3i completes med-tech upscale job

"We saw a business in its infancy with just one customer and purely focused on manufacturing patient monitoring cables," Thomson recalls.

3i passed on the opportunity and Baring Private Equity Asia acquired a majority stake in 2006. Two years on, Thomson found a different LHi. The original customer was still there and accounted for 50% of revenue, but Pok had brought in others. He had also hit his financial targets, with turnover reaching $30 million.

"It was an unusual scenario of an entrepreneur doing everything he said he would do," Thomson says. 3i duly acquired a 64% stake in the business for $58 million, taking out Baring Asia. Pok and members of the management team owned the rest of the company.

There were two immediate priorities: reduce the bias towards patient monitoring equipment and get into more technically challenging products; and deepen the management talent pool. Recruits included Alberto Bautista, formerly of Baxter International, who came in as chairman.

Global forces were also working in 3Hi's favor. While the healthcare market was sizeable and growing, medical device makers were under pressure to shift production of less sophisticated items to lower-cost manufacturing centers. It no longer made sense for the German company responsible for video-assisted surgical solutions to produce the electric cables for these devices as well. The global financial crisis exacerbated this pressure.

During this period, LHi made the transition from reusable to disposable products as hospitals, wary of the risks presented by viruses such as the MRSA superbug, clamped down on potential cross-contamination. The firm also developed its product base.

"Once LHi had proved itself with the simpler products, it was in a position to say, ‘Why can't we do electrosurgical products and video products as well?'" Thomson explains. "The skill sets aren't that different."

These two areas now make up part of LHi's product portfolio, although patient monitoring still accounts for the lion's share of revenue. Under the PE firm's ownership, EBITDA almost doubled and revenues tripled from $31 million in 2006 to over $100 million.

3i quietly reached out to a number of strategic players that were a good fit for LHi and ran a limited auction process. US-based Carlisle Companies acquired the firm for an enterprise valuation of around $195 million, generating a 2.9x money multiple for the PE firm.

"LHi was the only significant pure-play Asia-based medical cable manufacturer," Thomson adds. "The value was in the relationships it has established with a plethora of medical technology companies."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Exits
• Southeast Asia
• Greater China
• Healthcare
• Trade sale
• Exit
• 3i Asia Pacific
• healthcare
• Southeast Asia
• China