Fuel tech firm set for £850m sale

FUEL storage and brake systems business TI Automotive, which is part-owned by engineering firm Smiths Group, is being groomed for an £850m sale.

Investment banks Citigroup and JP Morgan have been appointed to advise on the process, which is expected to generate bidding from private equity groups and trade buyers.

Smiths, which owns about 20% of the business, has been looking to recoup its investment, worth about £325m.

However, attempts by TI Automotive to refinance itself in the past have failed, leaving observers to question the benefits of the investment to Smiths' shareholders.

Smiths Group was formed by a merger between Smiths and TI Group in 2000. TI Automotive later demerged, leaving Smiths with a stake in the business alongside management and other shareholders.

Oxford-based TI - divided into fuel systems, fluid carrying systems and a third arm aimed at the industrial market - employs 20,000 staff in 29 countries. It provides brake or fuel technology for about half the world's annual production of 57m cars and has annual sales in excess of £1.5bn.

While Europe is a significant part of TI's operations, the greatest revenue generator is North America, where the company has almost 10,000 employees and has average annual sales of more than £800m. This compares with less than £600m for Europe.

Insiders following the proposed sale of the business have suggested that a US-based bidder such as Blackstone or KKR could be more successful given TI's significant presence in America.