Carlyle to float testing business in Spain

The Carlyle Group is preparing to float Applus+ Services, a Spanish testing and inspection business, on four Spanish Stock Exchanges.

Barcelona-headquartered Applus+ provides regulatory-driven services and solutions for the energy, industrial, infrastructure and automotive sectors and operates in more than 60 countries. Applus+ aims to raise approximately €300 million from the public offering, which will mainly be used to reduce the group’s debt and transaction costs associated with the IPO, according to a statement. Applus+ generated €1.6 billion in revenues in 2013.

Carlyle, which owns 68.3 percent of the business, and Investindustrial, which owns 5 percent, both plan to sell down their stake in the listing. Pricing of the IPO is expected to take place in the next two weeks, according to a source familiar with the matter.

The IPO is likely to value the company at around €2.3 billion, the source said. It is understood Carlyle will retain a significant stake in the business following the listing. Both Carlyle and Investindustrial declined to comment.

Whilst preparing the flotation, Carlyle also received bids from Advent International, BC Partners and Cinven, which valued the business at around €2 billion, according to the source. The firm decided however to stick with the IPO as it expected it would lead to a higher valuation, the source added.

Under Carlyle’s ownership, Applus+ has grown significantly. When Carlyle bought its majority stake in July 2007 for €1.5 billion, the business had revenues of €546 million and a presence in more than 30 countries, PEI reported at the time. The firm made the initial investment using its €5.4 billion Carlyle European Fund III.

Investindustrial invested in the company using its €500 million Fund III. The firm will return approximately €1 billion of capital to LPs this quarter, a source told Private Equity International last week. This will include the proceeds of Avincis, which Investindustrial sold alongside Kohlberg Kravis Roberts for €2 billion last week. Fund III is currently valued at 2x, the source said at the time.

The planned listing in Spain is a further example of the recovery of the European IPO market as an exit route for private equity. KKR-backed Pets at Home and Warburg Pincus-backed Poundland were listed on the London Stock Exchange last month, while ISS, a Danish facility services company owned by EQT Partners and Goldman Sachs Capital Partners, also recently floated on the NASDAQ OMX Copenhagen stock exchange.