Doughty buys into wind power

Doughty Hanson swept competitors aside to acquire Svendborg Brakes A/S for €460m. The private equity firm bought the Denmark-based wind turbine braking solutions business from its two private vendors.

Svendborg Brakes was understood to be valued at a high multiple to its historic profits but Doughty Hanson was comfortable with the fast-growth nature of the company. It doubled its annual turnover between 2005 and 2007.

The wind turbine industry, to which Svendborg Brakes supplies braking solutions, is growing at a fast rate. Demand for wind energy is estimated to increase by 20%–25% a year until 2020.

“Doughty Hanson had a good understanding of the industry,” said Michael Eriksen from PricewaterhouseCoopers Corporate Finance Denmark, who worked on the deal. “The firm quickly and competently drilled down to understand the business.”

Doughty Hanson’s understanding of Svendborg Brakes was strengthened by an earlier investment in the renewable energy sector. The London-headquartered investor bought fellow Danish company LM Glasfiber in 2001. LM Glasfiber supplies blades for wind turbines.

Svendborg Brakes operates in more than 15 countries and recently established a new facility in China. Danske Bank ran the sale process. Skadden Arps and Kromann Reumert advised Doughty Hanson and Svendborg Brakes respectively on legal matters.