3i Group PLC completes investment in Formel D and introduces CITIC Capital as investment partner

3i Group plc (“3i”) today announces that it has completed its investment in Formel D, a global service provider to the automotive and component supply industry. Following the closing, 3i has introduced CITIC Capital China Partners III, L.P., a buyout fund managed by the private equity arm of CITIC Capital Holdings Limited (“CITIC Capital”) as an investment partner. CITIC has invested c€72m in the company and 3i’s investment is c€155m.

On 12 May 2017, 3i signed a definitive agreement to purchase Formel D from Deutsche Beteiligungs AG (DBAG) and DBAG Fund V. This transaction was subject to customary regulatory approvals, all of which have been granted. 3i intended to introduce a strategic partner post-closing with the view to supporting its investment strategy for Formel D. CITIC Capital is a strong partner with a broad network in China, which will help Formel D build its regional operations and further benefit from the anticipated market growth in Asia.

Ulf von Haacke, Partner & Head of Industrial at 3i, said: “We are delighted to welcome CITIC Capital as our investment partner in Formel D. Their insights into the Chinese automotive market will be invaluable as Formel D continues its growth in this market.”

Headquartered in Hong Kong, with offices in Shanghai, Beijing, Shenzhen, Tokyo and New York, CITIC Capital’s private equity arm leverages its extensive resources to help companies realise their full potential in Asia, and has completed over 50 investments over the past years in China, Japan, the US and Australia. The firm currently manages US$4.8 billion of committed capital.

Boon Chew, Senior Managing Director of CITIC Capital, commented: “The investment in Formel D is our first deal in Germany. We are happy to partner with the renowned investor 3i and are looking forward to jointly supporting the successful growth of Formel D. We are committed to adding significant value to the company’s development, in particular by using our expertise and network in Asia.”

Formel D has a strong track record and has outperformed the market over the last 10 years. Growing at an average of 17% p.a., Formel D differentiates itself through its global scale, premium customer relationships and comprehensive service offering: it is the only player offering quality services along the entire automotive value chain. 3i and CITIC Capital plan to support Formel D’s international growth by rolling out its existing services to clients in other geographies, expanding its client base in Asia, and increasing its higher “value add” services such as vehicle test specification and virtual testing.

Dr. Juergen Laakmann and Dr. Holger Jené, Managing Directors of Formel D, added: “We are excited to work with 3i and CITIC Capital. Formel D’s international success story has just begun and we feel the combination of 3i and CITIC Capital is an exceptional one to further drive the next phase of our growth.”

Baird served as financial advisor and Willkie Farr & Gallagher LLP served as legal counsel to 3i. Harris Williams & Co. served as financial advisor and Shearman & Sterling LLP served as legal counsel to CITIC Capital.

Cromology amends its banking terms

Wendel is pleased to announce that Cromology, one of Europe’s leaders in decorative paints, has executed a bank amendment approved by nearly all of its lenders.

Cromology has amended the terms and conditions of its bank loans with a covenant reset. In so doing it has increased its financial flexibility and taken the steps necessary to pursue its plans for growth and development. As part of the transaction, Cromology has also increased drawdown capacity under its lines of credit by a total of €20 million. The cost of Cromology’s debt will remain the same.

This transaction will make a positive contribution to long-term value creation at Cromology, which is majority-owned (87.3%) by Wendel.

Wendel welcomes today’s announcement by Constantia Flexibles, one of the world’s leaders in flexible packaging, that it has signed an agreement to sell its Labels business to Multi-Color Corporation, for an enterprise value of approximatley €1.15 billion(1.3 billion USD). Subject to customary regulatory approvals, the sale transaction is expected to be finalized in the fourth quarter of 2017. The majority of the transaction is payable in cash, while Constantia Flexibles will hold a 16.6 % equity holding in Multi-Color, thereby becoming its largest shareholder.

This value-creating transaction will give Constantia Flexibles additional resources to bolster its growth strategy in the flexible packaging market, where it is a leader in segments such as confectionery foils, die-cut lidding, alu-container systems and pharmafoil. Moreover, in becoming the largest shareholder of a company bringing together Constantia’s and Multi-Color’s labels businesses, Constantia Flexibles will retain an exposure to the growth of this market.

Frédéric Lemoine, Chairman of Wendel’s Executive Board and Chairman of the Supervisory Board of Constantia Flexibles, said, “I am very pleased with this excellent transaction, which will give Constantia Flexibles additional resources to pursue its growth and development in flexible packaging in the coming years.

Since 2015, Wendel has supported Constantia Flexibles in its international growth and development. During this time, Constantia has, in particular, acquired five companies in Europe and emerging markets. Today’s strategic transaction will enable Constantia Flexibles to focus on flexible packaging and step up its investments in innovation and growth through further value-creating acquisitions that will give it exposure to new markets and new initiatives that will generate organic growth.”

Alexander Baumgartner, CEO of Constantia Flexibles, said, “Following a detailed strategy review, we decided that our top-performing Labels division would be better suited with another partner, which will support its ongoing growth story. At the same time, Constantia Flexibles will participate in the future success story of Multi-Color as its largest shareholder. Constantia Flexibles will use proceeds from the transaction to deleverage its balance sheet and enable further acquisitions in the dynamic and consolidating flexible packaging industry. We will also focus on innovative products and services, as well as new technologies to strengthen our existing Food and Pharma divisions.”

Constantia Labels is a global supplier of labels to the beverage, food and home & personal care industries (HPC). The Labels division achieved sales of €605 million in 2016, compared with Constantia Flexibles’ total sales of €2.1 billion in the same year.

Established in 1916, Multi-Color is one of the largest label companies in the world, serving some of the most prominent brands in the following market segments: healthcare, HPC, food & beverage, consumer durables and wine & spirits. Following completion of the transaction, Multi-Color is expected to achieve pro forma sales of ca. 1.6 billion USD and EBITDA of ca. 300 Million USD.

This transaction will make a positive contribution to long-termvalue creation at Constantia Flexibles, which is 60.5% owned by Wendel, its majority shareholder.