Leonard Green to buy Mister Car Wash for $400 mln to $500 mln: UPDATED

ONCAP, the mid-market arm of Onex Corp, is selling Mister Car Wash after more than seven years.

Leonard Green & Partners is buying the Tucson, Arizona-based car wash company, according to two banking sources and an FTC filing. Harris Williams advised on the auction, the sources said. Mister Car Wash, which went up for sale earlier this year, was looking to sell for a double digit multiple. Other bidders included the Ontario Municipal Employees Retirement System and two other private equity firms whose identities couldn’t be determined, one of the bankers said.

Leonard Green is paying $400 million to $500 million for Mister Car Wash, the banking sources said. The investment is coming from Leonard Green’s sixth fund, the FTC filing said. Green Fund VI closed at $6.25 billion in 2012. The pool is producing an IRR of 2.75 percent and 1x total value multiple as of Dec. 31, performance data from the Washington State Investment Board showed.

Mister Car Wash operates 134 car washes and 32 express lubes in 14 states, the company website said. It employs more than 4,800 people and services more than 15 million vehicles annually, the company said in a May statement.

ONCAP acquired Mister Car Wash in April 2007. Toronto-based ONCAP invests in mid-market companies with enterprise values of $50 million to $500 million, the firm website said.

In September 2011, ONCAP III closed at $800 million while the firm’s second fund collected $574 million in May 2006, according to that firm’s web site. ONCAP’s first fund raised $400 million in December 1999.

ONCAP III is producing a 0.34 percent IRR since inception as of Sept. 30, according to the California State Teachers’ Retirement System. Performance data for funds I and II was unavailable.

UPDATE: ONCAP III is generating a 25 percent gross IRR and a 12 percent net IRR as of March 31, according to ONEX’s first quarter financial statement. ONCAP’s second fund produced a 30 percent gross IRR and a 21 percent net IRR as of March 31, Onex said, while ONCAP’s first pool produced a 55 percent gross IRR and 38 percent net IRR.

Executives of ONCAP, Leonard Green, Harris Williams and Mister Car Wash could not be reached for comment.

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