CITIC, Vector see 3x return on RAE Systems trade sale
CITIC Capital Partners and Vector Capital have exited gas detection equipment manufacturer RAE Systems through a $340 million trade sale to Honeywell. The China-focused GP came in as a co-investor on US-based Vector’s privatization of the company in June 2011, paying $138 million and using a small amount of debt. The return multiple is understood to be more than 3x.
According to a regulatory filing, the purchase price valued RAE at 13x forward EBITDA. The transaction is expected to close in the second quarter of 2013 after which the company will be integrated into Honeywell's analytics division.
"RAE Systems' geographic, manufacturing and distribution footprint, especially in high-growth countries like China, will help to make our already-strong gas detection portfolio an even greater global franchise in a very good industry," said Mark Levy, president and CEO of Honeywell Life Safety.
CITIC and Vector outbid Battery Ventures for the company in 2011, with the rationale for CITIC's involvement being that it could help strengthen RAE's sales, R&D and manufacturing expertise in China. The company was struggling at the time, posting a $2.6 million loss in 2010 despite net sales of $87 million.
RAE was founded in 1991 in California by Taiwanese American Robert Chen, who retained a minority stake in the business post-privatization.
The company has approximately 750 employees and generated sales of $107 million last year, providing fixed and portable gas, radiation and photo-ionization sensing and detection devices to clients from the government, oil and gas, industrial and emergency response sectors.
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