European buyout shop EQT, investing through its EQT Greater China II fund, has acquired a 30% stake in Modern Metal & Precision Holdings Ltd., an aluminum die casting manufacturer in China. Financial terms of the deal were not released. Modern Metal co-founders will retain the majority stake in the company. EQT Partners has offices in Copenhagen, London, New York, and other major cities around the world.
EQT Greater China II acquires 30% of the shares in Modern Metal & Precision Holdings Limited through a new share issue
— New funds will be used to expand current production and to establish a new plant in China
— Company co-founders remain majority owners
Modern Metal & Precision Holdings Limited (“Modern Metal” or the “Company”) is a leading aluminum die casting manufacturer in China. The Company was founded in 1969 by co-founders Mr. Duen Fung and Mr. C.T. Fung, who together will own 70% of Modern Metal after the new share issue. Modern Metal is a major supplier of highly-engineered aluminum die casting products in the global automotive, climate control and industrial automation markets. Its customers include leading multinational companies in the USA, Europe and Asia. The Company currently operates two plants in Dongguan, China and is planning to build a new plant in China. Modern Metal had sales of approximately USD 75 million in the financial year ended March 31, 2010.
Mr. C.T. Fung, co-founder and President of Modern Metal, says: “Our Company is in an expansion phase. The Chinese automotive market is expected to grow rapidly in the next ten years, and we are well-positioned to benefit from this secular growth trend. We are a well-established leader in the high-precision aluminum die casting market, and we have a proven track record of supplying high-quality products to leading multinational customers who increasingly source their products from reliable suppliers in Asia, particularly in China. As the domestic Chinese automotive market continues to develop, we expect that the demand for die casting components will increase. With our expertise in product development and product engineering, we are confident that we would capture significant market share in this market over time. We are planning to establish a new plant that will add significant production capacity to meet our customers’ demand and to provide superior value added services to our existing and potential new customers.”
“We are excited to have EQT Greater China II as a new shareholder. EQT is a major international private equity firm with significant experience in industrial investments in Europe and Asia. As our partner, we believe EQT Greater China II will bring tremendous support to Modern Metal, expanding our knowledge base and network and enhancing our profile in the international market place which will be crucial in taking Modern Metal to the next level of growth and development,” Mr. C.T. Fung continues.
Mr. Martin Mok, Partner at EQT Partners in Hong Kong, investment advisor to EQT Greater China II, says: “Strong growth in the Chinese automotive and industrial sectors drives demand for die casting products. Another important growth driver is the increased outsourcing to China by global companies, as die casting capacity in developed countries has been reduced during the economic downturn in late 2008 and early 2009. In addition, aluminum continues to replace brass and steel components in automotive applications. Modern Metal is well positioned for further growth and increased market share in the fragmented Chinese die casting market. EQT Greater China II is excited to be able to contribute to the Company’s continued growth and success.”
The Chinese aluminum die casting industry grew by 20% CAGR 2005-2009 and is expected to grow by 14% CAGR 2009-2015. Around 59% of Modern Metal’s sales are generated from the automotive industry.
Robert W. Baird & Co. served as the exclusive financial advisor to Modern Metal in this transaction.
EQT is the leading private equity group in Northern Europe with around EUR13bn in raised capital and multiple investment strategies. Together with a superior network of Industrial Advisors, EQT implements its business concept by acquiring or financing good medium-sized to large companies in Northern and Eastern Europe, Asia and the United States, developing them into great companies. Development is achieved by applying an industrial strategy with focus on growth. Since inception, EQT has invested in more than 80 companies (equivalent to EUR8.9bn) and exited around 40. EQT-owned companies have more than 500,000 employees.
EQT Greater China makes control or co-control investments in high-quality market leading, medium-sized companies in attractive industries in Asia with a potential for top-line growth.
EQT Partners, acting as investment advisor to all EQT funds, has more than 100 investment professionals with an extensive industrial and financial competence. EQT Partners has offices in Copenhagen, Frankfurt, Helsinki, Hong Kong, Oslo, London, Munich, New York, Shanghai, Singapore, Stockholm, Warsaw and Zurich.
More information can be found on www.eqt.se
Mr. C.T. Fung, co-founder and President of Modern Metal Tel: +852-2475-5338
Martin Mok, Partner EQT Partners Asia Limited Tel: +852-2971-5850
Johan Hahnel Communications & PR EQT Partners Tel: +46-8-506-55-334