Three line up for Spain’s Telvent

Private equity groups KKR, Permira and Carlyle have expressed interest in buying Spanish industrial group Abengoa’s 63% stake in IT firm Telvent, which could fetch €250m–€500m according to Madrid-based analysts.

Abengoa, a Seville-based industrial and energy group, had hired Blackstone Group as financial adviser, said Juan Carlos Jimenez Lora, investor relations director.

“We have hired Blackstone to explore sale options but we haven’t opened a formal process,” he said, adding that “several firms” had expressed interest in the business.

KKR, Permira, and Carlyle would not comment. Spanish technology group Indra, which is also understood to want to bid, also would not comment.

Telvent provides IT services and products for the energy, transport, environment and public sectors. It posted a 3.4% rise in nine-month profits to €17.9m this year on sales of €444m, down from €391m in the same 2007 period.

The company’s shares has been battered by Spain’s stinging economic recession and has fallen by more than 60% this year, closing at €10.44 on Monday.

Traded in New York, Telvent’s current market capitalisation is US$350m.

Analysts at brokerage Banesto said the firm could change hands for as much as €750m including debt, valuing Abengoa’s 63% holding at €472.5m.

If Abengoa garners that much from a buyout firm, the deal would be the first large Spanish PE acquisition in many months. First Reserve Corporation snapped up solar firm Gamesa for €250m in March, making it the country’s largest buyout this year. Since then, buyouts have virtually ground to a halt as the recession and the credit inferno have dried up liquidity for M&A transactions.

Sergio Ruiz, an analyst at brokerage Caja Madrid, said Banesto’s estimates were too high. He valued Telvent at 6.5–7.5x Ebitda or €350m–€400m, meaning 63% could fetch up to €252m.

Telvent recently acquired US rival DTN for 7.7x Ebitda and Abengoa is likely to use that acquisition as a guiding price for Telvent.

“There’s no way they are going to want to sell for much less than that and they will only sell if they get a good price,” Ruiz said. Moreover, Abengoa has enough expansion capital until 2011, so it is unlikely to rush the sale this year, he added.

According to analysts, Indra could wage a heavy fight for Telvent as it wants to expand in the US, where the firm has a strong presence, raising the potential for a bitter bidding war.