Affinity looks to sell Australian Loscam - sources

MELBOURNE Feb 8 (Reuters Basis Point) - Australian private equity firm Affinity Equity Partners has put pallet maker Loscam up for sale, in a deal that could be worth at least A$500 million ($433 million), three sources familiar with the process said.

Affinity has appointed Credit Suisse (CSGN.VX) and Deutsche (DBKGn.DE) to advise on options to sell the company, including a possible share market listing, the sources said.

Confidentiality agreements for the sale have been sent out to prospective buyers, two of the sources said, adding the information memorandum is likely to follow shortly.

Loscam makes and hires out wooden and plastic pallets, competing against Brambles Ltd (BXB.AX), the world's top pallet supplier. Loscam is based in Australia and has 11 offices in Asia, according to the company's website.

Affinity Equity and Loscam both declined to comment on speculation it is preparing for an initial public offering or sale. Credit Suisse and Deutsche also declined to comment.

Private equity funds such as Kohlberg Kravis Roberts & Co and Carlyle Group are likely to show interest in buying Loscam, sources said.

The sources declined to be identified as they are not authorised to speak to media.

An IPO could be valued at around 9-11 times earnings before interest, tax, depreciation and amortisation, one of the sources said, adding the enterprise value of Loscam could be about A$500 million. Enterprise value includes debt.

However Affinity may realise higher value for Loscam through a sale, given the poor share price performance of recent private equity exits of department store group Myer Holdings Ltd (MYR.AX) and Kathmandu Holdings (KMD.AX), the sources said.

Both companies are currently trading below their issue price.

Affinity acquired the company in 2005 for around A$250 million from another private equity firm, DB Capital Partners. ($1=1.154 Australian Dollar) (Additional reporting by Victoria Thieberger) (Editing by by Denny Thomas)