FILE PHOTO - The ticker and trading information for Blackstone Group is displayed at the post where it is traded on the floor of the New York Stock Exchange (NYSE) April 4, 2016. REUTERS/Brendan McDermid/File Photo

(Reuters) - Private equity firm Blackstone Group LP BX.N is exploring an initial public offering (IPO) of Gates Global LLC, three years after it acquired the U.S. auto parts and building products maker for $5.4 billion, people familiar with the matter said on Tuesday.

The IPO would follow a major turnaround at the company under Blackstone, which had to implement a program of significant cost cuts after being hit by weak demand in the agriculture, infrastructure, energy and mining markets.

Blackstone has told investment banks that it may hire IPO underwriters in the next few months to prepare to take Gates public in 2018, the three sources said. The IPO could value Gates at more than $7 billion, including debt, the sources added.

The sources asked not to be identified because the deliberations are confidential. Blackstone declined to comment, while Gates did not immediately respond to a request for comment.

Based in Denver, Colorado, Gates manufactures power transmission belts and fluid power products used in various industrial and automotive applications. It generated sales last year of $2.7 billion, according to credit ratings agency Moody’s Investors Service Inc.

Following Blackstone’s acquisition of Gates in 2014, Gates struggled to generate earnings growth, as several of its industrial customers scaled back on their orders. Blackstone, however, managed to stabilize the business through a number of cost-cutting and restructuring initiatives, and Gates now expects to report a jump in earnings next year, according to the sources.

(This story corrects paragraph 2 to turnaround instead of turnout.)