Euro Power

www.europower-hyds.com

Transaction Type: Turnaround Finance
Status: Partial Exit
Sector: Manufacturing
Investment Date: March 2006
Deal Size: £12 million*
Disposal Date: September 2006

Endless Contact: Aidan Robson

*IBP and Euro Power combined

BACKGROUND

Euro Power is a leading manufacturer and distributor of high pressure hydraulic hose and hose couplings for use in the automotive and engineering sectors. 

Established in 1969 Euro Power is headquarted in Leeds, England and has operations in the UK, USA and across Europe.  Euro Power (alongside IBP Ltd, another of our portfolio companies) was a part of AFC plc, a listed engineering group with revenues of over £100 million which went into administrative receivership in March 2005.

Prior to this, Euro Power had invested heavily in establishing its own purpose built manufacturing facility in Poland, which has expanded its production capabilities whilst reducing cost. 

Euro Power itself has 380 employees, generates revenues of £25 million and exports its products to major automotive manufacturers around the world.  The US in particular represents a key growth area for Euro Power, where it is quickly gaining market share. 

INVESTMENT COMMENTARY

We acquired Euro Power, alongside IBP Limited following the administrative receivership of its parent company.  This insolvency required a speedy response in order to protect the value in the business and we were able to complete a deal within 10 days!

Like IBP, the business had been cash constrained for a number of years due to capital commitments and the ongoing cost of an operational restructuring.  Following our acquisition we provided working capital funding and we also carried out a number of refinancings across Europe in order to generate further funding for trading, capital investment and the completion of the restructure.

Much has now been done to restructure both Euro Power and IBP and in September 2006 we approached Sun Capital Partners with a view to co-investing in Euro Power and IBP in order to complete the turnaround of these businesses and fund future growth.

Sun Capital Partners are a US and European based private equity investor with over $4 billion funds under management.  Like Endless, Sun focus on creating value in turnaround situations.

In September 2006 we completed a part disposal of our shareholding in Euro Power and IBP to Sun who have brought substantial additional funding and expertise to the table.  We believe that with a significant part of the turnaround already complete and with the combined support of both Endless and Sun, Euro Power will be able to take advantage of its superior product offering, particularly in the growing market of the US and Eastern Europe.

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