HarbourVest, Pantheon lead $1bn industrials deal

Funds of funds HarbourVest Partners and Pantheon Ventures are the lead investors in a $1 billion (€717 million) deal for four business units from US industrial giant Textron.

A business development company called Clyde Blowers, based in East Kilbride, Scotland, is buying the business units, which manufacture everything from industrial pumps, gears, valves and other industrial parts.

The company raised a private equity fund to finance the deal. HarbourVest and Pantheon are the lead investors in the fund, alongside Bank of Scotland and Swiss-based LGT Group. JPMorgan Cazenove acted as placement agent.

Clyde Blowers buys companies, enters joint ventures or provides management to turn-around companies.

Textron will receive about $526 million in cash, a six-year note with a face value of $28 million and up to $50 million depending on 2008 operating results payable in a six-year note. Additionally, Clyde Blowers will assume about $41 million in employee liability costs, Textron said in a statement.

Jim McColl, owner of Clyde Blowers, said in a statement that additional aspects of the deal, like the integration of one of the business units into an existing company Clyde Blowers owns, will ramp up the value of the deal to $1 billion.

David Atterbury, a vice president with HarbourVest, told PEO the funds of funds are confident in Clyde Blowers hands-on approach to the companies it buys.

“They worked with us to pull funding together, and we get people who will take up executive positions, who have got experience,” Atterbury said.

Atterbury said HarbourVest and Pantheon raised about 80 percent of the equity for the transaction. He said the deal was even more attractive because the companies being sold are diversified globally, and have about 50 percent of their operations in developing countries.

“They’re selling into power and nuclear infrastructure sectors that are growing,” Atterbury said. “Growth in these sectors in developing economies is so high.”

The businesses being purchased are Maag Pumps Systems, based in Oberglatt, Switzerland; David Brown, based in Huddersfield, England; David Brown, located in Poole, England and Union Pumps, based in Battle Creek, Michigan.

Union Pumps, which has about 730 employees at 10 locations in six countries, including the US, Canada and England, will integrate with Clyde Pumps. Maag Pumps Systems, David Brown and David Brown will remain separate companies in Clyde Blowers’s portfolio.