Advent in talks to buy Quadrant’s Zip

Advent International is believed to be the party in exclusive talks to buy Zip Industries from its local peer Quadrant.

Founded in Boston and spun out from TA Associates, Advent has assets under management worth $US31 billion ($41bn) and it has embarked on at least 290 deals in 40 countries.

Last year, the company was working with Bain Capital to buy the listed chemicals operation ALS for $2bn, although the offer was rejected by the company and the suitors walked away.

Zip Industries has been discussed in deal-making circles in recent weeks as Quadrant ramped up plans to float the operation through a raft of advisers.

But the attempts to list the hot water systems manufacturer were abandoned in May by Quadrant once it realised it was not going to receive strong support for a raising that would have taken Zip’s market value to $500 million, or 12 times its forecast earnings.

The understanding is that Quadrant has been in exclusive discussions with Advent for weeks, although the private equity firm has declined to comment.

Quadrant had the option of returning to a reasonably long list of potential buyers that had lobbed offers earlier. Among them were industry rivals such as AO Smith and Reece.

But some say that the opportunity for a global buyout fund is to embark on more international acquisitions to provide the company with more distribution muscle.

While Advent’s mooted price may be lower than Quadrant’s asking price, the deal is still expected to give the local buyout firm a major windfall.

Quadrant bought the majority of the instant boiling water business early last year in a deal that valued Zip at $300m, with the Crouch family owning the remainder.

Meanwhile, Advent Partners - a separate private equity fund based in Australia - is expected to sell its packaging company IPG for at least $120m. Among the suitors are thought to be The Carlyle Group, Pact Group, Propak, Coveris, Berry Global, Sealed Air and RPC out of Britain.