Private equity giants in the race for Molycop

Molycop is understood to generate annual earnings before interest, tax, depreciation and amortisation of about $US200m. Picture: Will Caddy

A large number of private equity firms are expected to line up for the Australian mining consumables business Molycop, and some predict the sales process will also attract a large number of trade players.

American Industrial Partners launched the sales process for the $2bn-odd Molycop business last week through advisers Record Point and Morgan Stanley, with flyers hitting the desks of prospective suitors.

All the well-known private equity names such as KKR, Blackstone and Brookfield are likely to take a look, along with a number of other funds.

But the understanding in the market is that some are more focused on the prospect of the business being purchased by a trade buyer.

Investment bankers are in talks with various parties around the market as they prepare to partner up ahead of a sale.

Most of the major groups in the space that could be keen to buy Molycop are based in Europe.

Swedish companies Sandvik and Epiroc are both global players in the mining services industry and would be logical acquirers, as would The Weir Group, based in Britain.

Then there is the mining equipment company Metso, which is based in Finland.

The contest is expected to feature global players with few Australian parties thought to be logical buyers.

Perth-based conglomerate Wesfarmers has also shown interest in most industrial companies that come up for sale.

Molycop is understood to generate annual earnings before interest, tax, depreciation and amortisation of about $US200m.

Once part of Arrium, it was purchased by American Industrial Partners in 2016 for $1.6bn. It makes steel balls used in mining and dominates the global market with about 80 per cent market share.