Bloomberg News

Vestar to Triple Investment From Sale of Duff & Phelps

December 31, 2012

Vestar Capital Partners, which yesterday agreed to sell Duff & Phelps Corp. (DUF:US) to investors including Carlyle Group LP (CG:US) for $665.5 million, will reap a more than three-times return on its stake in the investment-banking firm.

Vestar, a New York-based buyout firm, paid about $53 million for a 34 percent stake in Duff & Phelps in 2005, according to a person familiar with the transaction, who asked not to be identified because the terms are private. Vestar previously pocketed about $160 million from the company in share sales and distributions, according to filings with the U.S. Securities and Exchange Commission (DUF:US). It stands to get another $35.6 million when the sale is completed, the person said.

Vestar and Lovell Minnick Partners LLC, a Philadelphia- based buyout firm that invested an undisclosed amount in 2004, took Duff & Phelps public (DUF:US) in 2007, raising about $133 million in an initial offering. The two private-equity firms subsequently cashed out the bulk of their holdings through follow-on sales.

Vestar, created in 1988 by Daniel S. O’Connell, Sander M. Levy and other members of First Boston Corp.’s buyout team, oversees about $7 billion in assets, according to its website. Levy did not return a call seeking comment on the transaction.

Ebitda Multiple

Carlyle and its Duff & Phelps co-investors -- Swiss bank Pictet & Cie, U.S. private-equity firm Stone Point Capital LLC and Geneva-based Edmond de Rothschild Group -- are paying about eight times trailing 12-month earnings before interest, taxes, depreciation and amortization for the 80-year-old company. Revenue at the firm, which also provides financial-advisory services, is predicted to rise 17 percent this year to $465.8 million, the average of five analysts’ estimates compiled by Bloomberg.

Shares of Duff & Phelps, which has more than 1,000 employees worldwide, gained about 8 percent this year, while the Standard & Poor’s 500 Index rose 13 percent. The stock advanced 1.9 percent to $13.05 on Dec. 28, below the 2007 initial public offering price of $16.

Duff & Phelps surged (DUF:US) 20 percent today to close at $15.62 in New York.

The Duff & Phelps merger agreement provides for a “go- shop” period ending on Feb. 8, during which the company can solicit and receive alternative proposals. Duff & Phelps would pay a break-up fee of about $6.65 million if it gets a higher bid and ends the agreement before March 8.

To contact the reporters on this story: David Carey in New York at dcarey13@bloomberg.net; Cecile Daurat in Wilmington at cdaurat@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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Companies Mentioned

  • CG
    (Carlyle Group LP/The)
    • $28.63 USD
    • -0.42
    • -1.47%
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