Hannover Finanz eyes options for Schlemmer, including sale-sources

* Sale could value Schlemmer at above 500 mln eur -sources

* Schlemmer to post FY EBITDA of about 40 mln eur -sources

* Automotive supplier sector has seen string of deals (Adds context on sector, information from sources)

FRANKFURT, Sept 23 (Reuters) - German private equity firm Hannover Finanz is exploring options for its cable equipment maker Schlemmer including a potential sale which may value the company at more than 500 million euros ($556 million), two people familiar with the matter said.

The Germany-focused buyout group has mandated investment bank Baird to prepare a potential auction of the supplier of cable protection systems for automotive and industrial applications.

Hannover Finanz and Schlemmer declined to comment.

The potential sale is the latest in a string of deals in the German automotive supplier sector, which has seen Mann + Hummel buying U.S (Other OTC: UBGXF - news) . peer Affinia, Canada's Magna acquiring Getrag and Mahle taking control of U.S.-based Delphi's air-conditioning unit.

Schlemmer posted earnings before interest and taxes (EBIT) of 27 million euros on sales of 270 million euros in 2014.

The group, which has 2,300 employees and is targeting 400 million euros in sales by 2020, is expected to post earnings before interest, taxes, depreciation and amortisation (EBITDA) of about 40 million euros this year, the sources said.

Potential strategic or private equity buyers may value Schlemmer at more than 500 million euros if they value the company at a similar earnings multiple as that seen in the recent sale of a peer.

In July, U.S. car parts maker Delphi bought British cable equipment maker HellermannTyton for 1.1 billion pounds ($1.7 billion), or 14.7 times its core earnings.

Since a 2012 buyout, Hannover Finanz owns 66 percent of Schlemmer, while the founding family Mackprang holds the remaining stake. It (Other OTC: ITGL - news) has expanded Schlemmer's product portfolio with a bolt-on acquisition in 2013.

($1 = 0.6523 pounds) (Reporting by Arno Schuetze and Alexander Huebner; Editing by Christoph Steitz)