
Deal focus: Baring Asia completes Interplex turnaround

Refocusing on high-growth segments like electric vehicles – plus a smarter approach to sales and operations – underpinned Baring Private Equity Asia’s 4x return on engineering business Interplex
Press-fit pins hold together the modern electric vehicle (EV). From brake control modules and airbag sensors to batteries and power distribution centres, increasingly intricate layers of plastic and metal sit on top of each other. These tiny pins connect them, serving as a vital solder-free, lead-free, and automation-friendly solution in the age of the increasingly electrified automobile.
“Battery distribution systems have become a significant area. On the bottom of an EV, there are hundreds of batteries, and you need a system to connect them all and consolidate power. Precision is important – if you miss by one millimetre, a product won’t work,” explained Hong Yong Leong, a managing director at Baring Private Equity Asia (BPEA).
Interplex, a Singapore engineering business that BPEA recently sold to The Blackstone Group for an enterprise value of USD 1.6bn, claims to be one of few interconnector suppliers globally capable of the requisite precision. Tapping into the rise of EV has been integral to a transformation story that is said to have generated a more than 4x multiple. BPEA declined to comment on the return.
Undermanaged, underinvested
It privatized Interplex for around USD 320m in 2016, taking out majority owners CVC Capital Partners and Standard Chartered Private Equity. Two years earlier, the company – then known as Amtek Engineering – had acquired US-based peer Interplex Industries, prompting a name change and alerting BPEA to a wealth of potential synergies.
“Amtek was strong in mechanical engineering, in big form factor metal parts. Interplex was strong in electromechanical solutions, such as miniaturised interconnector products,” said Leong. “We thought there were cross-selling opportunities.”
He added that the company was undermanaged and underinvested – the previous owners had held it for nine years and had been looking to exit for a while – which meant BPEA picked it up at a relatively attractive valuation, 6x EBITDA. However, considerable time and effort had to go into sales and marketing, strategic positioning, and operations.
A new CEO was hired with a brief to build a team around him. BPEA spent the first six months of ownership talking to management and customers to develop a new blueprint for the business.
On the sales side, BPEA found that the company relied on a core of longstanding customers rather than proactively seeking new ones. Moreover, the Amtek-Interplex merger hadn’t been fully consolidated. Factories worked in silos, which sometimes resulted in customers asking for price estimates from two different teams and receiving different quotes.
“We wanted to be a go-to solutions provider for the most complex problems,” said Leong. “Rather than work with separate suppliers for metals and plastics, customers could just use us. If you have two suppliers, whenever there is a problem, they just blame each other.”
A new front-end unit was established to manage company-wide sales and marketing. This was part of a USD 50m investment in selling, general, and administrative (SG&A) expenses in the first year. Interplex brought a team of 10 experts spanning different functions onto the payroll to contribute to the efficiency drive.
Upgrades were also made in finance and IT, including digitisation of operations, so that management could make strategic decisions based on real-time data.
Keeping it simple
Improving the company’s strategic positioning was, at heart, an exercise in simplification. Eight business segments became three – EV, medical and life sciences, and data and communications – each one underpinned by a compelling megatrend. They now account for 80% of revenue.
Interplex has grown in terms of footprint, with over 30 manufacturing locations and 10 R&D sites globally. But the real impact of the repositioning was on the balance sheet. By focusing on faster-growing, more profitable areas – moving from steering columns to EV interconnectors, for example – revenue has more than doubled to USD 1.1bn and margins have expanded from 10% to 15%.
Performance improvement became apparent in year five, partly because it takes 3-6 months to sign up a customer and another 12-24 months to develop a prototype, secure regulatory approvals, and enter production. But customers are sticky. Supplier relationships usually stay in place for the lifetime of a program, which can be 5-7 years in automotive and 10-15 years in medical devices.
At the same time, Interplex has benefited from broader trends. For years, multinationals have been cutting vendors, prioritising larger players. This took on a new edge with the advent of the China-US trade war. Suddenly, supply chain diversification became an imperative and customers were asking Interplex to replicate an existing China-based production line in Hungary or Mexico.
Meanwhile, a different supply chain challenge came with COVID-19. Leong believes the constant lines of dialogue established with customers under the sales and marketing rebuild paid dividends as the pandemic-driven lockdowns brought significant parts of global manufacturing to a halt.
“They were shutting factories because they couldn’t get parts. Transparency in communication helped them plan production. One customer asked us for help when another supplier could no longer provide a certain part. We put together a team and went from tooling to production within two months,” Leong said.
“As a result, we have much stronger relationships than before with most of our customers, and we continue to win programs from them.”
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