Warranty Group changes hands to another private equity firm

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The Warranty Group Inc., a provider of extended-service contracts, is moving from one private-equity owner to another.

TPG of Fort Worth, Texas, said last week it has agreed to acquire The Warranty Group from Onex Corp of Toronto. TPG and Onex said the deal was worth about $1.5 billion and is expected to close in the third quarter. Onex said its initial investment in The Warranty Group, in November 2006, was $498 million.

The Warranty Group does automotive business as Resource Automotive. Resource Automotive’s F&I offerings are extended-service contracts, certified pre-owned limited warranties, prepaid maintenance, anti-theft etching, tire-and-wheel coverage, exterior protection, plus dealership training and consulting.

In the past several years there have been many other examples of private-equity firms investing in the automotive F&I space, including deals for independent finance companies that specialize in subprime loans, such as Exeter Finance Corp and First Investors Financial Services, and for F&I product administrators such as Warrantech Corp. and Safe-Guard Products International.

“This is a very good outcome for Onex’s shareholders and our limited partners,” Bobby Le Blanc, Onex senior managing director, said in a statement March 21.

Besides autos, The Warranty Group underwrites and administers extended service contracts on a wide variety of consumer goods, including homes, consumer appliances, electronics and furniture, plus specialty insurance products and services for financial institutions.

The Warranty Group operates in more than 35 countries, the company said. Its subsidiaries also include two wholly owned insurance companies.

You can reach Jim Henry at autonews@crain.com.

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