PRIVATE equity firm CVC Capital Partners yesterday bought Domestic & General (D&G), a provider of extended warranties, from rival Advent International in a deal thought to be worth around £750m.
D&G offers breakdown cover on household appliances such as television and white goods and claims to have 15m customers producing sales of over £600m a year.
Rather than targeting buyers in-store it approaches them after the purchase.
But yesterday’s secondary deal – also known as a “pass the parcel” transaction – between two private equity houses may rise eyebrows, especially among Advent’s backers.
Advent was originally thought to want around £1bn for D&G, which it bought for £524m at the height of the private equity boom in 2007. The traditional business plan would be to develop the company over five years and then refloat it at a profit.
Instead it has been sold to another private equity house, making it hard to work out how much money Advent made on the deal. The firm declined to clarify the exact purchase price and the suggested sale price is thought to include the company’s debt.
CVC said they were buying a company with “real long term growth potential” and insisted they would look to grow the business, especially abroad.
UBS provided investment banking advice to CVC, who were also assisted by OC&C Strategy Consultants, KPMG and Clifford Chance. The D&G management, who retain a stake in the firm, were advised by Macfarlanes and Jamieson Corporate Finance.