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Permira to make more than 5x its money with Intelligrated sale: source

After a four-year hold, Permira expects to make more than five times its investment with its sale of Intelligrated, a source familiar with the transaction said.

Honeywell said July 1 that it agreed to buy Intelligrated, a Mason, Ohio, warehouse-automation company, for $1.5 billion cash. The sale is expected to close in the third quarter, a Honeywell statement said.

Intelligrated provides supply-chain and warehouse software, equipment and services for retailers, manufacturers and logistics providers. Clients include Amazon.com, Tesla Motors, Walmart, Walgreen’s and Home Depot. Intelligrated employs more than 3,100 people, the statement said.

Once the sale closes, Intelligrated will become part of Honeywell’s Sensing and Productivity Solutions, which is part of the Automation and Controls Solutions business, the statement said.

Chris Cole, Intelligrated’s CEO, founded the company in 2001. Bruce Eric Anderson, Honeywell’s spokesman, told Buyouts that the intent is to buy all of Intelligrated.

The $1.5 billion sale price is about 12x Intelligrated’s estimated 2016 EBITDA of $125 million, the statement said. Intelligrated’s revenue for 2016 is expected to be around $900 million, according to the statement. That’s more than double the $435 million of 2012, according to Moody’s Investors Service.

Permira’s investment in Intelligrated dates to 2012. At that time, Gryphon Investors sold Intelligrated after a near 11-year hold, Buyouts reported.

Permira acquired a majority stake in the company in a deal valued at more than $500 million, Buyouts said. Permira invested a little more than $200 million equity in the deal, the source said.

The U.K. buyout shop backed an emerging trend in e-commerce, Richard Carey, a Permira partner and co-head of the firm’s industrials sector, told Buyouts Friday.

“It was pretty clear that the world in 2012 was moving to parcels delivered to the doorstep,” Carey said. “All of Intelligrated’s customers need to retool their fulfillment systems to keep pace with the growth of e-commerce.”

Permira has not received any dividends from Intelligrated since 2012, the source said.

The PE firm put Intelligrated up for sale earlier this year, the source said. Centerview Partners, which ran the auction, targeted only strategics, the person said.

Toyota Industries Corp competed with Honeywell to buy Intelligrated for $1.5 billion, Reuters reported. “I don’t think a financial buyer could’ve gotten to that price,” the source said.

Permira used its fourth fund, which collected $14 billion in 2006, to invest in Intelligrated. Permira’s fourth fund generated a net IRR of 6.5 percent and a 1.3x investment multiple as of Sept. 30, according to performance data from CalPERS.

The firm is fundraising for its sixth pool, which is seeking 6.5 billion euros, Buyouts reported.

David Cohen of Centerview advised Permira. Allison Schneirov and Jon Hlafter of Skadden provided legal advice to the firm.

A Permira spokesman declined comment. Intelligrated could not be reached for comment.

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Photo courtesy ©iStock/Andrew Rich