Montagu Private Equity, a mid-market buyout firm, should complete the £450 million ($854 million; €670 million) transaction to buy British Car Auctions, a European company, in a month, a source close to the deal said.
The business, described by the source as “the stock exchange of the used car market”, provides lease companies, fleet managers and dealers mainly in the UK with quick access to cash through its auctions. It has operations in 11 countries, including the UK, France, Spain, Germany and the Nordic region.
The source said the auction firm was a market leader with good, stable cashflows underpinned by long-term growth trends and a continental European business that was small but growing, particularly in Germany and Spain.
Montagu is buying the business from a group of 40 investors including the high-profile UK Conservative party deputy chairman Lord Ashcroft, who according to a report in The Financial Times is set to make about £200 million from the sale.
The investor group has held the company since buying it out of ADT, an electronic security group then headed by Ashcroft, in 1995 for £215 million.
The source said Montagu’s negotiations had focused on the chairman David Hammond. Jon Olsen, the auction company’s chief executive, is part of Montagu’s bid team and will take a large minority stake in the business.