21 March 2014

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Nordic Capital made a final exit from auto parts maker FinnvedenBulten at the beginning of March, marking the second exit from the GPтs fifth fund in quick succession.

The deal saw newco Finnveden, owned by Nordic Capital's fifth fund, sell its entire remaining holding of 4,874,273 shares, corresponding to a 23.2% stake in FinnvedenBulten. Nordic Capital wholly exited the investment, which originated in 2005, and reaped a multiple of around 3x its original investment.

Based in Göteborg, FinnvedenBulten is an international mechanical engineering group that manufactures powertrain components, fasteners and auto products in steel and magnesium. The company has manufacturing units in Sweden, Germany, Poland and China.

Malmö-based investment group Volito is the new majority owner of FinnvedenBulten, increasing its stake to more than 20% through the transaction. Nordic Capital deemed Volito to be a suitable new owner due to its knowledge of the company: former Finnveden CEO Johan Lundsgård is currently the CEO of Volito and is also a member of FinnvedenBulten's board.

The investment originated when Nordic Capital delisted the Finnveden group from the Stockholm Stock Exchange in 2005. The GP launched a public cash offer to all Finnveden shareholders in 2004 – the offer represented a premium of approximately 35% on the share price at the time and was financed by both equity and debt funding from Svenska Handelsbanken. At the time of the 2005 take-private, Finnveden consisted of four divisions: Bulten, Metal Structures, Powertrain and Bufab.

Multiple fronts
FinnvedenBulten then went through significant change throughout Nordic Capital's holding period. Bufab was separated from Finnveden directly after the delisting, to be set up with its own management and board of directors. The company then had a turnover of around SEK 900m, with the figure standing at slightly more than SEK 2bn today. During Nordic's ownership period, the company expanded into Hungary, China, Estonia, India, Taiwan, the US, Romania, Russia and Turkey. It also completed eight add-ons in Austria, the Czech Republic, France, China, Spain, Finland and Slovakia. Bufab was listed in February 2014, although Nordic Capital V still holds 20% of the company. The share price has increased by around 20% since the IPO.

Meanwhile, Metal Structures launched a new magnesium foundry in Poland during Nordic Capital's ownership, with significant capital investments to meet the increasing demand from car manufacturers to lower the total weight of cars and reduce gas consumption. The Metal Structures and Bulten divisions are today called FBAB. A review is underway to either divest or separately list Metal Structures in 2014, with a decision expected to be taken in April, in order to better focus on the fast-growing Bulten division.

The last division, Powertrain, is a manufacturer of precision components for diesel engines within the heavy truck industry. Nordic was initially looking to acquire Italian industrial buyer Gnutti in 2007, but the negotiations turned around and Gnutti acquired Powertrain instead.

In connection with the sale of Powertrain, all of FinnvedenBulten's loans were paid off and the company ended up debt-free – which allowed it to weather the crisis that struck the vehicles market in 2008. Following the consolidation, FinnvedenBulten expanded organically and increased its geographical footprint; it was eventually relisted on Nasdaq OMX Stockholm in May 2011. The organic growth in Bulten is currently above 20% following several new contracts during the last three years.

People
Nordic Capital – Ulf Rosberg

Advisers
Equity – Carnegie, Tony Elofsson (Corporate finance); Handelsbanken, Ed Plumbly (Corporate finance).