Apax Partners, Periphas Capital buy $550m stake in KAR Auction Services

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Apax Partners and Periphas Capital has acquired a $550m stake in global vehicle remarketing and technology solution developer KAR Auction Services.

The private equity firms bought $550m worth of newly issued perpetual convertible preferred stock in the company, which has a 7% dividend, which will be paid for the eight months following the close.

The initial conversion price of $17.75 per share represents  a 43% premium to KAR’s closing price of $13.52 per share on Friday 22 May.

Capital from the sale will be used to help meet market demand, deepen its technology capabilities and support the development pipeline. Funds will also be used to navigate industry and economic recovery.

KAR offers sellers and buyers an end-to-end solution that supports whole car, financing, logistics and other ancillary and related services. Its online, physical and mobile vehicle marketplaces aim to improve transparency and streamline transactions across 80 countries.

Its platform has seen the sale of nearly 3.8 million vehicles, valued at around a total of $40bn.

KAR chairman and CEO Jim Hallett said, “KAR took early and decisive steps in response to COVID-19 to protect the safety of our employees and customers, preserve our capital position and keep our operations moving forward.

“This transaction will help us continue to support our global customers and further accelerate our digital transformation. Apax is the right strategic partner for our company, employees and stockholders, and their investment reinforces the strength of our brands, market position and long-term strategy for growth and expansion.”

Goldman Sachs served as the lead financial adviser for the sale.

Earlier in the year, Apax Partners-backed shoemaker Cole Haan publicly filed to list on the Nasdaq stock exchange, seven years after the private equity player bought out the business from industry giant Nike.

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