U.S. buyout funds Blackstone and Bain Capital are looking to place indicative offers for Italian car parts distributor Rhiag (IPO-RHIA.MI) in an attempt to derail its Milan listing, four sources familiar with the matter said.
Two other private equity funds, Carlyle and Permira, are also considering whether to enter the race, the sources said, adding that non-binding bids are expected early next week.
Rhiag is wholly held by private equity firm Apax which hopes to cash out for at least 1 billion euros, or 10 times its earnings before interest, taxes, depreciation and amortization (EBITDA) of 103 million euros, said a source close to Rhiag, speaking on condition of anonymity.
Spokesmen at Apax, Blackstone, Bain, Carlyle and Permira declined to comment.
Rhiag was not immediately available for comment.
Reuters exclusively reported in July that JPMorgan and UBS were working with Rhiag to explore strategic options.
On Oct. 2, the company filed a request to list on the Milan Bourse.
A stock market listing remains the main goal, the source close to Rhiag said, adding that offers valuing the company at a double digit multiple would be taken into account.
“A solution will be found by the end of the year,” another source said, adding that both options – an initial public offering (IPO) and a sale – were still being considered.
BUY AND BUILD
Private equity bidders could be challenged by high price expectations, said a source familiar with the process, who stressed that Apax bought Rhiag in 2013 for seven times its core earnings and industry valuations have since then remained flat.
However, Blackstone and Bain could leverage their automotive expertise since they have both done deals in car parts distribution and could eventually combine Rhiag with existing portfolio companies, the sources said.
In 2014, Blackstone bought Alliance Automotive Group, a wholesale distributor of auto parts in France and Britain.
Bain said in September it was in exclusive talks to buy Autodis Group, a French firm specialising in after-market automotive parts distribution.
Headquartered in Pero, close to Milan, Rhiag operates as a distributor of replacement automotive components to after-market wholesalers in 10 European countries including the Czech Republic, Slovakia, Poland, Romania and Ukraine.
It was sold to Apax in October 2013 for an undisclosed amount.
Founded in 1962, Rhiag has a long history of private equity ownership as buyout funds have consistently injected capital for the past 17 years.
It was first sold to London-based buyout fund CVC in 1998 and later acquired by Alpha Associates in 2007. Alpha tried to list the business in 2011 and subsequently sold it to Apax.