Kelso Hires Bank to Shop Building Products Firm: Sources

Private equity firm Kelso & Company has hired Barclays to find a buyer for Custom Building Products, Reuters reported.

(Reuters) – Private equity firm Kelso & Company has hired Barclays to find a buyer for Custom Building Products, which makes supplies for home furnishings and construction and counts Home Depot Inc as a primary retail partner, three people familiar with the matter said on Wednesday.

Kelso joins a number of buyout firms looking to divest assets in the housing and building products sector through a public offering or private sale, as the U.S. housing market rebounds from a prolonged slump following the credit crisis.

Custom Building Products, which Kelso bought for $600 million in 2005, makes various products such as mortars, ceramic tiles, grout, and thin veneers. The business now may be worth around $800 million, one of the sources said.

Initial offers for the company were due earlier this week, two of the sources said, asking not to be identified because the process is not public. Representatives for Kelso did not immediately respond to requests for a comment. Barclays declined to comment.

Seal Beach, California-based Custom Building specializes in flooring preparation products and tile and stone installation systems for residential and commercial construction.

Public market investors as well as private equity buyers are looking to capitalize on a rebound in the U.S. housing market, which was hit hard by the turmoil in the U.S. credit market in late 2007. Low interest rates and rising rents have pushed many consumers to buy homes, boosting the outlook for the housing and building products markets.

Another building products maker CPG International has also been put up for sale by private equity owner AEA Investors LP, a deal that could fetch between $1 billion and $1.5 billion, Reuters reported last month.