Cinven snaps up Jost

Cinven has bought commercial vehicle components manufacturer Jost World GmbH (Jost) from Silverfleet Capital. The deal weighed in at a reported €550m and will yield returns of 3.1x and an IRR of 47% for Silverfleet, owner of an 80% stake in Jost since 2005.

“The company performed ahead of schedule, with profits more than doubling during the investment period,” says Neil MacDougall, managing partner of Silverfleet.

Headquartered in Neu Isenburg, near Frankfurt, Jost’s rapid growth since Silverfleet, then known as PPM Capital, which acquired it for €320m in August 2005, has been achieved through the implementation of a buy-and-build strategy. Most recently, Jost completed the bolt-on acquisition of Tridec BV, a Netherlands-based specialist manufacturer of steering and suspension systems.

Strong truck sales have driven demand for Jost’s products. “Truck orders from Eastern Europe used to account for 5% of total sales and they are now between 15% and 20%,” confirms MacDougall.

The relocation of Europe’s manufacturing sites from West to East has required new trucks and upgrades to existing trucks, creating healthy forecast demand for the company’s products.

Consequently, new owner Cinven had no trouble raising €425m of senior and mezzanine debt, or a total package of 4.5x, from BNP Paribas, ING and Société Générale to support its acquisition.

It is understood that there were debt offers in excess of what Cinven used – noteworthy in what is otherwise an illiquid market. Jost’s strong performance throughout 10 years of private equity ownership – it was owned by Alpha Investors between 1998 and 2005 – seems to have encouraged lenders.

After receiving several approaches from trade buyers, including a discussion with German peer SAF-Holland, Silverfleet hired Deutsche Bank’s mid-market advisory arm DB Consult in April to run a sale process.

SAF and Warburg Pincus were among the trade buyers and private equity players competing to secure the company, with Cinven reported to have offered the best price, and terms and conditions to the management team.

Jost employs around 2,000 staff and generated Ebitda of between €70m and €80m on sales of €445m in 2007. It has forecast sales of €600m for 2008.