VAT Group AG launches IPO on SIX Swiss Exchange and sets price range

Haag, March 31, 2016 – VAT, the leading global manufacturer of high-end vacuum valves and related products and services, today announced the launch of its initial public offering (“IPO”) on SIX Swiss Exchange with the publication of the Offering Memorandum and the start of the book-building process. The IPO aims at broadening the shareholder base of VAT through the sale of 12,000,000 existing shares plus an over-allotment option of up to 1,800,000 existing shares. The price range for the offered shares has been set at CHF 39 to CHF 46 per share, implying an offer volume of approximately CHF 538 million to CHF 635 million (assuming full exercise of the over-allotment option) and a total market capitalization of approximately CHF 1,170 million to CHF 1,380 million. The first day of trading on SIX Swiss Exchange is expected to be on or around April 14, 2016. In 2015, VAT generated net sales of CHF 411 million, representing an increase of 13% compared to 2014, adjusted EBITDA of CHF 127 million and an adjusted EBITDA margin of 30.8%, confirming the Group's momentum of profitable growth, which is further supported by its strong year-to-date February 2016 current trading. VAT is committed to an attractive dividend policy based on a strong free cash flow generation, with an envisaged dividend payment for the financial year 2016 of at least CHF 65 million.

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FOR RELEASE IN SWITZERLAND – THIS IS A RESTRICTED COMMUNICATION AND YOU MUST NOT FORWARD IT OR ITS CONTENTS TO ANY PERSON TO WHOM FORWARDING THIS COMMUNICATION IS PROHIBITED BY THE LEGENDS CONTAINED HEREIN.

Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in connection with any offer or commitment whatsoever in any jurisdiction. Investors should not purchase or subscribe for any shares referred to in this announcement except on the basis of the information that is contained in the offering and listing memorandum (the "Offering Memorandum") published by VAT Group AG (“VAT” or the “Company” and together with its subsidiaries, the “Group”) in connection with the proposed initial public offering of VAT Group AG and listing of all its issued and outstanding 30,000,000 registered shares with a nominal value of CHF 0.10 each on SIX Swiss Exchange. Copies of the Offering Memorandum may be obtained free of charge from UBS AG, Zurich, Switzerland (email: swiss-prospectus@ubs.com) and from Credit Suisse AG, Zurich, Switzerland (email: equity.prospectus@credit-suisse.com).

Media release

The current shareholders, mainly funds managed and/or advised by Partners Group and Capvis as well as management and other shareholders (the “Selling Shareholders”), will offer 12,000,000 existing shares (the “Base Offer”, before the exercise of the over-allotment option), representing 40% of the Company's 30,000,000 shares in issue. Partners Group, Capvis, the Company and other shareholders have committed to a lock-up period of six months after the first trading day. Management shareholders will be subject to a staggered lock-up over 36 months after the first trading day.

Pure player in high-end vacuum valve technology, and global market and technology leader

VAT is the global market leader for high-end vacuum valves and related services in the semiconductor, display, solar and industrial & research sectors. In 2015, VAT had a 41% market share in the vacuum valves market, almost eight times more than the next largest competitor (according to VLSIresearch). VAT's key strengths are:

• Pure play business model focused on mission-critical high-end vacuum valves
• Technology leadership resulting in long-standing, trust-based partnerships with blue-chip customers
• Undisputed market leadership and high barriers to entry
• Multi-dimensional growth driven by accelerating importance of vacuum as key enabler of proliferating technologies
• Proven management team with a clear strategy and highly skilled workforce
• High profitability and strong cash flow generation through the cycle

Heinz Kundert, CEO of VAT, comments: “As the global market leader for vacuum valves, VAT is well positioned to benefit from strong secular trends, such as the increasing miniaturization and sophistication of electronic devices, the proliferation of electronics in all areas of our daily life and the increasing use of vacuum products in the industry. The listing on SIX Swiss Exchange will broaden our shareholder base, create an attractive free float and will enhance the public profile of VAT as a global player. This will help us to further attract the best talents available. We look forward to opening the next chapter in the history of VAT.”

Alfred Gantner, Vice-Chairman of the board of directors of VAT and co-founder of Partners Group, comments: "Since our joint acquisition of the Company, Partners Group has worked actively alongside Heinz and his management team, in particular helping VAT to expand its international presence and find additional efficiencies in its operational processes. We are pleased that these efforts have enabled us to prepare VAT for an IPO on SIX Swiss Exchange. I firmly believe that VAT continues to have promising potential for growth and look forward to remaining a member of its board of directors and seeing it realize that potential as a listed Company."

Ulrich Eckhardt, member of the board of directors of VAT and partner of Capvis Equity Partners, adds: “We are very pleased with the development of VAT since we invested in the Company. The strengthened executive leadership team has accelerated the global growth of VAT and has further expanded the Company's market position in all relevant segments and regions. As a listed Company, VAT is ideally positioned to capture the promising growth opportunities ahead.”

Strong growth and profitability –­ positive outlook for 2016

VAT is organized into three different reporting segments: Valves (73% of net sales in 2015), Global Services (16% of net sales in 2015) and Industry (11% of net sales in 2015). The segment Valves includes Single Valves (67% of net sales in 2015) and Modules (6% of net sales in 2015). The segment Industry consists of the subsidiaries COMVAT with its edge-welded bellows product offering and Sysmec, a manufacturer of mechanical components and assemblies. The Company maintains international manufacturing facilities in Haag (Switzerland), Penang (Malaysia), and Arad (Romania). In 2015, VAT recorded 40% of net sales from Asia, 37% from the Americas and 23% from Europe/Rest of World.

Key financial figures

* Financial figures shown for 2015 are those of VAT Holding S.à r.l., a wholly owned subsidiary of VAT Group AG and former parent company of the Group prior to foundation of VAT Group AG; financial figures shown for 2014 are those of VAT Holding AG, a wholly owned subsidiary of VAT Group AG and former parent company of the Group prior to its acquisition by funds managed and/or advised by Partners Group and Capvis. For details please refer to the Offering Memorandum.

** Adjusted for certain one-time personnel costs in connection with the acquisition of the Group by funds managed and/or advised by Partners Group and Capvis (2015: CHF 1.5 million; 2014: CHF 2.1 million) and consulting fees associated with the reorganization of the Group and the transition from a family-owned business to a publicly-listed company (2015: CHF 5.7 million; 2014: CHF 2.7 million).

*** Free cash flow for the year ended December 31, 2014 was CHF 38.9 million; the free cash flow as presented above excludes an intercompany loan of CHF 25.6 million granted by VAT Holding AG to a parent holding company.

In the first two months in 2016, the business of VAT has continued to perform positively with net sales amounting to CHF 74 million and adjusted EBITDA and profitability having also developed as expected. VAT continues to observe increased market momentum and technology investments by end-customers. This, in turn, has driven order intake from key OEM customers resulting in an increased order book as of February 29, 2016 as compared to year-end 2015, supporting the currently positive outlook for 2016.

Highly attractive dividend policy

VAT is committed to an attractive dividend policy based on a strong free cash flow generation. For the financial year ending December 31, 2016, VAT intends to pay a dividend of at least CHF 65 million out of reserves from capital contributions. For subsequent financial years, as long as the Group's net debt does not significantly exceed 1x EBITDA, VAT intends to distribute to shareholders up to 100% of Free Cash Flow to Equity*, barring unforeseen events. VAT's ability to pay dividends remains subject to the availability of sufficient distributable reserves as well as certain other legal and contractual restrictions applicable to the Group as described in greater detail in the Offering Memorandum.

*Defined as cash flow from operating activities less cash flow from investing activities less interest paid and scheduled amortization of debt

Offer structure

The book-building process begins today, March 31, 2016, and is expected to end on or around April 13, 2016. The final offer price is expected to be published on or around April 14, 2016 before the start of trading on SIX Swiss Exchange. The listing of the shares in accordance with the International Reporting Standard of SIX Swiss Exchange and commencement of trading in the shares on SIX Swiss Exchange is expected to take place on or around April 14, 2016.

The funds managed and/or advised by Partners Group and Capvis have granted the Joint Global Coordinators an over-allotment option of up to 1,800,000 shares, exercisable in whole or in part within 30 calendar days after the first trading day on SIX Swiss Exchange. The free float is expected to amount to 40% of the shares before exercise of the over-allotment option and 46% if the over-allotment option is exercised in full, corresponding to a total placement volume of up to CHF 635 million. After the listing and assuming the over-allotment option is exercised in full, the funds managed and/or advised by Partners Group and Capvis will hold approximately 45.8% of the share capital, other shareholders will hold approximately 5.4%, while management will hold approximately 2.9% of the share capital.

The IPO of VAT consists of a public offering in Switzerland; private placements in certain jurisdictions outside the United States of America (the “United States”) and Switzerland in accordance with applicable securities laws and on the basis of exemptions provided by Directive 2003/71/EC of the European Parliament and the Council of November 4, 2003 on the prospectus to be published when securities are offered to the public or admitted to trading, as amended (the “Prospectus Directive”); an offering in the United States only to Qualified Institutional Buyers as defined in, and in reliance upon, Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”); and private placements in Canada to accredited investors and permitted clients in the provinces of Alberta, British Columbia, Ontario and Quebec. All offers and sales outside the United States will be made in compliance with Regulation S under the U.S. Securities Act of 1933, as amended.

UBS and Credit Suisse are acting as Joint Global Coordinators and Joint Bookrunners on the IPO, and J.P. Morgan is acting as additional Joint Bookrunner. Bank Vontobel and Berenberg are acting as Co-Lead Managers and St.Galler Kantonalbank as Selling Agent. Lilja & Co. is acting as independent adviser to Partners Group, Capvis and VAT.

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