Knowles return

Doughty Hanson has notched up a 1.7x return on its equity investment in Knowles Electronics, with the sale of the US-based micro-acoustic component and transducer company for US$750m to Dover Corp.

This is the firm’s seventh realisation from its third fund, which has returned US$4bn to investors at a realised gross multiple of 2.4x. It follows the IPO of RHM, the sale of Priory Group and the sales of ATU and Dunlop Standard in 2004.

The fund acquired Knowles Electronics in 1999 for US$530m, financed through equity investment of US$180m and US$350m of new debt. Doughty Hanson’s value enhancement group worked with management to reduce costs and working capital and to raise top-line growth during the period of the firm’s ownership. Gains included a US$20m annual cost saving and US$25m of cash generation from working capital reduction. Product launches included the MEMS microphone.

“Our focus on leading-edge technologies in both transducers and MEMs, and the establishment of a very low cost base have positioned Knowles for strong growth in existing and new markets,” said John Leahy, a principal at Doughty Hanson.

Doughty Hanson’s third fund raised US$2.66bn in 1998, of which US$2.2bn was committed for investment. Companies that remain in the fund include Impress, LM Glasfiber and North American Membership Group, as well as the 26% stake in RHM and a 33% stake in Umbro.