US-based private equity firm Genstar Capital is considering the sale of automotive software company OEConnection, Reuters reported citing sources.
The sale could value the company at up to $5bn, including debt, sources told the news agency.
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The sale process for OEConnection, which is also backed by automotive giants Ford and General Motors (GM), is expected to commence later in the year.
Evercore, an investment banking advisory firm, has been engaged by Genstar to provide counsel on the sale.
Genstar Capital declined to comment on the potential sale, and representatives from Evercore and OEConnection were not immediately available for comment, the report said.
Genstar Capital acquired OEConnection in 2019 from fellow private equity firmProvidence Equity.
As part of the 2019 acquisition, Ford and GM retained minority stakes in OEConnection.
The sources, who wished to remain anonymous, indicated that OEConnection could fetch a valuation of more than 20 times its earnings before interest, taxes, depreciation, and amortisation (EBITDA).
Ohio, US-based OEConnection was founded in 2000, and specialises in software systems that support the sale and distribution of original equipment manufacturer (OEM) replacement parts.
These systems are used by dealerships, suppliers, and repair shops to streamline their operations. The company is reported to have an EBITDA of $200m and annual revenues amounting to $400m.
In 2001, OEConnection introduced CollisionLink, an online tool designed to enable repair shops to purchase OE parts from dealership inventories.
Following this, the company rolled out D2DLink, a system that networked dealers across the country, expanding the OEC dealer network from 500 to 10,000.
Genstar Capital has over three decades of experience in investing in “high quality” companies.
The firm, established in 1988, has nearly $50bn of assets under management and focuses on investments in specific sectors, including financial services, software, industrials, and healthcare.
