But first, the would-be buyer must sell itself as an acceptable buyer. Soros Fund is on an aggressive marketing mission to sell itself to large dealership groups interested in having a partner or full-fledged investor -- provided management remains in place, both sources said.
One of the messages from the fund’s representatives was that, as an investor, it is not cut from the same cloth as hedge funds or the standard private-equity fund. Rather, it is a family fund, investing private assets of billionaire George Soros.
Sales speech
Soros Fund representative Vipul Tandon spoke to about 40 auto industry leaders, mainly dealers, at the dinner, which was hosted by dealership buy-sell firm Bel Air Partners.
The two attendees who shared details of Tandon’s speech with Automotive News said he touted the benefits of a family fund over other investors such as private equity, hedge funds and public dealership groups.
Tandon “tried to paint a different picture and a reason to more seriously consider the Soros family private capital office approach over some of the other options,” said one of the sources who heard the speech. “The major selling point of organizations like his is its flexibility, he said.”
Tandon did not return two calls seeking comment regarding his speech. He had declined to comment in an earlier Automotive News report that said the Soros Fund wants to partner in, invest in or outright buy a large auto dealership group.
'Intelligent capital'
The two sources said Tandon spoke at length about how other investors such as private equity, hedge funds and public companies often prefer to bring in new management. Or, in some cases, they will leave management in place but might insist on total ownership. Yet other times, investors are just looking for a quick return before a sale.
“Soros see themselves as intelligent capital. You’ll run the dealership, day-to-day, but they’ll help you with capital strategies,” said one of the sources. “For example, they may be able to help you with noncore business decisions such as HR. They want current management to stay in place because they don’t know how to run car dealerships.”
A purchase of a large dealership group by Soros would rival the deal by Warren Buffett’s Berkshire Hathaway Inc. to buy the Van Tuyl Group. In that deal, as proposed, Van Tuyl’s management team will stay in place. It was announced in October and is expected to close in the first quarter.
Tandon never mentioned that deal by name during his speech, nor did he cite last year’s purchase by Lithia Motors Inc. of DCH Auto Group Inc. But both are examples that represent what Soros Fund seeks, one of the sources said. That is, to have a partial- or full-ownership stake in a large dealership group but leave that group’s management team in place.
$1 billion
The sources said Tandon’s talk was eye-opening for those who mistakenly believed Soros Fund would want to own and operate a dealership.
“They’re interested in high-quality growth and expansion and being part of a bigger and better dealership group,” said one of the attendees.
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.
Another source said Soros Fund has been researching the industry for at least the past seven months.
Soros, an 84-year old, Hungary-born investor and philanthropist, has a personal net worth of $23 billion, according to Forbes magazine. Both sources said less than 5 percent of that would be invested in the auto industry, putting about $1 billion available to spend on dealerships, they said.
So far, one of the sources said, the firm is in “conversations” with several interested parties.
