Deal focus: Bain revives FCI in Asia

Ten years, five divestments, and sustained incremental restructuring separate the FCI that Bain Capital bought with the one it recently sold - as FCI Asia - to US-based industry peer Amphenol.

"Our investment in Europe in the industrial sphere is exactly this," says Michel Plantevin, a managing director with the private equity firm. "We buy divisions of large groups that are non-core, often haven't been properly invested and are facing some strategic challenges, and we take time to reposition them. Sometimes there is M&A, sometimes restructuring, sometimes a combination of both."

FCI was acquired from Areva Framatome, which was more interested in nuclear power than connectors, in 2005 at an enterprise valuation of EUR1.01 billion ($1.13 billion), supported by a reported EUR695 million in debt. One of the initial problems was the breadth of the business: it sold connectors to car makers, electric utilities players, financial services companies, and the consumer electronics industry.

Plantevin describes the strategy as "re-focusing the portfolio, addressing the mismatch between what we saw as the market potential and the customer mix at the time, and repositioning the manufacturing footprint." This led to speedy exits from the Europe and North America-focused utilities business and the North American microconnectors manufacturing operation.

The rest of the microconnectors business, which produces components for bank cards and SIM cards, saw its capacity triple. A majority stake was sold to Astorg Partners in 2011 for EUR650 million and a full exit came last autumn. The automotive division was sold in 2012 to Delphi for EUR765 million following an expansion of the customer base to take in North America, China and Korea.

This left electronics, where the objective was to address cost and customer proximity issues by increasing capacity and presence in Asia. Investments were made in new and existing plants across the region, while in North America pure manufacturing ceased and in Europe it was largely relocated.

Moving the headquarters to Singapore brought with it changes to the management team. One senior member of staff stayed on - the head of R&D, who relocated to Singapore - but Bain hired a new CEO and CFO, as well as a new head of manufacturing based in China. "The repositioning was the result of gradual investment over 10 years," Plantevin adds. "What ended up being FCI Asia was an evolution."

FCI Asia is expected to generate sales of $600 million in 2015 and an adjusted EBITDA margin of 20%. More than two thirds of the company's revenue in 2014 came from the data and communications sectors. Nearly two thirds came out of Asia Pacific.

The sale to Amphenol, which was announced in June and closed last week, is worth $1.28 billion, close to the price paid for the business - before the divestments - in 2005.

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• Topics
• Trade sale
• Southeast Asia
• Europe
• Industrials
• Bain Capital Asia
• Trade sale
• Exit
• Europe
• Southeast Asia
• manufacturing