December 10, 2019 / 4:29 PM / 2 months ago

Bain Capital nears deal for Italian IT services firm Engineering: sources

LONDON/MILAN (Reuters) - Bain Capital is close to finalizing a deal for a stake in IT services provider Engineering Ingegneria Informatica that would see the U.S. investor share ownership of one of Italy’s biggest technology companies, sources told Reuters.

FILE PHOTO: The logo of Bain Capital is displayed on the screen during a news conference in Tokyo, Japan October 5, 2017. REUTERS/Kim Kyung-Hoon

The deal values Engineering at more than 1.5 billion euros ($1.65 billion) and is in the final stages of negotiations, four sources familiar with the matter said, speaking on condition of anonymity.

If successful, Bain will become the biggest investor in the Rome-based IT company in tandem with NB Renaissance Partners, an investment platform backed by New York-based Neuberger Berman.

NB Renaissance owns a joint 88% stake with Apax Partners.

The pair first invested in Engineering in 2016 and is now expected to part ways, with Apax selling its stake to Bain, the sources said.

Founder Michele Cinaglia still owns 12% of Engineering and will remain invested, one of the sources said.

NB Renaissance, Bain and Apax declined to comment.

Neuberger Berman is in the process of raising 1 billion euros for its third Italy-focused buyout fund, sources had said.

The fund, dubbed NB Renaissance Partners III, is seeking deals in the eurozone’s third-largest economy in sectors that include industrials and technology.

Apax kicked off the sale earlier this year in a bid to take advantage of the company’s positive performance and high growth rate following a series of bolt-on deals including the recent purchase of cybersecurity firm Cybertech.

Bain is finalizing the governance terms with NB Renaissance while also ironing out the financial details of the deal, two of the sources said.

Bain has emerged as the most motivated bidder for Engineering having trumped rival proposals from European private equity firms Cinven, PAI and Intermediate Capital Group (ICG) which initially expressed interest in a possible investment but subsequently walked away, several sources said.

PAI, Cinven and ICG declined to comment.

Engineering, founded in 1980 and led by Paolo Pandozy, is valued at roughly 10 times its estimated core earnings of 160 to 170 million euros in 2020, representing a final top-range price in excess of 1.6 billion euros, two of the sources said.

The company employs around 11,000 staff in 65 locations across Europe, the United States and South America. It reported a 20% rise in adjusted core earnings last year which hit 147.2 million euros while revenue was up 15% to 1.18 billion euros.

Reporting by Pamela Barbaglia in London and Stephen Jewkes in Milan; additional reporting by Valentina Za; Editing by Emelia Sithole-Matarise

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