CASE STUDY

First Engineering LIMITED

Overview

  • First Engineering was acquired by by Anchorage Capital Partners Fund I and management investors in June 2012
  • First Engineering is a leading manufacturer of ultra-precision moulds and plastic components for high technology engineering applications
  • Anchorage, together with management, led an all-encompassing strategic and operational turnaround programme. This programme included investments in new manufacturing capacity in India, a specialised Technology and Tooling Centre in China, improvements made across operational processes, the development of a world-class customer acquisition model, and significantly enhanced financial performance and stability
  • A successful sale of First Engineering to Singapore Exchange Mainboard-listed Sunningdale Tech Ltd was completed on 12 November 2014

Background

Following a decline in business performance, First Engineering defaulted on its senior debt facilities due to breach of covenants, and was taken over by its senior lenders through a credit bid in September 2009.

Anchorage identified the business through its Asian network and agreed indicative terms in late 2011, including a period of exclusive due diligence, ultimately leading to completion in June 2012.

First Engineering overview

First Engineering is a leading manufacturer of ultra-precision moulds and plastic components for high technology engineering applications. 

The company was founded in 1979 in Singapore, and offers an integrated suite of solutions including product design, tooling, production and assembly services predominantly for the consumer electronics, automotive and medical device industries. 

First Engineering has approximately 2,500 staff based in Singapore, Malaysia, China, and India.

Turnaround program

Despite the stress placed on the business over an extended period, Anchorage recognised that the quality of the underlying business remained strong. 

A large range of operational business improvement initiatives provided material upside, including a supply chain review, manufacturing review and implementation of LEAN processes.

Anchorage also saw significant opportunity for diversification in a number of attractive markets, including auto and medical devices, enabled by a redesigned business development structure and focus on execution and building internal capabilities.

Key aspects of the comprehensive business turnaround program included:
  • Development of a high performance business development capability to grow sales
  • Focus on decreasing cost of quality in manufacturing and tooling
  • Implementation of a LEAN program and incorporation of LEAN philosophies in the company culture
  • Improved supply chain management
  • Optimisation of working capital

Over the term of its ownership, Anchorage oversaw investment in major capital programs aimed at improving the quality of the business including a specialised Technology and Tooling Centre in Shanghai, China, and a manufacturing facility in Chennai, India.

Financial performance

The turnaround initiatives outlined above have significantly improved the quality and stability of the business, evidenced by the change in business mix since acquisition (illustrated in the pie charts below).  

Entry (FY2012) Total Revenue: US$127 million


Exit (FY2014) Total Revenue: US$128 million

Exit

Anchorage completed a successful sale of First Engineering to Sunningdale Tech Ltd in November 2014, just over two years after its initial investment.