When private equity house Doughty Hanson decided to invest in the wind energy sector, it had to bring in the experts for some solid facts.

In June, Jan Amethier, head of private equity firm Doughty Hanson’s Nordic operations, agreed to spend a nine-figure sum buying Svendborg Brakes. On the surface, the Danish company was simply an industrial brakes maker, but Amethier believed its true value lay in the market it served.

Svendborg’s products are mostly used by the mining and offshore oil industries, but the company’s potential lies in wind energy, where its products are used to keep turbines facing the wind for some of the largest energy players in Europe, the US and Asia.

He was convinced of Svendborg’s strong position within a growing industry, and just four months later paid its two private shareholders €460 million (£387.5 million) for the business.

Amethier claims wind energy is one of the fastest developing sectors in the growing green energy market, and is confident that this trend will continue in the coming years, after studying the findings of a technical due diligence review of the target company provided by renewable energy consultancy Garrad Hassan.

In April, the Global Wind Energy Council forecast that the international wind market would grow by more than 155 per cent to 240 GW of total installed capacity by 2012.

“We believe Svendborg’s position and reputation leaves it well placed to take advantage of continued growth in the renewable energy sector,” Amethier notes.

“We are backing an experienced management team with a track record and this, combined with the clear market opportunity, makes it a highly attractive acquisition.”

The professionals
Svendborg has operations around the world, including China where it opened a site last year. Its chief executive Martin Rambusch says he has built up the business in the past few years and that this acquisition will accelerate its global expansion.

“We believe that Doughty Hanson’s experience of backing founder-owned businesses and its track record in the renewable energy sector, make it a suitable partner for Svendborg as we take the business forward,” he says.

This track record includes its acquisition of LM Glasfiber, a supplier of wind turbine blades, seven years ago, which the buy-out firm has subsequently transformed from a regionally-focused player in Denmark into an international operation that generated revenues of €600 million last year.

As on the LM Glasfiber deal, Garrad Hassan’s team, which included professionals in Denmark, was led from its Bristol office by chief executive Andrew Garrad.

Amethier says that he turned to Garrad Hassan for its technical and commercial opinion due to what he calls its “deep knowledge of the wind industry”.

“While we already have internal sector expertise due to our LM Glasfiber investment, Hassan added significant insights specific to Svendborg’s business and technology,” he added.

The review not only included an examination of the company from an engineering point of view, but also looked at the strength of its competitors. Garrad explains: “We were there primarily to look at the engineering – the product and the company’s ability to deliver it – but also to appraise its competition and the general market.

“Svendborg is the world’s number-one supplier of windmill brakes and in the windmill world that means quite a lot.”

Green energy
Garrad explains that the firm has mirrored the high growth of the renewable energy market, expanding 25 per cent year-on-year in the past five years. He puts this growth down to climate change driving the need to reduce carbon emissions, a desire to generate power locally and the fact that wind has proved to be a cheaper alternative to oil in recent years.“Governments around the world are thinking of ways to promote renewable energy. It is certainly very popular, and rightly so in my mind,” comments Garrad.

He predicts that this will not be the last time he works with Doughty Hanson. “It already owns LM Glassfiber, so it has got blades and now it has brakes. So yes, you could conclude from that that it is certainly interested in the sector.”