The Australian's Bridget Carter has published two articles in the DataRoom column about the players vying for Australia's second largest repair group Captial S.M.A.R.T.
According to Carter, Britain’s Belron is believed to be among the final contenders while the Canadian pension fund-backed Fix Auto is understood to have left the competition.
'It comes as bidders prepare to submit their final offers by September 23 for the Suncorp-owned business that is up for sale through Luminis Partners.
'Left in the competition are Quadrant Private Equity with the Capital Smart founder Jim Vais, AMA and Pacific Equity Partners, while DataRoom can reveal that Belron is in the final stages.
Belron describes itself as the world’s leading vehicle glass repair and replacement company, operating in 30 countries.
Fix Auto, backed by pension fund Caisse de depot et placement du Quebec, was thought to be interested but is no longer a contender. (Brands include O'Brien and Autoglass.)
'Shaping up as the frontrunner in the contest is AMA, which is close to Quadrant, and its backers, advised by Allier Capital, which will no doubt put up a strong fight. AMA trades at 11 times its earnings and may do an equity raising to buy the business.
'Quadrant’s plans are to eventually list Capital S.M.A.R.T should it secure ownership of the company that is expected to sell for about $300m, but in isolation.
'One theory circling last week was that the business could be listed in conjunction with Quadrant’s Peter Warren Automotive and the John Weekley-founded Motor One parts operation, although that is now not on the agenda for Quadrant, with differing views as to whether there are synergies between its other automotive-related companies.
No doubt weighing on Suncorp’s mind will be what company it will be dealing with when it continues a 20-year contract with Capital Smart.
'Suncorp refers 160,000 vehicles a year from its insurance arm, generating $46.4bn over the life of the contract.
It currently has exclusive use of Capital S.M.A.R.T, but once sold, an acquirer will have the right to provide services to other customers.
Annually, Capital Smart is thought to generate between $20m and $30m of earnings annually and some believe it would be likely to stage a strong improvement back in the hands of Mr Vais, who founded the business in 2010 and sold it to Suncorp.'
In an earlier article published on 12 September, Carter speculates on Quantrant's strategy for Capital S.M.A.R.T.
'There could be more at stake for Quadrant Private Equity in buying Suncorp’s Capital Smart smash repairs business than some people think, with a theory that the buyout fund has a major automotive-related initial public offering riding on the purchase.
'Vying for Capital Smart along with the Allier Capital-advised Quadrant is founder and former owner Jim Vais, and what could be brewing in the background is a plan to combine Capital Smart with companies Quadrant already owns.
These include its Peter Warren Automotive Group and Motor One parts operation, founded by John Weekley.
'Such a move may achieve synergies as high as $30m by bringing the three operations together, and create an attractive $1bn-plus float prospect at a time when weak new-car sales has made dealership businesses unattractive for investors.
A merger could help Quadrant position its business as a smash repairs provider like the listed AMA Group, which trades at 11 times its earnings.
'Quadrant has experience in automotive, previously owning Burson Auto Parts, which now trades publicly as Bapcor.
Suitors for the $300m-plus Capital Smart contest are preparing to submit final bids by September 23, and others still in the mix are understood to be listed crash repairs company AMA Group, Pacific Equity Partners and Fix Auto.
Another logical contender to be around the hoop is British-based vehicle repair company Belron Group.
Suncorp currently has exclusive use of Capital Smart, but once sold, an acquirer will have the right to provide services to other customers.
'The attraction for buyout funds is that the company is considered “best in breed”, with superior technology, a long track record and a defensive nature, generating income from car smash repairs.
Suncorp moved into the sector about nine years ago, but the business is no longer considered core. It was established in 2010.'
DATAROOM EDITOR
Bridget Carter has worked as a writer and editor for The Australian’s DataRoom column since it was launched in 2013, focusing on capital markets, mergers and acquisitions, private equity and investment banking.