Phoenix nearly triples money on Nationwide sale to Halfords

Kimberly Romaine
18 February 2010

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Second exit in 2010 for Phoenix, Kimberly Romaine reports

Four years after acquiring Nationwide Autocentres, Phoenix Equity Partners has sold the business to trade buyer Halfords Group for £73m, generating a healthy multiple of nearly 3x cost and an IRR in the 30s. The sale was the result of a direct approach from the buyer last autumn, which meant Phoenix didn't pursue a formal auction.

Nationwide currently operates more than 220 auto centres and is the UK's major MOT tester.

"The single most important factor in achieving this return was recruiting a strong management team before we bought the business," explains Phoenix's Hugh Lenon. Phoenix approached the incumbent management team five years ago, when NBGI Private Equity owned Nationwide. "We'd identified Nationwide as an under-performing business, knowing the existing team was looking to exit. We then assembled the four-strong new team from RAC so when the business was formally put up for sale by NBGI, we were in a good position to buy." This management team is staying on board following the sale to Halfords.

KPMG led that auction, which saw Phoenix emerge as the successful buyer in the 2006 £49m secondary buy-in, which generated 10x money for NBGI and a 72% IRR. NBGI had acquired a 51% stake in the business four years earlier.

"It's a gem of a business," Lenon says. Indeed: profits have grown an immense 75% during Phoenix's stewardship, to £10m today, with revenues growing 30% over the same time period to roughly £100m.

The exit is the second this year for Phoenix, having sold Acorn Care & Education in January. However, this timing is more coincidence than anything else, according to Lenon: "Both exits were completed after long, contracted processes. Halfords approached us more than six months ago, while we'd appointed advisers 18 months prior to the Acorn sale."

Halfords itself was previously private equity backed, having been owned by CVC for two years prior to its London Stock Exchange flotation in summer 2004.