Bridgepoint acquires Zenith from HgCapital in £750m deal

Kenny Wastell
30 January 2017

Tweet
Facebook
LinkedIn
Google plus
Send to

HgCapital has sold UK-based car rental business Zenith to Bridgepoint in a deal valuing the business at ТЃ750m.

Capital for the transaction was drawn from Bridgepoint Europe V, which held a final close in March 2015 on its €4bn hard-cap.

The sale comes three years after HgCapital acquired the business with capital drawn from its £1.75bn sixth fund. A spokesperson for the firm told unquote" the deal represents a 2.9x return.

According to another source close to the situation, Zenith is forecasting EBITDA of £58m in the current financial year, giving it a value of around 13x EBITDA.

The business has repeatedly served as a platform for extensive consolidation of the UK's contract vehicle rental under successive private equity backers. The latest deal marks the sixth time the company has been owned by private equity, according to unquote" data. Under the vendor's tenure, it merged with HgCapital portfolio company Leasedrive in February 2014.

Since the merger of Zenith and Leasedrive, the company has enjoyed a 19% compound annual growth rate, according to a statement issued by the vendor.

A spokesperson for Bridgepoint said in a statement the company would continue to pursue an acquisitive growth strategy under the GP's tenure.

Debt
HSBC, RBS and Lloyds provided debt facilities to support the deal.

Previous funding
3i originally backed the management buyout of Zenith Vehicle Contracts Group in 2003 for £12m. Two years later, Dunedin picked up a minority stake in an SBO for £27m, with management holding a majority interest and 3i exiting the company.

Barclays Private Equity then acquired a majority stake from Dunedin and management for £40m in June 2007.

Morgan Stanley Global Private Equity (MSPE) acquired a 60% stake in Zenith in August 2010 from Barclays Private Equity (now Equistone Partners Europe) with management retaining the remaining 40%. The company was understood to be valued at £85m at the time.

HgCapital acquired Zenith from MSPE in January 2014, in a deal reportedly valuing the business at £200m. A month earlier, the GP had bought a majority stake in Leasedrive in an SBO from LDC in, with the vendor retaining a minority stake as part of the deal. HgCapital then merged the two companies in February 2014.

Company
Established in 1989, Leeds-headquartered Zenith is a car rental provider, focusing on outsourced contract hire and fleet management. The business has a headcount of around 500 and manages a fleet of around 85,000 vehicles.

People
Bridgepoint – Emma Watford (partner).
HgCapital – Andrew Land (partner).
Zenith – Tim Buchan (CEO).

Advisers
Equity – Investec (corporate finance); White & Case (legal); LEK (commercial due diligence); Deloitte (financial due diligence, IT due diligence, tax); ERM (environmental due diligence); EY (tax).
Vendor – Evercore (corporate finance); Deloitte (financial due diligence); OC&C (commercial due diligence); KPMG (financial due diligence); Weil Gotshal & Manges (legal); Sidley Austin (legal).