Gresham backs £24.5m management buy-out of Altair Filter Technology. Gas turbine filter specialist targets new markets

Gresham, the mid-market private equity house, has backed the management buy-out by Andrew Steel and Steve Wenger of Altair Filter Technology, in a deal which values the specialist filter systems and acoustic equipment manufacturer at £24.5m. With an international client base, Altair’s market leading filters are used to clean the air entering gas turbines which power everything from oil and gas rigs and electricity generation units to warships and cruise liners.

The funding package includes a £14m investment by Gresham together with £10.5m in debt and working capital funding provided by Bank of Scotland Corporate Banking.

Around half the group’s current £20m+ turnover comes from the oil and gas market. Its filters are used extensively in mainly offshore installations in established markets such as the North Sea and expanding areas like Azerbaijan, West Africa and the Gulf of Mexico.

It is also a growing player in the marine market where, following successful trials on the Type 22 frigate `HMS Coventry`, its Neptune range of filters will provide major design and tactical benefits for the next generation of Royal Navy warships. Altair has developed filters for the naval and other marine markets since 1968. Further new products are being targeted at the large end of the power generation market.

Altair has a 100-strong staff serving customers throughout the world from its head office and manufacturing base in Alton, Hampshire, and its US head quarters in Louisville, Kentucky. Heavy investment in research and development of its proprietary designs ensures it remains an innovator in the market place.

The management buy-out team was led by former sales director Andrew Steel, who becomes chief executive, and Steve Wenger, managing director USA. They are buying the business from Roy Cleaver, Ian Church and private equity group 3i which backed the two previous owners in 1989.

Tim Smallbone, Gresham investment director, says: "An outstanding management team, coupled with a market-leading suite of existing products and exciting innovations in the pipeline, ensure Altair is poised for substantial growth. We are delighted to support Andrew and his colleagues in their expansion plans for the business."

Looking ahead, the group expects to grow its turnover by more than 50 per cent over the next five years.

For Altair, Steel comments: "With Gresham’s support, we have the chance to unleash the full potential of the business. Building on our existing reputation and competitive position, we will continue to invest in research and development to improve and expand our product range and target markets."

Peter Elsdon has joined the management team as commercial director. Elsdon was previously finance director of garden products group, Levington - the subject of a management buy-out from Fisons. He brings considerable experience in human resources and information technology to strengthen the team’s staffing and management information systems.

Current non-executive chairman Ian Hinton will support the new management team pro tem. Tim Smallbone and Ken Lawrence join the board as non-executive directors.

The deal is the second to be handled by Gresham’s regional office in Manchester where strong local contacts and due diligence skills leveraged the firm’s middle market expertise. Indeed all advisers to the transaction are based in the north-west.

Paul Lupton of Deloitte & Touche, Manchester, introduced the business to Gresham’s Tim Smallbone and Andy Tupholme. Catherine Richards and Ian Sladen handled the debt element for Bank of Scotland Structured Finance in Manchester. Mark Watts of Dow Schofield Watts provided Gresham with the corporate finance advice while KPMG`s John Hughes, Victoria Morton and Andy Hargraves carried out the due diligence. Stephen Levy and Gregg Davison of Hammonds provided the legal advice to Gresham.