(Adds details, background) FRANKFURT, July 8 (Reuters) - Buyout group BC Partners has launched an auction process for Ceramtec in a deal that could value the German maker of industrial ceramics at roughly 3.5 billion euros ($4.1 billion), including debt, people close to the matter said. Ceramtec’s products are used in artificial hips and dental implants and the thermal management of car batteries, as well as circuit carriers and heat sinks in electronic applications. BC Partners is working with Bank of America and Morgan Stanley on the sale and has asked for first round bids by the end of July, the people said, adding that BC Partners launched the sale after attracting strong interest. Peers such as Celanese and CoorsTek are expected to hand in offers as are private equity groups such as a consortium of CVC and Partners Group, they said. BC Partners, Celanese, CVC and Partners Group and the banks declined to comment, while CoorsTek was not immediately available for comment. Any transaction would add to an M&A frenzy that saw volumes spike to a record $1.5 trillion in the second quarter as companies rush to reposition themselves for the post-COVID world. Sectors such as technology and healthcare have topped the dealmaking charts. Ceramtec, which employs 3,400 staff, saw 2020 adjusted earnings before interest, tax, depreciation and amortisation fall 13% to 213 million euros, while sales dropped 11% to 553 million euros as patients postponed surgery in the COVID-19 pandemic. Net debt was 1.36 billion euros at the end of 2020. BC Partners bought Ceramtec from peer investor Cinven in a deal valuing the company at 2.6 billion euros. Ceramtec traces its roots to porcelain manufacturer Thomaswerke, founded in 1903. From the 1920s, it produced technical ceramics. $1 = 0.8448 euros Reporting by Arno Schuetze; Editing by Edmund Blair and David Evans Our Standards: The Thomson Reuters Trust Principles.