Reuters – Second Round Bids Due for Ista

The sale of German energy metering firm Ista is heating up as a number of buyout houses including Axa Private Equity and BC Partners prepare to submit second round bids, Reuters wrote on Wednesday. Private equity groups Charterhouse and CVC Capital Partners kicked off the sale of Ista last year, hiring Deutsche Bank and Goldman Sachs to run the process.

(Reuters) – The sale of German energy metering firm Ista is heating up as a number of buyout houses including Axa Private Equity and BC Partners prepare to submit second round bids, banking sources said on Wednesday.

Private equity groups Charterhouse and CVC Capital Partners kicked off the sale of Ista last year, hiring Deutsche Bank and Goldman Sachs to run the process.

The sellers are hoping to tap into a growing appetite for deals among private equity groups sitting on large cash piles after a dearth of M&A activity last year, with Ista seen as a solid earner with growth potential.

First round bids were submitted last month for Ista which has a price tag of around 3 billion euros ($3.85 billion), making this one of the biggest private equity transactions in Germany this year.

Charterhouse bought Ista at the height of the buyout boom in 2007 for 2.4 billion euros from CVC, backed with 2.1 billion debt, according to Thomson Reuters LPC data. CVC later bought back 24 percent.

Axa and BC are due to submit second round bids later this month as are Ontario Teachers’ Pension Plan and Wendel, bankers said.

Bain Capital, Blackstone, Canada Pension Plan and Cinven are not going through to the second round. Apax expressed initial interest but did not submit a first round bid, bankers said.

All potential bidders and sellers declined to comment or were not immediately available to do so.

The successful buyer will need to write an equity cheque of around 1.1-1.2 billion euros and the rest will be financed with debt.

Bankers are working on debt packages of around 2 billion euros or seven times Ista’s approximate 290 million euros of earnings before interest, taxes, depreciation and amortization (EBITDA), bankers said.

There is enough liquidity in the debt markets to raise around 2 billion euros to back the buyout but senior leveraged loans, mezzanine loans and the high-yield bond market could all need to be tapped to raise it, bankers added.

Deutsche and Goldman Sachs have also put together a ‘staple’ financing package that offers all potential buyers money to pay for the acquisition, to speed the deal along and give buyers confidence that debt can be raised.

Ista, which has energy meters installed in 11 million flats and commercial sites, posted sales of 700 million euros in 2011 and employed 4,600 staff in 25 countries.