Applus draws takeover interest from Apollo, Apax

(Corrects date to May 4)

By Andres Gonzalez and Amy-Jo Crowley

LONDON (Reuters) - Apollo and Apax are among private equity firms interested in a potential takeover of Spanish industrial testing company Applus Services, people familiar with the matter told Reuters.

A consortium formed by I Squared and TDR has also signalled potential appetite for a takeover of the 1 billion-euro ($1.1 billion) company, said the people who asked to remain anonymous because the discussions are not public.

Applus has received a number of approaches in the last year and is working informally with JPMorgan as an adviser for a potential deal, the sources said.

Applus, Apollo, Apax, JPMorgan, I Squared and TDR declined to comment.

Raising funds to help pay for an acquisition could be a challenge in the current market conditions though, two of the sources said, adding no deal is certain.

A slowdown in the economy is causing concern among some of the potential private equity bidders about the upcoming renewals of a couple of Applus's 10-year contracts, two of the sources said.

Still, private equity firms globally are seeking to take advantage of depressed valuations on stock markets to deploy their $1.2 trillion cashpile.

Applus shares, which trade in Madrid, are down more than a quarter since the pandemic struck in 2020 and more than half from its peak just after its initial public offering in 2014.

According to accounting firm EY, so far this year take-private transactions have made up more than 80% of private equity activity by value.

The company lacks a controlling shareholder, with the shares held broadly among institutional investors and asset managers that each own less than 6%, according to regulatory fillings.

Spanish newspaper Expansion reported in March that the company was approached by Brookfield a year ago.($1 = 0.9049 euros)

(Reporting by Andres Gonzalez and Amy-Jo Crawley, editing by Emelia Sithole-Matarise)