Privet reaps 20x on £22m Thermal Engineering sale

Alice Murray
03 December 2013

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Turnaround specialist Privet Capital has sold Thermal Engineering to trade buyer Senior for ТЃ22m, generating a 20x return.

The transaction saw Senior paying a total £28.3m for the business, with £6.5m of debt repaid as part of the deal.

According to Steve Keating, founder of Privet, the company received two pre-emptive approaches from trade buyers, with Senior resulting as the successful bidder.

As Thermal and Privet were approached by Senior, which has an in-house M&A team, no advisers were involved in this transaction.

The turnaround investor was introduced to the business in 2010 as one of its key clients had found a problem with its supply chain. At the time the business had not kept up with modern production techniques and needed help in becoming a modern and relevant manufacturer. Privet supported the company in becoming leaner and more efficient in its production processes, as well as introducing better health and safety practices. The turnaround house also made efforts to improve the company's culture to better employee morale.

Furthermore, Privet secured Thermal's refinancing around 18 months ago, where previous lenders HSBC and GE Capital were replaced by Lloyds.

Senior manufactures components and systems for the aerospace, defence, land-vehicle and energy markets.

Previous investment
Privet wholly acquired Thermal in July 2010 and immediately installed Vardhan Rajkumar as chairman. The original turnaround strategy was to improve efficiencies in the production process.

Company
Established in 1988, Thermal produces high-temperature lightweight aerospace components. The Royston-based manufacturer specialises in hot- and cold-forming of hard alloys, fabrication, assemblies, thermal insulation and protection. Customers include Rolls Royce, Safran and GKN.

The company reported operating profit of £1.6m in 2012. Thermal employs 234 people.

People
Steve Keating is the founder of Privet. Vardhan Rajkumar is the outgoing chairman of Thermal.