Apollo weighs $1.5bn sale of Heritage Grocers with UBS in US deal

Apollo Global Management is testing the market for a potential sale of its Hispanic-focused supermarket platform, Heritage Grocers Group, in a process that could peg the business at about $1.5bn, people close to the matter say. The private equity firm has engaged UBS to provide advice as it considers strategic options for the asset.

Heritage operates roughly 115 stores across multiple states — including Illinois, Texas, Kansas, California, Nevada and Arizona — under familiar banners such as El Rancho Supermercado, Cardenas Markets and Tony’s Fresh Market. The combined retail estate generates in excess of $2bn of annual sales and around $150m of EBITDA, according to people with knowledge of the figures.

The headline valuation being discussed implies an enterprise multiple near 10x EBITDA, a level that sits toward the higher end of what buyers have historically paid for regional supermarket platforms. Grocery assets remain attractive to investors because they are cash-generative and defensive, but multiples vary widely by format, geography and margin profile.

Operationally, Heritage has shown signs of strain this year. Management and market observers point to softer consumer spending and lower footfall in some Hispanic-dense markets — concerns amplified by immigration-related uncertainty — which have weighed on sales growth. Credit-rating actions earlier this year reflected those headwinds and the business’s decelerating trajectory.

The platform is the product of a roll-up strategy executed by Apollo Global Management since 2022. The firm consolidated a number of regional chains — acquiring Cardenas Markets from KKR and adding Tony’s Fresh Market from its founding owners — later bringing in El Rancho Supermercado in 2023 to expand its footprint and buying scale in key states.

The contemplated sale is part of a broader review of consumer and retail assets within Apollo’s portfolio as activity in the grocery M&A market has picked up. Private equity buyers and strategic grocers have recently returned to the sector, hunting for resilient businesses that can deliver predictable cash flow amid a choppier macroeconomic backdrop.

If launched formally, the sales process is likely to draw interest from both trade and financial buyers, though timing and structure remain fluid while advisers canvass demand. For Apollo, a divestment would unlock capital and allow the firm to redeploy proceeds into other opportunities; for bidders, Heritage offers scale in Hispanic grocery markets that have out-sized growth potential relative to suburban formats.

Representatives for Apollo Global Management and UBS declined to comment. The situation remains preliminary and could evolve if bidders surface or if Apollo elects to pursue alternative paths such as minority recapitalisation or a continuation vehicle.