3i, Europe’s leading private equity company, today announces it has agreed to sell HSS, the UK tool hire company, in a £310m transaction to Aurigo, an investment vehicle led by ex-Asda CEO and Chairman Archie Norman and affiliated investment funds of Och-Ziff Capital Management Group. Norman will become Chairman of the company upon completion.

The deal delivers a return in excess of 4 times money multiple to the 3i shareholders.

After a period of operational improvement and development following 3i’s original 2004 investment, HSS has successfully shifted its focus from a pure ‘hirer’ company to a customer-focused facilities management company servicing customers in sectors where the provision of safe and effective equipment, on time is mission critical to their success and profit. The 50-year old brand underwent a repositioning under 3i ownership, and now sees its future as a logistical and technical partner to its trade customers, who currently make up 90% of the business. With 3i’s support, the company has transformed its depot network in order to meet the changing needs of its customers, enhanced efficiencies of delivery logistics, improved overall availability of stock and developed a web presence on which domestic customers (10% of  revenues) can order and pay for equipment without visiting a branch.

HSS Chairman Alan Peterson commented on the sale: “This is the kind of substantive improvement to a business that the private equity model can achieve. HSS has come through a complete turnaround since 2004 and earlier this year reported EBITDA of £40m for the year ended 31 December 2006 - some 30% higher than when 3i first invested – and is now a business that is set on a path of rapid growth.”

Ken Beaty from 3i added: “We have been hugely impressed with the work that Chris Davies and the rest of the HSS management team have done to deliver significant operational and strategic improvements to the business. We hadn’t planned to make a realisation at this stage, but with the business well ahead of its milestones, and strategically attractive to others, the board of HSS and 3i decided Aurigo’s offer provided the right solution for both the HSS shareholders and the business. We are delighted with the overall return on our investment that this transaction delivers and are sure the business will continue to thrive under its new ownership.”

Chris Davies, HSS CEO added: “The real success of HSS is the great people who work here.  The combination of our people, their very clear vision of great customer service and the partnership with Archie Norman, Aurigo and Och Ziff is a truly compelling combination.”

3i was advised by Hawkpoint Partners and Travers Smith.