Exclusive: Providence's Altegrity looks to sell $1 billion unit - sources

Tue Jul 2, 2013 1:21pm EDT
 
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By Soyoung Kim

NEW YORK (Reuters) - Altegrity Inc, owned by private equity firm Providence Equity Partners, is looking to sell a division that provides background checks for private-sector employers and could fetch up to $1 billion, two people familiar with the matter said on Tuesday.

A potential sale of the HireRight division comes at a tough time for Altegrity, as another of the latter's units, USIS, faces a U.S. government investigation over its 2011 background check into Edward Snowden, the National Security Agency leaker.

Unlike USIS, which is the largest private provider of federal government background checks in the United States, HireRight focuses on private-sector employers and provides employee background checks, as well as drug and health screening for companies.

A successful sale of HireRight could help relieve financial woes for Altegrity, which has struggled to pay down debt as revenue and earnings take a hit from government spending cuts.

HireRight - one of the world's largest employment screening providers according to its website - has around $95 million in annual earnings before interest, tax, depreciation and amortization (EBITDA) and could be sold for roughly 10 times EBITDA, one of the people said.

Bank of America Merrill Lynch (BAC.N: Quote) is advising on the auction process, which has attracted private equity interest and is advancing to the second round, the sources said, asking not to be named because the matter is not public.

Representatives for Providence Equity declined to comment. Altegrity did not immediately respond to requests for comment. Bank of America did not have immediate comment.

Altegrity, which Providence bought from Carlyle Group LP (CG.O: Quote) and Welsh, Carson, Anderson & Stowe for $1.5 billion in 2007, also expanded its intelligence and security consulting business through its $1.13 billion acquisition of Kroll in 2010.   Continued...