Phoenix exits Forest Holidays for 3x money

Forest Holidays’ minority shareholder LDC is also selling its stake in the business after a 10-year investment period, the firm confirmed in a statement.

A source familiar with the situation told Unquote that the deal generated returns of 3x for Phoenix. Phoenix Equity Partners declined to comment. LDC had not responded to a request for comment by the time of publication.

The Times reported that the deal values Forest Holidays at GBP 300m.

LDC originally backed Forest Holidays’ MBO in 2012. Phoenix acquired Forest Holidays in December 2017 in a deal that saw LDC and the company's management team retain significant minority stakes in the business. Ares and RBS provided debt to back the buyout.

Phoenix deployed equity via Phoenix Equity Partners 2016, which held a final close in July 2017 on GBP 415m. The fund typically invested in companies with enterprise values of GBP 30m-GBP 150m. Following the sale of Forest Holidays, the fund has made four exits and generated returns of 4x cost.

Phoenix said in a statement that the company opened several new locations and doubled its EBITDA during the investment period. Forest Holidays generated underlying adjusted EBITDA of GBP 10.4m and revenues of GBP 36.2m at the time of its acquisition by Phoenix, according to its financial statements.

Vitruvian acquired a majority stake in Sykes Holiday Cottages in October 2019, deploying equity via Vitruvian Investment Partnership III, which closed on EUR 2.4bn in 2017. The deal saw Livingbridge, who had originally backed the business in a GBP 54m MBO in 2015, retain a minority stake.

The GP said in the same statement that the acquisition of Forest Holidays will facilitate the diversification of both businesses and that it intends to work with Forest’s management to support its growth in the UK.

Sykes Holiday Cottages has made a series of add-ons during its year under PE ownership, including LDC’s Pure Cottages Group in 2020, as well as Northumbria Coast & Country Cottages in December 2021. The company was formed in 1991 and generated EBITDA of GBP 20m and revenues of GBP 68m at the time of its acquisition by Vitruvian, according to Unquote Data.

Company
Founded in 2006 and headquartered in Moira in Derbyshire, Forest Holidays owns and operates cabins for holidays in the UK. The company has 700 cabins and operates in 12 locations in the UK, five of which were opened in the past 10 years, including forests, national parks and Areas of Outstanding Natural Beauty. In addition to operating its cabins in forests, the company has invested more than GBP 100m in the UK’s forests.

The company posted revenues of GBP 23.4m and gross profit of GBP 7.4m in the year to 25 February 2021, versus revenues of GBP 37.5m and gross profit of GBP 14.7m in the previous year, according to its latest publicly available accounts.

People
Phoenix Equity Partners – David Burns (managing partner).
Vitruvian Partners – Ben Johnson (partner).
Livingbridge – Adam Holloway (partner).
LDC – David Bains (partner, head of East Midlands and East of England).
Forest Holidays – Bruce McKendrick (CEO).
Sykes Holiday Cottages – Graham Donoghue (CEO).

Advisers
Vendor – Harris Williams (corporate finance); Travers Smith (legal); Burness Paul (legal); PwC (financial due diligence); LEK (commercial due diligence); Intechnica (technology due diligence).
Management – Liberty CF (corporate finance); Eversheds Sutherland (legal, tax).
Acquirer – Clearwater International (debt advisory); Mayer Brown (legal); FTI Consulting (tax, accounting); Springboard Corporate Finance (corporate finance).

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• Topics
• Exits
• Portfolio management
• UK / Ireland
• Consumer
• United Kingdom
• Trade sale
• Build-up
• Phoenix Equity Partners
• LDC
• Vitruvian Partners
• Livingbridge