HgCapital exits The Parts Alliance in £205m trade sale

Christopher Papadopoullos
02 June 2017

Tweet
Facebook
LinkedIn
Google plus
Send to

HgCapital has sold its investment in UK automotive aftermarket parts distributor The Parts Alliance to Canadian trade buyer Uni-Select for ТЃ205m.

The sale, the 13th realisation from HgCapital 6 Fund, delivered a 2x investment multiple and 19% gross IRR after a holding period just shy of five years. The company was expanded through a series of acquisitions, with the group now formed of 13 parts distributors, 10 of which are owned by Parts Alliance.

Uni-Select estimates a purchase price multiple of 9.7x based on run-rate adjusted EBITDA.

The 2009-vintage HgCapital 6 Fund has now delivered returns of 2.3x and a 24% gross IRR, returning 130% of the original cash invested so far.

Uni-Select is a listed distributor of automotive refinish and industrial paint products and aftermarket parts. The purchase will be fully funded with debt, while Parts Alliance CEO Peter Sephton will join Uni-Select's executive team.

Uni-Select has secured a $625m commitment from the National Bank of Canada as co-lead arranger and sole bookrunner, and Royal Bank of Canada, as co-lead arranger. The package comprises a $100m term facility and an operating facility of $525m.

Previous funding
In August 2012, HgCapital invested to acquire a minority stake in Parts Alliance for an undisclosed amount. It gradually acquired and added on businesses to the group while gaining a majority stake.

Company
Parts Alliance is the second largest distributor of automotive afterparts in the UK, with an approximate market share of 7%, according to the GP. It services 23,000 customer accounts through 161 corporate stores employing 2,900 staff. The group was created in 1999, but its oldest member was founded in 1960. It is based in Solihull.

On an unaudited basis, Parts Alliance recorded £264.9m in sales and EBITDA of £17.8m for the year to April 2017. Adjusting for its most recent acquisition, Parts Alliance's adjusted EBITDA is estimated at £21m, on an estimated £280m in sales.

People
HgCapital – Martin Block (partner).
The Parts Alliance – Peter Sephton (CEO).
Uni-Select – Henry Buckley (CEO).

Advisers
Equity – Freshfields Bruckhaus Deringer (legal); McCarthy Tétrault (legal); Jefferies (corporate finance).
Vendor – Baird (corporate finance); White & Case (legal).