Providence to buy Carlyle, Welsh Carson portfolio company for $1.5bn

The Carlyle Group and Welsh Carson have agreed to sell USIS, a provider of “pre-employment screening solutions”, to Providence Equity Partners for $1.5 billion.

Background screening firm USIS is set to change hands among private equity firms, as Providence Equity Partners has agreed to pay $1.5 billion (€1.1 billion)  to acquire the company from The Carlyle Group and Welsh, Carson, Anderson & Stowe.

The transaction is expected to close in the third quarter of 2007, and is subject to regulatory approvals and other customary closing conditions. Lehman Brothers was financial advisor to USIS.

Founded in 1996, USIS has three divisions that provide “pre-employment” screening including drug testing, background investigations, business intelligence and risk management solutions, and national security training and staffing professional services. It is the largest provider of security investigations for the US government.

In November, UK mid-market firm Bowmark Capital sold its stake in drug-testing provider Medscreen Holdings for £30 million, netting a 6.7 times return on investment.

Security training providers have also proven attractive to the industry; In 2003, New York-based Veritas Capital purchased DynCorp for $850 million. The company provides training for international security services and law enforcement, as well as aviation maintenance.

Carlyle, Providence, and Welsh Carson are among the world’s top 50 largest private equity firms, according to the PEI 50, a new league table from sister publication Private Equity International. Ranked in terms of the amount of capital raised in the past five years, Carlyle took the top spot with $32.5 billion, while Providence ranked ninth with $16.36 billion and Welsh Carson ranked 42nd with $4.7 billion.