Private Equity Group Invests In SLV Group

    European private equity investor HgCapital is to become the majority shareholder in the SLV Group, the German lighting company. SLV's founder and current managing director, Franko Neumetzler, who has held the majority of SLV's capital, will retain a significant minority stake in the company in the future, with the other members of management also continuing to hold shares. The transaction, which is being executed on the basis of an enterprise value of EUR 320 million, still requires the approval of the German Federal Cartel Office and is expected to be closed in roughly one month's time.

    Comprising the parent company S.L.V. Elektronik GmbH, which is based in Ubach-Palenberg near Aachen,
    as well as subsidiaries and associates in Germany, France, Belgium, Switzerland, Hong Kong and Russia,
    the SLV Group has evolved into one of the most successful European producers of lighting systems over the past few years. Between 2004 and 2006, its sales surged by a total of 65 percent to just under EUR 73 million, with a further increase to around EUR 90 million projected for this year. In fact, revenues are expected to double to almost EUR 150 million by 2010. With roughly 160 employees in Germany, the company is highly profitable and posted earnings before interest, taxes, depreciation and amortization (EBITDA) of almost EUR 25 million in 2006.

    Founded in 1979 and achieving growth far in excess of the industry average, the SLV Group owes its
    ongoing success to the resolute implementation of what is a unique strategy in its sector. This strategy combines the development of innovative lighting systems in Germany with the cost advantages derived
    from the early relocation of production activities to less expensive foreign countries in tandem with highly potent logistics and an efficient multi-channel distribution system based on strong partnerships.

    Following the acquisition of a majority stake by HgCapital, SLV's proven structures and successful business model are to be retained. After almost three decades at the helm, the company's founder Franko Neumetzler will be gradually withdrawing from day-to-day management between now and the end of the year, handing over the reins to a younger generation. Afterwards, he will not only be a shareholder but also an active adviser to the company. The other key members of management - Detlef Harms and Toni Stumpf - will retain their positions. Working in conjunction with the management team, HgCapital will particularly drive continued efforts to develop foreign business and intensively work towards readying the company for a stock market flotation in the medium term.

    Justin von Simson of HgCapital in Munich commented: "This is currently the sixth investment led by HgCapital's German team. Following the recent acquisition of toy maker Schleich, the transaction provides further proof of our ability to forge strong growth-oriented partnerships with successful family-owned companies as well as reflecting the mounting acceptance of private equity as a source of finance for
    German mid-size enterprises. Over the past few years, SLV has performed superbly and we are certain that it is ideally positioned to grow just as quickly and profitably as before in Germany as well as in its present and future international markets. We will be providing SLV's management with comprehensive support via our extensive resources and expertise and are convinced that the company will be ready for the capital market in a few years' time."

    Franko Neumetzler, founder and shareholder/manager of SLV said: "We are very pleased to have found in HgCapital an experienced and strong investor seeking a partnership-based relationship with whom we can continue our company's success story. With HgCapital by its side, SLV will retain its independence, continue to implement its business model in undiluted form and unlock new potential. In this way, we have been able to find an answer smoothly and in good time to the difficult successor problem, which many small and mid-size shareholder - managed companies face. In addition, by working with HgCapital we can systematically and resolutely take SLV to the next level of its economic development- with the clear perspective of readying it for the capital market."

    www.slv.de
    www.hgcapital.com