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Carlyle-backed Applus to Debut With $3.6B Enterprise Value

NEW YORK (The Deal) -- Testing and inspection services provider Applus Group on Thursday raised 300 million euros ($418.3 million) in new money through a Madrid IPO which delivers an 800 million euro payout for owners led by Carlyle Group.

Applus+, of Barcelona, priced its IPO shares at 14.50 euros, just below the middle of a 13.25 euro-to-16.25 euro bookbuilding range. That will give the company a debut market capitalization of 1.89 billion euros and a free-float of 58.3% when it lists on the Spanish stock exchanges at noon local time on Friday. Its enterprise value will be about 2.6 billion euros.

Net proceeds from the primary offering will be 263.8 million euros, which Applus will use, together with a new 700 million euro loan facility and existing cash, to repay in full outstanding syndicated debt of 1.05 billion euros.

Carlyle, which first invested in the company in 2007, and owns its stake through its second and third European funds, will be reducing its stake from about 72% to between 35% and 40%. Carlyle and the minority investors in its Luxemburg-registered holding vehicle for Applus Group, Azul Holding SCA, may sell up to another 10% of the "base" offer through a greenshoe. Ahead of the float, Catalunya Bank owned 7.98%, London mezzanine investor Intermediate Capital Group plc owned 6.34% and other Spanish savings banks and family investors owned smaller stakes.

Applus will list in Madrid and the linked exchanges of Barcelona, Bilbao and Valencia as Applus Services SA. The company and Carlyle will be subject to a lockup of 180 days, while company management will commit to a lockup for their personal holdings of 360 days.

Carlyle did not disclose the return on its investment from the partial exit of Applus, although it is understood that the IPO price very broadly represents an uplift of about 2.5 times.

Applus Group does business as Applus+ and operates through six divisions, including energy and industry services; statutory vehicle inspection; and automotive engineering and testing. The energy and industry division has significant operations in the U.S. and Canada, as well as the Middle East, Asia and Latin America, and accounted for over 74% of revenue in 2013.

In 2013, the group recorded revenue of 1.6 billion euros and 200 million euros of operating profit before depreciation, amortization and "others," according to a statement.

Rothschild is advising the selling shareholders and the company, who are taking legal advice from Latham & Watkins LLP and Cuatrecasas Concalves Pereira.

Morgan Stanley & Co. International plc and UBS are the joint global co-ordinators for the IPO, while Morgan Stanley, UBS, Citigroup Global Markets Ltd. and JPMorgan Securities plc are joint bookrunners. Joh. Berenberg, Gossler & Co. KG and Santander Investment SA are co-lead managers.

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