Dalmore Capital has expressed interest in the U.K. commercial equipment and services provider, and Apax Partners and Nordic Capital have also been pursuing it, Bloomberg News reported, citing people familiar with the matter. Cinven has discussed a valuation above £1 billion.
A mid-sized British services business has become a test of who is willing to pay up for steady cash flow in an unsettled market.
Dalmore Capital is among the parties that have expressed interest in acquiring JLA Group, a U.K. supplier of commercial equipment and services, from Cinven, Bloomberg News reported, citing people familiar with the matter. Apax Partners and Nordic Capital have also been pursuing the business, the people said.
Cinven revived the sale process earlier this year and is working with Goldman Sachs. It has discussed a valuation of more than £1 billion, or about $1.3 billion. Spokespeople declined to comment. No bids or agreement have been reported.
Why the buyer mix matters
Dalmore invests in infrastructure. Apax and Nordic Capital are buyout firms. When an infrastructure investor competes with private equity for the same asset, it can reflect a view that the business behaves more like essential infrastructure than a typical company, with long contracts, recurring revenue and limited exposure to economic swings.
That matters for price. Investors with that view may accept lower returns in exchange for stability, which can let them pay more. Their interest in a business described as a provider of critical services suggests the seller may be able to test a higher valuation than a pure buyout process would support.
The timing
The process is running in a difficult week for leveraged finance. U.S. high-yield spreads reached a 17-month high and primary markets saw the year's biggest spate of pulled deals. Buyout bidders typically rely on debt markets to fund acquisitions, and whether the turmoil affects JLA's sale is not known. An infrastructure investor, which may use less leverage, could be less exposed to that pressure.
What it shows about exits
The sponsor exit market has been split. Large, high-quality assets are finding buyers while the overall number of exits remains depressed. A competitive process for a business at this size would be another data point that assets with predictable cash flow can still attract multiple bidders.
Two readings
One reading is that JLA is the kind of asset that holds up in any market, and that competition between infrastructure and buyout capital will support a strong price.
The other is that the process is at an early stage, with no bids reported, and that a £1 billion-plus target set before this month's credit stress may prove ambitious if financing costs keep rising.
What to watch
Whether formal bids emerge and from whom, whether Cinven achieves its valuation target, and whether other infrastructure investors enter U.K. services auctions.