Target: A&A Manufacturing
Price: $202.5 million
Sponsor: 3i Group’s North America unit
Seller: Audax Group
Financial Adviser for Audax: Houlihan Lokey
Financial adviser for 3i: Robert W. Baird
Legal Counsel: Ropes & Gray for Audax
Ken Hanau, managing partner, 3i North America, told Buyouts that the bidding process, as with most LBOs, was competitive. But his firm did have the advantage of having built up a relationship with management starting about 12 months ago.
“We’d been targeting A&A for some time,” said Hanau, who works out of New York City with a team of 20 from 3i Group. “We were a partner of choice for management to expand internationally.”
Under terms of the deal, 3i Group is investing about $110 million to acquire New Berlin, Wisconsin-based A&A Manufacturing, a producer of engineered products that protect other equipment, such as screw covers. The company has grown bigger through acquisitions, acquiring Germany-based MFB Technik Schillig in 2013 and Michigan-based Lead Screws International Inc in 2012.
The A&A Manufacturing deal marks the latest in a series of transactions by 3i Group in North America, including its exit of Mold-Masters in an early 2013 sale to Milacron LLC, a portfolio company of CCMP Capital Advisors. The firm generated a 2.6x return on the deal. It also made about 2.1x on its sale this May of Hilite International to a unit of Aviation Industry Corporation of China for $623 million. On the acquisition side, 3i Group invested about $175 million for JMJ Associates, a U.S.-based consulting firm for the oil, gas and chemical sectors.
3i Group is investing off its balance sheet and often offers co-investments to limited partners. Its vintage flagship 2006 fund, 3i Europartners V, was about 90 percent invested as of March; the remaining money is aimed at further investments within the existing portfolio, rather than new investments.
Looking ahead, Hanau said he expects 3i Group to continue at a pace of about one or maybe two acquisitions a year in North America, although the firm isn’t on any strict timetable.