HgCapital offloads Zenith in £750m deal

HgCapital announced on Monday that it has agreed the sale of Zenith, the largest independent vehicle leasing business in the UK, to Bridgepoint in a transaction totalling £750m.

The London-listed firm said Zenith is headquartered in Leeds, with full-service operations in both Solihull and Wokingham and over 500 employees, providing end-to-end automotive solutions focused on contract hire, salary sacrifice, fleet management and short-term hire services to customers across the UK.

It said the company operates a fleet of around 85,000 vehicles, and focuses on serving blue-chip customers, principally as sole supplier.

Zenith was recently ranked seventh in the FN50's list of the UK's top 50 contract hire companies.

“HgCapital initially invested in Leasedrive in December 2013, with LDC retaining a minority stake in the business), subsequently completing the merger with Zenith in February 2014, and the business has operated as a single entity since March 2014,” HgCapital’s board explained.

“The merger of Zenith and Leasedrive was driven by the highly complementary nature of the two businesses and the potential to create economies of scale.”

A substantial part of the value created during HgCapital's investment period has been driven by the close collaboration of Zenith's management and the HgCapital team, the board claimed.

It said Zenith has continued to deliver strong double-digit revenue and EBITDA growth over the past year - 19% p.a. CAGR since March 2014 - and the contracted nature of its business model means that a significant proportion of future growth is already underpinned by existing customer contracts.

“We have had a very successful partnership with the Zenith management team and are proud to have been part of the company's success,” said HgCapital partner Andrew Land.

“The business model has been a great fit with Hg's investment strategy, providing mission-critical services to customers through long-term relationships and the use of proprietary technology.

“We have no doubt that Tim, Mark and the rest of the team will have continued success working with Bridgepoint.”

Tim Buchan, CEO at Zenith, thanked HgCapital for their contribution and said he was pleased to welcome Bridgepoint as its new partner.

“We look forward to working together on our long-term strategy of continued investment in product and system developments.”

Emma Watford, partner at Bridgepoint and head of its business services sector team, described Zenith as already being best-in-class with a “proven business model” that has had an “unbroken track record” of growth over a long period.

“It benefits from an exceptional management team and, with them, we believe that the business can continue its impressive growth trajectory through its continued focus on customer service, technology and targeted acquisition activity.”