CD&R forms USD 4bn special-purpose vehicle for Belron stake

Harriet Matthews
20 December 2021

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Clayton Dubilier & Rice (CD&R) has formed a USD 4bn special-purpose vehicle (SPV) for its stake in Belron, with the aim of continuing its investment in the vehicle-glass repair and replacement company.

The transaction values Belron at EUR 21bn.

The deal will see 61% of the stake held by CD&R via its CD&R X fund transferred to the continuation vehicle, CD&R Value Building Partners I. The continuation fund was registered in August 2021, according to Unquote Data, with a target size of EUR 4bn-5bn.

One quarter of the fund has been provided by CD&R, with the majority of the fund contributed by existing LPs.

In addition, CD&R is to sell around 39% of the stake held in the company to Hellman & Friedman (H&F), the Singaporean sovereign wealth fund GIC, and BlackRock Private Equity Partners.

CD&R will hold a 20% stake in the company following the transactions, with the majority of this held via the SPV. CD&R will be Belron's second largest shareholder following the deal.

CD&R acquired a 40% stake in Belron in November 2017 for EUR 620m, with the company valued at EUR 3bn. Automotive supplier D'Ieteren Group and Belron's management team retained a 60% stake in the company. At the time, the company had an equity value of EUR 1.55bn and posted revenues of EUR 3.3bn.

The GP invested in Belron via CD&R X, which held a final close in April 2017 on its USD 9.35bn hard-cap. LPs in the fund include various US-based private and public pension funds, such as the Teacher Retirement System of Texas (TRS), which committed USD 325m to the fund. Canada Pension Plan Investment Board (CPPIB) committed USD 225m to the fund. Additional institutional investors in the vehicle include Pantheon and HarbourVest, according to Unquote Data.

CD&R sold EUR 150m's worth of shares in Belron back to previous parent company D'Ieteren in February 2020.

In July 2021, H&F, GIC and BlackRock invested in Belron in a deal that also valued the company at EUR 21bn, with an equity value of EUR 17.2bn, as reported. Following this, CD&R owned a diluted 24% stake in the business, while D'Ieteren owned a diluted 50.1% stake. H&F was the company's third largest shareholder with a 9% stake valued at around EUR 1.75bn.

Founded in 1897 and headquartered in Egham in Surrey, Belron provides vehicle glass repair and maintenance services, operating in 31 countries. The company operates in the UK and Ireland under the Autoglass brand. Belron posted revenues of EUR 3.9bn and adjusted operating results of EUR 583.1m in 2020.

Debevoise & Plimpton provided legal advice to CD&R on the sale of the company and the formation of the SPV. Lazard served as financial adviser to CD&R on the creation and closing of the SPV. Bank of America, Citi and JP Morgan advised CD&R on the sale of its stake to H&F, GIC and BlackRock.

GP-led secondaries deals have emerged in recent years as a way for GPs to retain some of their "jewel in the crown" assets for longer, giving LPs the option to take liquidity or roll over to the new continuation vehicle.

Recent large-cap continuation deals include BC Partners' Springer Nature; the GP announced in June 2021 that it was to transfer the publishing company into a continuation vehicle with commitments of more than EUR 1bn, as reported. The company is expected to place its road safety information and education assets up for sale in 2022, according to Unquote sister publication Mergermarket.