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CVC revs up £1.2bn sale of warranty giant D&G

cvc revs up 1 2bn sale of warranty giant dg

Business

CVC revs up £1.2bn sale of warranty giant D&G

The former owner of Formula One motor racing is revving up a fresh attempt to offload Domestic & General (D&G), the warranty giant which insures millions of Britons’ household appliances.

Sky News has learnt that CVC Capital Partners is holding talks with a small number of rival buyout firms about a sale of D&G, even as it prepares for a stock market listing of the business.

City sources said on Friday that CVC and its advisers had held talks in recent weeks with potential bidders including Apax Partners, Centerbridge and Warburg Pincus about a deal.

D&G, which is likely to be valued at about £1.25bn, has also been drawing up plans for an initial public offering (IPO) months after shelving earlier plans for a float.

Sources suggested that CVC has been examining a flotation as soon as the end of next month, although any market turbulence prompted by the Conservative Party’s impending leadership contest is likely to make that impossible.

One private equity investor said the chances of a successful listing at a price that would be attractive to CVC would be diminished if its private equity suitors decide against pursuing a takeover.

D&G has contracts to insure millions of boilers, washing machines, televisions and cameras in 14 countries, and is chaired by David Tyler, who recently stepped down from the same role at J Sainsbury, the supermarket chain.

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Mr Tyler also chairs Hammerson, the shopping centres giant.

A person close to CVC said it was relaxed about the timing of any transaction.

D&G was founded in 1912, initially insuring livestock in Western Australia, before its headquarters moved to London.

The possibility of an IPO was highlighted in accounts filed last by Galaxy Finco, the warranty provider’s parent company.

In results published this week, D&G reported a modest 2.3% rise in underlying earnings before interest, tax, depreciation and amortisation to £101m.

It said group sales has risen by 6.5% to £872m.

D&G employs 2,900 people and has a broader network of 8,500 approved engineers, which it says is the largest in the UK.

It has core relationships with major consumer-facing companies including Argos and Sky, the immediate parent of Sky News, and has a market-leading position in specialist warranties and home appliance care provision.

In total, D&G has more than 16m customers and insures 24m appliances.

The company was taken private in 2007 by Advent International, the private equity firm, in a £524m deal, before being sold six years later to CVC for £750m.

A sale or IPO of D&G would come at a time of increased regulatory scrutiny of the product insurance market at a time when companies in the rent-to-own sector have faced tough trading conditions.

D&G was founded in 1912, initially insuring livestock in Western Australia, before its headquarters moved to London.

People close to D&G pointed to Homeserve as the closest listed peer to it, but highlighted its strong relationships with appliance manufacturers and retailers as a point of differentiation for the business.

D&G is run by Ian Mason, the former chief executive of Electrocomponents.

CVC, D&G and its potential suitors declined to comment.‎

Bank of America Merrill Lynch and Credit Suisse are understood to be advising on the talks with prospective bidders.

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