Doughty Hanson said on Thursday it had made a threefold return on its equity investment in Moeller.
The private equity group invested €192m in the German electrical component maker, which was bought by Eaton Corporation, the diversified US group, €1.55bn.
The sale reflects opinion in the private equity market that trade buyers represent the best exit given current market conditions.
The disposal is the second Doughty Hanson has made from its Fund IV, which closed to new money in January 2005. With this sale, the fund would have returned to investors €1bn of the original €1.5bn invested. The first sale was of Saft, a French high-end battery maker.
Fund IV still has nine investments, including Tumi, the luxury luggage maker, TV3, the Irish television company, and Hellermann Tyton, a cable company.
The fund bought Moeller from Advent International, another private equity firm, in September 2005, paying €1.1bn including Moeller’s pension liabilities and debt.
Of the fund’s investment, only €192m was equity, and Doughty Hanson said the sale gave it a gross internal rate of return of 54 per cent on that.
Moeller makes systems and components for power distribution and automation for use in industrial, infrastructure and residential building.
Doughty Hanson said that during the two years it owned Moeller it increased annual revenues from its core businesses by 26 per cent to €960m. It expected revenues in the current year to reach €1bn with earnings before interest tax depreciation and amortisation of €170m.
Eaton said the Moeller deal would expand its competitiveness in electrical markets outside the US. It also announced it would launch a $565m tender offer on Friday for Phoenixtec Power, a company listed on the Taiwan Stock Exchange. Phoenixtec makes uninterruptible power supply systems and has leading positions in China, south-east Asia, and eastern Europe.