SAN FRANCISCO -- Wall Street fund Soros Fund Management wants to partner in, invest in or outright buy a large auto dealership group, said four sources familiar with the situation.
Two representatives of Soros Fund Management are at the National Automobile Dealers Association convention here this weekend to research the industry and find potential purchase opportunities, sources said.
Soros Fund, run by Chairman George Soros, an international financier, is “in conversations” with an undisclosed number of dealership groups and has “proposed different transactions to different people” to meet those sellers’ needs, said one source close to the situation.
Those potential transactions range from an investment partnership to a full-fledged purchase of a group, said the source.
A purchase of a large dealership group would rival Warren Buffett’s Berkshire Hathaway Inc.’s deal to buy the Van Tuyl Group. That deal was announced in October and is expected to close in the first quarter.
Soros Fund representative Vipul Tandon declined to comment.
Tandon spoke at a private dinner hosted by the financial advisory firm Bel Air Partners on Saturday evening, said a source familiar with the dinner. About 40 dealers attended the dinner, which was closed to the media.
One source close to the Soros Fund talks said it started seriously researching the auto space about seven months ago. It is interested in the car business because it is seeking diversification and cash flow opportunities, sources said.
“These are multi-billion dollar players who want a cash return to support their charitable endeavors,” a source close to the situation said. “And they want to diversify their investments.”
Soros, an 84-year old, Hungary-born investor and philanthropist, has a personal net worth of $23 billion, according to Forbes magazine.
He is well-known for backing liberal causes and has funded a number of groups devoted to promoting democracy in the former Eastern bloc. He also backed John Kerry’s failed campaign for U.S. president.
One source familiar with the matter declined to name how much Soros is looking to allocate investments in the car business. The source did indicate that Soros would want to buy a large dealership group with management already in place.
“You gotta go big, or go home,” said the source.
Soros’ interest in the auto industry dates to well before the NADA convention. One source with a large dealership group said he has taken “several” phone calls in the past year from Soros’ employees seeking to learn about the auto industry and acquire a dealership group.
This is the latest move by outside equity groups to enter the auto industry. Buy-sell advisers say they are seeing increased interest in the auto industry from outside investors such as private equity groups.
Buy-sell advisers say the interest is partly fueled by Buffett’s move to buy the Van Tuyl group. Van Tuyl ranks No. 5 on the Automotive News list of the top U.S.-based dealership groups, with retail sales of 130,447 new vehicles at its 75 dealerships in 2013.
Terms of the proposed purchase weren’t disclosed, but outsiders estimated the all-cash price tag at over $4 billion.
Also fueling the interest from outside investors has been the booming U.S. economy and low interest rates that have spurred auto sales and boosted dealership valuations.