- KKR, Blackstone and Warburg Pincus are considering bids for Cary, a European windshield repair business owned by CVC Capital Partners and Nordic Capital, according to people familiar with the matter. First-round bids are expected in the coming weeks and Jefferies is advising.
- Bloomberg reported in March that the owners were exploring an exit at a valuation of €3 billion, about $3.4 billion, or more. Deliberations continue and there is no certainty any of the firms will bid. Representatives for all parties declined to comment.
- Jefferies has been circulating information to banks and private credit firms so potential lenders can size and price financing packages. Banks are expected to offer cut-rate pricing specifically to outbid private credit firms, with recent comparable pricing seeing B2-rated Sunday Natural term loans at a margin of 350 basis points over Euribor.
- Cary operates across Europe through brands including National Windscreens, Autoglass Clinic, Ralarsa and Dansk Busglas, and provides auto-body and smaller-area repairs in the Nordic region.
What Happened?
The process arrives as dealmakers attempt to recover from a sluggish third quarter and push toward what could be a record year for mergers and acquisitions. Private equity firms are central to that, but have found transacting difficult this year partly because of persistent valuation gaps between buyers and sellers.
Why It Matters?
The financing contest is more consequential than the deal. Banks offering deliberately cheap pricing to displace private credit lenders is the clearest evidence yet that the banking system is reclaiming leveraged lending share it ceded over the past decade. A reference point of 350 basis points over Euribor on B2-rated paper is tight for deep speculative-grade credit, and if that is the level required to win mandates, origination spreads across the asset class are compressing. For anyone holding private credit funds, returns are determined at origination, and this is where that return is being competed away. The timing makes it sharper. Moody’s reported that private credit already represents 35% of life insurer investments with more than 40% of insurers planning to increase exposure, so capital is flowing into the asset class at precisely the moment banks are undercutting it on price. More money chasing deals against a competitor willing to price below economics is the standard precondition for spread compression and weaker covenants, and both tend to be recognised only after the fact. Investors being offered private credit allocations should ask what origination spreads look like now rather than what the strategy returned historically. The transaction structure also says something about the exit environment. This is a sponsor selling to other sponsors rather than to a strategic buyer or through a listing, which is how private equity exits when the other routes are unavailable. It passes the asset between funds, generates fees and a realisation for the seller, and leaves the underlying question of ultimate value unresolved.
What Next?
First-round bids in the coming weeks will indicate whether the €3 billion valuation holds or whether the buyer and seller gap that has stalled other processes applies here too. The financing outcome is the item with the broadest significance: whether banks or private credit firms win the package, and at what spread, will be read across the leveraged finance market. Watch whether other large European sponsor-to-sponsor processes launch on the back of this one, since a successful sale would encourage sellers who have been waiting. For private credit investors, track whether the pricing seen on comparable deals continues tightening, as that determines forward returns far more than deal volume does.
Affected Tickers and Coins: KKR, BX, CVC, ARES, APO
Source: Bloomberg
