Inflexion returns 2.2x on the sale of SMD

Inflexion Private Equity is pleased to announce the completion of the sale of SMD, the world’s leading designer and manufacturer of subsea vehicle systems. Valuing the company at £120m, Inflexion generated a return of 2.2x. SMD has been bought by Zhuzhou CSR Times Electric Company Limited, a joint stock company incorporated in the People’s Republic of China (the “PRC”) whose shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited.

SMD’s unmanned submarines, Remotely Operated Vehicles (ROVs), and engineering trenching equipment provide subsea intervention work in depths and conditions that are inaccessible for human divers. Inflexion worked closely with management to professionalise systems and processes, enabling SMD to optimise production and focus on business development. This led to the opening of a second UK factory, increasing manufacturing capacity.

With an innovative and market-leading product offering, SMD leveraged Inflexion’s experience in internationalising businesses to further extend its footprint and open sales offices in Singapore, USA and Brazil, significantly expanding its range of customers across complimentary sectors. In addition, Inflexion’s Digital Director identified the opportunity to introduce an intelligent spare parts and servicing model to optimise the operational effectiveness of the ROVs and facilitate future earnings through monetising the data which they capture.

One of the motivations for a buyout was the vendor’s wish to reduce his managerial responsibilities and focus more on cutting edge engineering projects, so Inflexion helped enhance the team, immediately recruiting a CEO and Chairman. Overall, headcount increased almost three-fold during Inflexion’s tenure.

John Hartz, Managing Partner at Inflexion said, “SMD was a truly entrepreneurial business when we invested. Working in partnership with the management team we helped strengthen the board, professionalise manufacturing and expand into new markets whilst maintaining SMD’s innovative edge. SMD is a unique asset in the global subsea market and we wish the team every success under Chinese ownership.”

Andrew Hodgson, CEO of SMD said, “I am proud of the business SMD is today. Inflexion has been an active and supportive investor with whose help we have diversified our customer base and the markets which we serve. SMD is now well positioned for the future.”

The sale of SMD was led by Tim Smallbone and Catherine Richards.