One Equity Partners (OEP) is reportedly working on a continuation vehicle (CV) for its German power transformer manufacturer, SGB-SMIT. This move comes after an initial attempt to sell the company, advised by JP Morgan, did not materialize as bids failed to reach OEP's expectations during the second round. OEP had acquired SGB-SMIT in 2017 through its 2016-vintage Fund VI, which raised $1.65 billion.
SGB-SMIT is projected to report €300 million in EBITDA for fiscal year 2025. Based on this projection, OEP was also recently working on a dividend recapitalization for SGB-SMIT, targeting leverage of around 3x-3.5x EBITDA. This would imply a debt quantum of €900 million to €1.05 billion, though this refinancing process has reportedly been delayed.
SGB-SMIT, headquartered in Regensburg, Germany, is described as the largest independent, pure-play manufacturer of power transformers. Its products, including large and medium power transformers, dry transformers, and distribution transformers, are utilized by utilities, grid operators, renewable energy OEMs, and industrial clients globally. Two years prior, SGB-SMIT underwent a restructuring plan to extend debt maturities by 45 months and secure approximately €70 million in fresh funds to avert insolvency.
The European market has recently seen several large continuation vehicles. Examples include PAI Partners' €3.6 billion CV for Froneri, anchored by Goldman Sachs, and CapVest's $7 billion transaction for Curium, led by Intermediate Capital Group, TPG, and CVC. Both of these were "CV-squared" transactions, involving existing continuation vehicles.
