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Providence puts OEConnection on block, seeks at least $1 bln

  • First round bids due in two weeks
  • Providence acquired OEC in 2016 from GM, Ford
  • UBS is advising Providence

Providence Equity Partners has put software maker OEConnection on the block after a three-year hold, three sources familiar with the process told Buyouts.

First round bids are due in two weeks, the people said. UBS is advising Providence on the sale, they said.

Cleveland-based OEConnection (OEC) makes software for the automotive market, including distributors and original equipment manufacturers (OEMs). The company serves more than 20 OEMs and 100,000 dealership and repair customers.

OEC’s business model includes e-commerce, tracking, supply chain and pricing technology components.

The company generates about $80 million in Ebitda, the sources said.

Providence is looking for a price well over $1 billion, three sources said. One source said the seller is looking for a multiple of 15x, which equates to a price of $1.2 billion.

In June 2016, Providence acquired a majority stake in OEC from General Motors and Ford. As part of that deal, each automaker retained a 15 percent stake in OEC.

It’s unclear whether GM or Ford are planning to exit their positions in OEC.

Since its initial investment, Providence completed two add-ons to the OEC platform. In October 2018, the firm acquired Bluegrasscoms, a U.K.-based automotive business consultancy and service provider.

About a year and half earlier, Providence bought Clifford Thames Group, a data management provider for vehicle repair and maintenance.

Providence is no stranger to the automotive software market. It previously bought and sold AutoTrader and Vector Solutions. Most recently, in August 2018, it acquired KPA, a provider of environmental, health and safety (EHS) compliance offerings to auto dealers.

Providence is looking to do deals. It raised more than $2.2 billion for its eighth fund in December. Six months earlier, growth equity arm Providence Strategic Growth raised $1.3 billion for PSG Fund III.

Based in the city of the same name in Rhode Island, Providence manages more than $40 billion in total capital commitments. The firm focuses on investments in media, communications, education and information industries.

Representatives for Providence, OEC and Ford declined to comment. GM did not respond to a request for comment before press time.

Action Item: Reach Providence Equity in New York at 212-588-6700.