American Beacon may be too expensive for PE

Target: American Beacon Advisors

Price: Seeking bids in high $600 mln to $700 mln range

EBITDA Multiple: Could go for 12x

Financial Adviser: J.P. Morgan Chase & Co (seller)

Fort Worth, Texas-based American Beacon is seeking bids in the high $600 million to $700 million range, two sources said. The mutual fund company produces EBITDA of $50 million to $60 million, one of the people said.

“We are interested in buying the business but don’t think it’s a 12x business,” said one private equity executive who is no longer vying for American Beacon.

“That’s a really big price,” a second private equity executive said. “To pay that amount, it would be more likely a strategic who wins. It would be hard to see how a private equity firm justifies that valuation without some level of revenue or cost synergies.”

Interested parties could include Old Mutual, Affiliated Managers Group and Virtus Investment Partners, a third private equity executive said.

Still, a fourth source thinks private equity will be interested. Potential bidders could include Lightyear CapitalClayton Dubilier & Rice as well as Altamont Partners. Sources pointed to Altamont Partners’s hiring of David Odenath, ex-Senior VP and head of Americas at Legg Mason, in September to pursue financial services investments. The Carlyle Group, which acquired money manager TCW in 2013, would also be a logical buyer, a different source said.

But Hellman & Friedman, which has also invested in asset managers, likely wouldn’t be interested. American Beacon isn’t that big of a business, a private equity source said.

In September, sister news service Reuters reported that American Beacon, which is backed by Pharos Capital Group LLC and TPG Capital, was up for sale. J.P. Morgan Chase & Co. is advising on the auction, the story said.

American Beacon had $60.1 billion in assets under management as of June 30. In 2008, AMR Corp. sold American Beacon to Pharos and TPG Capital in a $480 million deal. AMR retained a 10 percent stake, press reports said.

Executives for American Beacon, Old Mutual, TPG Capital, Carlyle Group, Virtus, Hellman & Friedman, Pharos and Lightyear declined comment. Those at Altamont, Affiliated Manager Group, and CD&R couldn’t be reached for comment.

Luisa Beltran is a senior reporter for sister website peHUB.