Investment Portfolio

HSBC Private Equity led the institutional buyout of the plumbing division of Caradon plc in a transaction with total funding of £496 million (€794 million).

The business, which retained the Caradon name, was one of the largest manufacturers and suppliers of plumbing and heating products in the UK, employing some 3,900 staff across ten manufacturing sites when acquired. It had a market leading position in its four core product areas of showers, bathrooms, boilers and radiators. Its brands included Mira and Rada in showers, Twyford and Doulton in bathrooms and Ideal Boilers and Stelrad Radiators. It was primarily a UK business but had pan-European operations in the radiator market.

Elements of the Caradon Plumbing business dated back to the early twentieth century. The businesses were brought together during the 1980’s as a result of the MBO of Reed Building Products to form Caradon and the acquisition of Carnaud-Metal Box in 1989.

Caradon conducted a tightly controlled competitive auction for the business, attracting interest from both potential trade and financial bidders. HSBC Private Equity’s success was a result of extensive sector research over a sustained period, which included contact with a number of key industry personnel. This knowledge, combined with its expertise in financial structuring and reputation for delivery, provided HSBC Private Equity with the edge to win the auction.

In July 2001, Mira Showers was sold for £301 million (€481 million) to US-based Kohler Corporation. This disposal followed the earlier sale of Twyford Bathrooms to Sanitec plc for £84 million, and completed the programme of disposals planned at the time of acquisition. At this point, the business was successfully financed with HSBC Private Equity recouping its entire investment in the group. The boiler and radiator businesses continued to be developed by HSBC Private Equity and the management team.

This deal clearly demonstrated HSBC Private Equity’s ability to lead and structure large and complex deals.

In May 2005 Montagu Private Equity sold Caradon Plumbing to Warburg Pincus in a transaction valuing the business at £227 million.