Exclusive sale and purchase agreement for the sale of Punch Powertrain to the Chinese YinYi group

Exclusive sale and purchase agreement for the sale of Punch Powertrain to the Chinese YinYi group

Capricorn Venture Partners NV announces that the shareholders of Punch Powertrain signed an exclusive sale and purchase agreement with the Chinese YinYi group to acquire 100% of the shares of the Belgian company Punch Powertrain.  The valuation agreed upon in the context of this transaction indicates that based on a 2016 sales forecast of €500 million and expected EBITDA of over €100 million the enterprise value of Punch Powertrain would be around €1 billion.  The transaction is still subject to a number of financial and regulatory conditions.

Having pioneered continuously variable transmission (CVT) technology in the 1970s, Punch Powertrain now has an established position in the fast growing Chinese and Asian automotive markets, to which its products have been tailored through 40 years of CVT development.  Punch Powertrain has also made significant investments in cutting-edge hybrid and electric powertrain technology.  This positions the company to benefit from the increasing focus on fuel efficiency and emissions reduction in global automotive markets, especially in growing urban traffic.

In March 2010 Capricorn Cleantech Fund acquired a 12 percent stake in Punch Powertrain at the occasion of a capital increase.  In December 2013 Capricorn Cleantech Fund, together with the other shareholders (i.e. LRM, Gimv and Gimv-managed Gimv-XL fund, PMV and management) sold 30 percent of their stake in Punch Powertrain to the China-focused private equity fund New Horizon Capital.  After this partial exit Capricon Cleantech Fund's stake dropped to 8,5 percent.

Since Capricorn Cleantech Fund's investment in Punch Powertrain in 2010, turnover has almost increased fivefold to EUR 326 million.  At the same time the number of employees grew from 210 to more than 1.200 FTEs.  In addition, it expanded its customer base and broadened its products range.  Today, its largest-ever order book points to a great number of vehicles with Punch Powertrain transmissions being built over the next few years, ensuring growth.  Moreover, Punch Powertrain plans to continue its innovation track and is currently adding plant capacity in both China and Europe.

Cor van Otterloo, CEO Punch Powertrain, on this transaction: "Our shareholders not only gave us financial stability.  Over the past years we also enjoyed their active support in developing Punch Powertrain to where it stands today."  He continues: "Together with the other shareholders we already accomplished two of three jointly-strategic pillars: customer and product diversification.  Our third objective for the next five years is to achieve further geographic diversification both within and outside Asia.  In YinYi we found the right partner to support us in this ambition.  To achieve this ambition, our Belgian R&D and operations team is set to expand from around 300 engineers to around 700 in the coming five years.  This will allow the company to continue to develop new cutting-edge technologies.  On top, plant capacity will jump from 300.000 to over a million units per year, both in Belgium and in China."

Chairman and founder Mr. Xiong from YinYi group comments: "The strong technology expertise and growth track record of Punch Powertrain combined with its Asian exposure, make Punch Powertrain fit perfectly with YinYi's strategy to diversify its activities and also allows YinYi to catapult to the rank of tier 1 supplier, thus becoming its first Chinese full system transmission player."

Dr. Jos B. Peeters, founder and managing partner of Capricorn Venture Partners, is very excited about the deal: "First and foremost we want to congratulate CEO Cor van Otterloo and his management of Punch Powertrain for growing the company to the world leading independent manufacturer of CVT's it is today and for making this landmark deal possible.  The sale to a local investor strengthens the position of Punch Powertrain in its most important market which will be an asset for future growth.  In addition the investors in the Capricorn Cleantech Fund obviously benefit from one of the most successful exits in the history of Capricorn Venture Partners."

Upon successful closure at the valuation agreed upon in the context of this agreement the Capricon Cleantech Fund will receive a multiple of 17 times its original investment made in 2010 and realise a gross IRR of around 60 percent.