AGIC joins $1b Chinese acquisition of KraussMaffei

This is the first investment by AGIC, which stands for Asia-Germany Industrial Promotion Capital. China National Chemical Corporation (ChemChina) appears to be leading the transaction - Onex's announcement made no reference to AGIC or Guoxin International Investment Corporation, another participant in the deal.

KraussMaffei manufactures machinery and systems for producing and processing plastics and rubber. According to Onex's website, the company generated revenue of EUR1.1 billion in 2014.

The Germany-based player was founded in 1838 as a locomotive maker. It subsequently went into defense products and spun off its plastics technology into a separate unit that became a part of steel group Mannesmann in 1992. The business was subsequently absorbed into a joint venture between Siemens and KKR, and Madison Capital acquired it in 2006.

When KraussMaffei was put up for sale in 2012 an unnamed Chinese machinery group reportedly entered into exclusive negotiations with Madison. However, Canada-based buyout firm Onex ended up acquiring the business for EUR568 million (then $731 million). Onex said it invested EUR276 million for a 96% stake.

The commitment was made through the $4.7 billion fund Onex Partners III. The firm expects to receive proceeds of around EUR670 million from the sale, with listed entity Onex Corporation - which holds a 24% stake in KraussMaffei - getting EUR180 million, including carried interest of EUR12 million.

"KraussMaffei Group is a prime example of an excellent German industry player," Henry Cai, chairman of AGIC, said in a statement. "It is the global technology and innovation leader in its markets and its brands have excellent growth prospects in China. We see vast potential for the injection molding and equipment manufacturing industries not just in China, but globally, and believe that in cooperation with AGIC, ChemChina and Guoxin, KraussMaffei Group will be best positioned to exploit this opportunity."

The deal, which is expected to close in the first half of 2016, is said to be the largest direct outbound investment from China into Germany. However, investments by Chinese GPs in German companies are not unprecedented. In 2012 CITIC Private Equity helped Chinese construction equipment manufacturer Sany Heavy Industry to acquire German concrete pump maker Putzmeister Holding, with CITIC retaining a minority stake.

Cai set up AGIC after a career in banking that included a stint as executive chairman of corporate finance for Asia Pacific at Deutsche Bank. AGIC reached a first close of $550 million on its debut fund in October of last year, with China Investment Corp. (CIC) coming in as an anchor investor. The vehicle has a full target of $1 billion.

It focuses on investments in the Mittelstand - small and mid-size companies in Germany, Switzerland and Austria - in the technology and manufacturing sectors. The goal is to connect these companies with industrial producers in China that can use the technology to improve their operational efficiency.

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• Topics
• Greater China
• Europe
• Industrials
• Buyouts
• Trade sale
• Europe
• China
• buyout
• manufacturing
• Outbound investment
• Exit
• Trade sale