Arjun Infrastructure Partners has signed an agreement to acquire a majority stake in ONroute Services Centres, three sources briefed on the situation said.
The London infrastructure manager is to buy a majority stake while a US and a Canadian investor are taking a combined minority position.
The deal will leverage ONroute in the 6x-7x range, said one of the sources. The business was marketed off CAD 30m, implying the business will be leveraged with CAD 180m to CAD 210m in debt. CIBC, the sellside banker on the deal, will lead the debt financing.
Financial close is expected in the next two months subject to approval from the Province of Ontario.
If the transaction closes, ONroute would become Arjun’s first North American investment. The fund has exposure to the rest area business through its 49.99% stake in UK service station operator Welcome Break, which it co-owns with Applegreen (50.01%). Applegreen owns service stations in the US.
Arjun Infrastructure Partners was founded in 2015 by former senior members of the European infrastructure team at JP Morgan Asset Management. It has since invested in renewable assets across the UK, as well as a solar company in the Middle East. Overall, it manages GPB 1.8bn (USD 2.39bn) of capital across 11 investments.
ONroute Services Centres’ equity sponsors K.D. Infrastructure and Host International of Canada hired CIBC earlier this year to run the auction process.
The business owns and operates a chain of 23 service plazas and has a 50-year concession agreement with the Province of Ontario that expires in 2060. The chain services around 45 million customers per year.
Most of the service plazas have been operational for less than seven years and collectively cost roughly CAD 400m (USD 303.55m) to build.
The business was being marketed off CAD 30m in normalized EBITDA. Early indicative bids were in the 15x level, implying a CAD 450m valuation.
Other bidders involved in the auction process included InstarAGF and Fiera Infrastructure, as reported.
Arjun, CIBC, K.D. Infrastructure and Host International of Canada did not return calls seeking comment.