Toronto-based private equity firm Onex Corp (TSE:OCX) said it has sold The Warranty Group to TPG Capital in a deal valued at roughly $1.5 billion including debt.
The deal is expected to close in the third quarter of this year, Onex said, subject to regulatory approval and other closing conditions.
The Warranty Group provides full service underwriting and administration of extended warranties, with operations in more than 35 countries and 1,800 employees. The company's operating units include Virginia Surety Company, London General Insurance Company and Resource Automotive, allowing it to provide a single-source solution for underwriting, claims and administration and marketing expertise to manufacturers, distributors and retailers of consumer goods. It also provides specialty insurance products and services for financial institutions.
Onex invested $498 million in The Warranty Group in November 2006, and said that once the deal is closed, it will have received proceeds of $1.5 billion including prior distributions of $403 million, which will result in a multiple of invested capital of 3.1 times and an 18% rate of return.
The private equity firm said its portion of the proceeds would be roughly $385 million, including carried interest.
"This is a very good outcome for Onex' shareholders and our limited partners," said senior managing director at Onex, Bobby Le Blanc.
"TWG's performance is a testament to our approach of identifying attractive carve-out opportunities and partnering with management teams to build industry-leading businesses and improve operational efficiency on a standalone basis."
Onex, which is the largest limited partner in each of its funds, has about $19 billion of assets under management in private equity, credit securities and real estate. Its portfolio of businesses generate annual revenues of $33 billion.