Polypipe and Electra agree deal for ventilation company Nuaire

Electra Private Equity, the FTSE 250 investment group, has agreed to sell its interest in Welsh ventilation systems manufacturer Nuaire to Polypipe Group for a total of £145m.

Fully listed Polypipe, which will acquire the Caerphilly-based firm on a debt and cash-free basis using a combination of existing cash and new debt, said the addition would improve earnings-per-share by a double-digit amount in the first full financial year of ownership.

On completion, Electra will receive proceeds of roughly £72m, representing an uplift of 50% on Nuaire's valuation at 31 March 2015, implying an increase in diluted net asset value of 49p per share.

It said, inclusive of income and proceeds from a refinancing, this will generate a return of 3.8 times on original cost, an 18% internal rate of return.

Nuaire, which designs and builds ventilation low-energy and -carbon-emitting equipment for commercial and residential applications, originally received an investment of £23m as part of the company's management buyout in 2007.

From Polypipe's perspective, the acquisition will broaden its product offering in the high-growth ventilation sector, particularly the commercial segment, as well as accelerating it strategy in the area of carbon efficient products.

Electra partner Charles Elkington: "In 2007 we saw an opportunity for regulatory-driven growth in the ventilation market. With our backing, Nuaire has invested strongly in new product development and successfully expanded its customer base, particularly in the residential market. The result of this has been an 80% increase in revenues and a 120% increase in profits for the business which has generated a strong investment return for Electra."

Polypipe chief executive David Hall said: "We have long been an admirer of Nuaire and this acquisition provides a perfect fit for us. Nuaire expands considerably our product platform and market reach within the growing ventilation sector, which, like other parts of our business, are being positively impacted by environmental legislative change."

Shares in Polypipe were up 6.5% to 317.4p by 0830 BST on Wednesday, with Electra up 1% to 3,314p.