By Emma-Victoria Farr and Pamela Barbaglia
FRANKFURT/LONDON (Reuters) -Providence Equity Partners has entered exclusive talks to buy French automotive data firm A2Mac1 for about 1.4 billion euros ($1.36 billion), clinching one of Europe's rare private equity buyouts in a tough financing market, two sources told Reuters.
Providence signed an exclusive agreement with A2Mac1's owner Five Arrows Principal Investments last night, trumping rival bids from buyout funds EQT and TA Associates, the sources said.
Five Arrows, advised by Harris Williams and Jefferies, will retain a minority stake in the business, the sources said.
Five Arrows, Providence, EQT and TA Associates declined to comment.
Providence's swoop on A2Mac1 comes as global M&A shrank for the third consecutive quarter this year as rising interest rates have forced lenders to pull back from financing large deals.
Providence, whose portfolio includes Colorado-based technology firm KPA - which provides compliance systems to auto dealers - preempted the A2Mac1 auction after bidders submitted non-binding offers on Sept. 29 as competition to secure recession-proof assets in the technology industry is fierce, the sources said.
The Rhode Island-based buyout firm focuses on media, communications, education and technology investments across North America and Europe and manages funds with $32 billion in aggregate capital commitments.
Founded in the mid-1990s, A2Mac1 is based in Boulogne-Billancourt, near Paris, just a short walk away from Renault (EPA:RENA)'s headquarters.
It provides vehicle data and analysis tools as well benchmarking services to the car industry with a client base mostly focused on original equipment manufacturers (OEMs) and Tier 1-2 suppliers.
The deal values A2Mac1 at a multiple of almost 30 times its core earnings of 50 million euros ($49 million), one of the sources said.
Five Arrows is owned by Rothschild and manages 2.8 billion euros ($2.85 billion) of capital focused on mid-market investments in Western Europe. It bought A2Mac1 in 2017 for more than 200 million euros.
($1 = 1.0245 euros)