Applied Energy
Transaction Background
In December 2001 Graphite Capital led the £24 million management buy-out of Applied Energy Products from GDA, a joint venture between GE and Marconi. Applied Energy manufactures and distributes electric ventilation, heating and water heating products branded Xpelair, Creda and Redring.
Deal Attractions
The business owned three strong and widely recognised brands with a significant share of the electrical wholesaler distribution channel. The merger of the three separate brands to create Applied Energy two years prior to the buy-out disrupted the company’s operations and damaged profitability. This presented Graphite with an attractive turnaround opportunity. We backed the strong and talented management team to execute the turnaround. Our investment supported the management team’s growth strategy and provided a result-orientated incentive structure for the team.
Achievements
- the management team turned the business around, delivering considerable sales and profit growth
- it focused on continued cost improvement coupled with selective low-cost sourcing
- the product portfolio was rejuvenated
- the business penetrated new routes to market, including merchant and retail
- strong cash flow enabled senior debt pay down ahead of schedule
- we successfully refinanced our investment in 2004
Exit
- as the sector was consolidating, Graphite and the management team approached a limited number of potential trade buyers
- in October 2007 the business was sold to Glen Dimplex, an acquisitive Irish business
- Graphite generated strong returns from the investment
