(Reuters) - XIO Group, the China-backed private equity firm which owns J.D. Power, is exploring a sale of the U.S. customer survey and car ratings company that could value it at close to $1.9 billion, including debt, people familiar with the matter said on Friday.
XIO’s acquisition of J.D. Power in 2016 attracted U.S. government scrutiny because the buyout firm has investors from China. XIO has decided the time has come to sell the company so it can score a profit on its investment, according to the sources.
XIO has hired investment bank Evercore Partners Inc to run a sale process for J.D. Power, which has 12-month earnings before interest, taxes, depreciation and amortization of about $135 million, the sources said.
The sources asked not to be identified because the matter is confidential. XIO, J.D. Power and Evercore declined to comment.
Based in Costa Mesa, California, J.D Power provides consumer insights, advisory services and data and analytics to companies.
J.D. “Dave” Power and his wife Julie started the eponymous company in 1968 from their home in Calabasas, California, and landed Toyota Motor Corp as their first client.
While J.D. Power’s roots are in car research, it also conducts annual customer satisfaction surveys on industries, from credit cards to hotel loyalty programs and cable companies, that are often cited in advertisements and commercials.
S&P Global bought J.D. Power in 2005 for an undisclosed sum before selling it to XIO for $1.1 billion in 2016. In the last three years, XIO has recouped from J.D. Power through dividends about a third of the $1.1 billion purchase price, one of the sources said.
The Committee on Foreign Investment in the United States (CFIUS), a government panel that scrutinizes foreign acquisitions of U.S. companies, reviewed XIO’s acquisition of J.D. Power and approved it.
At the time of J.D Power’s acquisition, Chinese investors accounted for much of XIO’s investor base, one of the sources said. Only a small chunk of XIO’s capital now comes from China, the source added.
There is no suggestion that U.S. national security considerations have informed XIO’s decision to sell J.D. Power. However, the potential deal comes at a time of increased government scrutiny of Chinese-backed ownership of U.S. companies which preside over consumer-related data, amid an escalating trade row between the world’s two largest economies.
Founded in 2014, XIO has more than $5 billion in assets and is headquartered in London. Its four founding partners have experience in international and Asian markets, having previously worked at BlackRock Inc, Permira Advisers, Olympus Corp and China International Capital Corporation.
Reporting by Joshua Franklin in New York; Editing by Richard Chang