CITIC Capital, 3i acquire German auto services provider
China-focused GP CITIC Capital has teamed up with 3i Group to acquire Formel D - a German provider of vehicle testing and other support services to the auto industry - from private equity firm Deutsche Beteiligungs AG (DBAG).
3i signed an agreement two months ago to purchase the asset, and the transaction has now been approved by regulators. Following the closing, the GP introduced CITIC Capital as an investment partner. CITIC has invested EUR72 million ($83 million) via its latest US dollar vehicle CITIC Capital China Partners III - which recently closed at $1.57 billion - while 3i’s commitment is EUR155 million.
Founded in 1993, Formel D offers services intended to optimize product quality and process efficiency along the entire automotive value chain – from development to production to after sales. At present, it has more than 7,000 employees at 80 locations in 19 countries. Revenue has grown at an average annual rate of 17% over the last 10 years, with turnover reaching around EUR255 million last year.
Under the new ownership, Formel D will pursue international growth by rolling out its existing services to clients in new geographies, particularly in Asia, and offer a wider variety of value-add services such as vehicle test specification and virtual testing.
“The investment in Formel D is our first deal in Germany,” said Boon Chew, a senior managing director at CITIC, in a statement. “We are happy to partner with the renowned investor 3i and are looking forward to jointly supporting the successful growth of Formel D. We are committed to adding significant value to the company’s development, in particular by using our expertise and network in Asia.”
Part of CITIC's investment strategy is investing in global companies and helping them fully realize the potential of their China business. The firm previously teamed up with New York-based Crestview Partners to buy Canadian auto parts maker supplier Stackpole International in 2013. They sold the company to Hong Kong-based electro-mechanical motor producer Johnson Electric two years later.
Harris Williams was CITIC's financial advisor on the Formel D transaction with Shearman & Sterling serving as legal counsel. Baird and Wilkie Farr were 3i's financial advisor and legal counsel, respectively.
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