Banker Sees More EU Auto Parts Deals

  • Baird’s Silver sees more deals likely after LKQ buys Sator Beheer
  • Apax Partners buying Italy’s Rhiag after reports of a Bain bid
  • Banker signals interest from buyout shops on both sides of the Atlantic

“There is a good level of private equity interest in this sector,” David Silver, managing director and head of European investment banking at Baird, told Buyouts. “People are keen to identify assets. Deals like this get other market participants thinking.”

It’s the second auto parts deal for Baird in less than two years after the bank advised Euro Car Parts Ltd on its sale to LKQ for up to $435 million.

While sales of new cars and trucks have hit the skids as part of sluggish European GDP, the business for replacement auto parts is benefiting from an aging fleet of roughly 250 million vehicles still on the road.

Silver said this macro trend has cast the spotlight on a number of buyout shop holdings in the sector:

  • London’s Apax Partners is set to close its $651 million purchase of acquisition of Rhiag, an Italian auto parts distributor, after reports that Bain Capital would buy the company last year. The deal marks the first Italian leveraged buyout in a year, sister news service Reuters reported.
  • Florida-based H.I.G. Capital sold car parts maker Anvis to Japan-based Tokai Rubber for $178 million earlier this year.
  • Andrew Page, one of the U.K.’s largest distributors of car parts, is owned by Phoenix Equity Partners, a mid-market private equity firm.  
  • U.K.-based HgCapital Trust last year disclosed an investment in the Parts Alliance, as part of a plan by the firm “to consolidate this group to create a single national entity which we believe will be attractive to a range of potential trade and financial buyers.”
  • Dutch-based H2 Equity Partners closed its acquisition of a majority stake in Unipart Group in 2011.
  • London and New York-based TowerBrook Capital Partners took control of Autodistribution Group, a European distributor of spare parts for cars and trucks, in 2009.

Baird’s Silver said he sees a surprisingly robust M&A picture in Europe overall. The firm’s deal backlog on the Continent is the highest it has ever been, he said.

“The economic environment could be better, but we’re finding the merger and acquisition environment is very good in Europe,” Silver said. “It’s a good way to drive growth beyond what you’re seeing in the economy in general. There are private equity firms who need to show returns and are very focused on getting those returns from their best quality investments.”

Marco De Benedetti, a managing director at The Carlyle Group and co-head of Carlyle European buyouts, told Buyouts in February that the region appears to have “bottomed out.”

The Washington, D.C., mega-firm ranks as one of the most active U.S. sponsors operating in Europe.

“That does not mean we expect any significant recovery anytime soon, but my sense is that the worst is over. We will have a bumpy road, it will be a volatile market, but things are improving,” De Benedetti said.