UPDATED: Zenith keeps motoring after being sold in £750m deal

Tim Buchan, the CEO of Zenith
Tim Buchan, the CEO of Zenith
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A vehicle leasing business is expected to keep growing by acquisition after being sold in one of Yorkshire’s biggest corporate deals since the financial crash of 2008.

HGCapital has announced that it has agreed to sell Zenith, the largest independent vehicle leasing business in the UK, to Bridgepoint in a transaction totalling £750m.

Headquartered in Leeds, with full-service operations in Solihull and Wokingham, Zenith has more than 500 employees and provides automotive services focused on contract hire, salary sacrifice, fleet management and short-term hire services to customers across the UK.

Zenith is expected to transfer more than 300 staff from its current base in Calverley, near Leeds, to a new, purpose-built building at Kirkstall Forge, which is also near Leeds, towards the end of this year.

The Yorkshire Post understands that, following the completion of the deal, Zenith is expected to continue to grow through acquisition and it may also pursue opportunities in mainland Europe.

Zenith is regarded as one of Yorkshire’s most visible private equity success stories. It is thought to have gone through more MBOs (management buyouts) than any other company in Yorkshire.

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

HgCapital initially invested in Leasedrive in December 2013, with LDC retaining a minority stake in the business.

It subsequently completed the merger with Zenith in February 2014. The business has operated as a single entity since March 2014.

A HGCapital spokesman said: “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.”

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

“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.”

Tim Buchan, the chief executive of Zenith, said: “We thank HgCapital for their contribution and are pleased to welcome Bridgepoint as our new partner. We look forward to working together on our long-term strategy of continued investment in product and system developments.”

Emma Watford, a partner at Bridgepoint and head of its business services sector team, commented: “Zenith is already 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.”

HgCapital were supported by Evercore, Deloitte, OC&C, KPMG, Weil Gotshal & Manges and Sidley Austin on the sale.

It is Zenith’s sixth successive MBO in 14 years. Professional services firm Deloitte has advised on all six transactions. In the latest £750m deal, Deloitte acted as co-financial adviser and lead debt adviser to HgCapital and to Zenith, and also as lead adviser to the management team, led by Tim Buchan and CFO Mark Phillips. Squire Patton Boggs in Leeds also provided legal advice to the management team. The Deloitte teams were led by Martin Jenkins and also comprised Oliver McRae and Anil Gupta and the Squires team was led by Jonathan Jones and Jayne Aarons.

Mr Jenkins said: “I believe Zenith’s six successive MBOs to be unique to the world of private equity with stellar returns being delivered for each of the previous five investors. In Bridgepoint Zenith has found the ideal partner to support the next stage of its journey at a time of great change and opportunity in the industry”

Gareth Harris of RSM Restructuring Advisory LLP

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