New Horizon, Gimv agree sale of Punch Powertrain to China's Yinyi

Punch, which pioneered continuously variable transmission (CVT) technology in the 1970s, already has a strong position in the Asian automotive market and supplies a host of Chinese manufacturers such as Beijing Automotive Industry Corp, BYD, Changan Automobile, Geely Automobile Holdings, and Great Wall Motors. The company has plants in Nanjing, China and Sint-Truiden, Belgium.

LRM, an investor that supports companies in the Belgian province of Limburg, took full ownership of Punch in 2009. The following year Gimv - working alongside the Gimv-XL fund - and Capricorn Venture Partners committed EUR24 million to the company, taking 46% and 12%, respectively. LRM retained 38%, with Punch management holding the balance.

In December 2013, the shareholders sold a 30% interest to New Horizon. Gimv's stake fell to 32% while Capricorn's ownership dropped to 8.5%. With the completion of its exit through the sale to Yinyi, Capricorn will return 17x its original investment and generate a gross IR of around 60%, the firm said in a statement.

Since the 2010 investment, Punch's turnover has increased almost fivefold to EUR326 million, while the number of employees has grown from 210 to more than 1,200. The company has enacted a five-year plan that will see its annual capacity rise from 300,000 to 1.3 million units. The Belgian R&D team will also grow from 300 to over 700 employees during this period. The EUR1 billion enterprise valuation is based on forecast sales of EUR500 million in 2016 and EBITDA of over EUR100 million.

"Together with Gimv and the other shareholders we already accomplished two of three jointly-strategic pillars: customer and product diversification. Our third objective for the next five years is to achieve further geographic diversification both within and outside Asia. In Yinyi we found the right partner to support us in this ambition," Cor van Otterloo, CEO of Punch, said in a statement.

Yinyi, which realized turnover of EUR7.6 billion in 2014 and has interests spanning mining, semiconductors and automotive components in addition to real estate, sees the acquisition as a means of further diversifying its business. The deal is still subject to a number of financial and regulatory conditions.

Gimv currently manages around EUR1.8 billion of private equity and venture capital investments, including co-investment partnerships, in about 50 portfolio companies. Capricorn manages cleantech, healthcare and IT-related funds that invest in European companies with technology as a competitive advantage.

New Horizon was set up in 2005 by Winston Wen, son of former Chinese Premier Wen Jiabao, and Jianming Yu. Wen subsequently ended his day-to-day involvement with the business in 2012. The firm raised three funds with more than $2 billion in committed capital. Last year New Horizon was restructured as two entities: Advantech, which focuses on growth investments in technology, media and telecom and healthcare; and Redview Capital, a traditional growth vehicle targeting consumer, advanced manufacturing, clean energy and new materials. 

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• Topics
• Greater China
• Europe
• Trade sale
• Industrials
• New Horizon Capital
• Exit
• manufacturing
• automobiles