Cinven has sold car parking business NCP to 3i for £555m generating a return of around 3x the original equity investment and an IRR of approximately 50% for Cinven.
Cinven acquired the business from Cendant in 2002 for £820m. It was one of the early investments made by the E4.4bn third Cinven fund. Since that original MBO, the group has been transformed from an asset-heavy owner of multi-story car parks to a manager of both on and off-street parking. The key element in this transformation was the 2003 sale of the group’s property assets to an investor group comprising investor Igal Ahouvi and Delek Investments for £609m.
Another part of Cinven’s strategy was to secure contracts from local authorities to manage their parking facilities. NCP now manages over 900 car parks throughout the country and 230,000 on-and off-street parking spaces. It has contracts with 31 local or regional government authorities. As well as operating and maintaining the physical infrastructure of parking spots and meters, the company also manages enforcement in the form of attendants and clamping. The group also enforces bus lane violations and may be well positioned to bid for tenders on the planned expansion of congestion charges across the UK.As a result of these initiatives, EBITDA has doubled to over £42m, over 30% of which has been generated by new business lines. This growth in profitability, combined with a strong cash flow, enabled Cinven to return 70% of the original investment to investors by sale and leaseback and other refinancings. 3i is backing the existing management team, led by Bob Macnaughton, chief executive. Mizuho Bank is providing senior debt facilities. The purchase price includes an element of proceeds from recent property disposals, which will be received by the company shortly.
Citigroup Global Markets ran the auction for Cinven, while KPMG provided vendor due diligence. UBS and Deloitte acted as financial advisors for 3i with Osborne Clark providing financial advice. 3i portfolio company ERM did the environmental due diligence.