LONDON/FRANKFURT U.S. private equity firm Sun Capital Partners has appointed Morgan Stanley (MS.N) to sell Aclara Technologies, a provider of smart meters to almost 800 utility customers, sources familiar with the matter said.
The sale is expected to draw interest from several industry players including U.S. conglomerate Honeywell (HON.N), one of the sources said, adding the process will likely kick off after the summer.
Sun Capital, Morgan Stanley and Honeywell declined to comment. Aclara was not immediately available for comment.
A Moody's report in 2016 estimated Aclara's revenue to come in at around $500 million.
The company took on a $345 million seven-year term loan in 2016, and Moody's estimated its leverage ratio to be above 4.5 times debt to earnings before interest, tax, depreciation and amortization (EBITDA) after signing this loan.
The business, which has been backed by Sun Capital since 2014 and has offices in Spain and Britain, could be valued at under $1 billion, one of the sources said.
Its private equity owner has made a series of add-on acquisitions in recent years including the purchase of GE Energy Management's grid solutions division and Tollgrade Communications' smart grid business.
Smart meter companies have been undergoing a sustained phase of consolidation, partly due to cuts in government funding and growing capital needs to upgrade technology that passes information directly from the utilities to customers' mobile phones.
CVC is currently selling German metering and energy management group Ista while Australian infrastructure investor Macquarie (MQG.AX) is looking to auction off its German metering group Techem in a deal potentially worth up to 4 billion euros.
Japan's Toshiba (6502.T) is also selling its Swiss-based smart meter group Landis+Gyr.
(Additional reporting by Greg Roumeliotis in New York and Dasha Afanasieva in London; editing by Elaine Hardcastle)