American Capital in $112m secondary auto parts deal

In the third auto parts buyout in two weeks, Norwest Equity Partners has sold Imperial Supplies to American Capital Strategies for $112 million in equity and debt.

American Capital Strategies has acquired after-market auto parts distributor Imperial Supplies from Norwest Equity Partners for $112 million (€79 million). The deal includes an equity portion as well as a senior term loan and senior and junior subordinated debt, though specific financial details weren’t disclosed.

Imperial’s management will also make an equity investment, and will hold a minority stake in the company after the deal’s close.  

Norwest bought the company in April 2003 for an undisclosed amount. During its ownership, the private equity firm focussed on adding new customers and shipping locations, Norwest said in a statement. Since 2003, Imperial has realised double digit growth on compound annual sales, Norwest said.

The after-market auto parts sector has long attracted the interest of private equity firms, despite, or in some cases because of, the troubles faced by the US automotive industry as a whole. In 2004, private equity firms acquired 30 aftermarket auto parts suppliers for a total of $5.4 billion, according to a report by Robert W. Baird & Co. The trend shows no signs of slowing: last week alone Sentinel Capital Partners bought one after-market auto parts distributor, and sold an after-market golf cart parts distributor.

American Capital said in a statement that the industry is supported by the increase in truck transportation volumes and the aging of fleets.