Cinven sells NCP to 3i

Guy
14 July 2005

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Cinven has agreed the sale of NCP to 3i for an enterprise value of £555m. NCP was one of the early investments made by the EUR 4.4bn third Cinven fund in 2002 and Cinven’s exit sees the fund making a return of about three times its original equity investment. Including this divestment, the third Cinven fund will have returned more than EUR 2bn to investors through a combination of exits and refinancings. This sale of NCP follows the successful IPO of Foseco Plc in April 2005, an investment made in September 2001 by the second Cinven fund that generated equity returns of 3.7 times (including the fund’s retained stake in Foseco).The investment case for Cinven’s acquisition of NCP involved a radical strategic repositioning of the company from an asset based, off-street parking business to an off street and on-street parking services business that could leverage the significant opportunities arising from local and regional government outsourcing and traffic management initiatives.

The financing of the acquisition separated the property assets from the operations of the business and these were then subject to a sale and leaseback agreement. Thereafter, the board, led by Bob Macnaughton (CEO) invested in additional resources at operational management level in order to support NCP’s new strategic direction. The breadth of services provided by the business have been expanded dramatically and NCP has since captured a clear leadership position in parking services, being three times the size of its nearest competitor.

The company now has contracts with 31 of the UK’s local or regional government authorities, and manages over 900 car parks including car parks at 10 of the principal UK airports and 57 railway and London Underground stations. In total, NCP manages or operates 230,000 parking spaces and handles more than 60 million customer transactions per year.As a result of these strategic initiatives, EBITDA has doubled to over £42m, over 30% of which is generated from new lines of business. This growth in profitability, in combination with a strong cashflow profile, has enabled Cinven to return 70% of the original investment to investors ahead of the sale. Citigroup Global Markets Ltd acted as exclusive financial adviser to Cinven and NCP on this transaction.