easyRentacar gets GBP26m

NBGI Private Equity and Bank of Scotland Corporate Banking have provided a GBP26 million funding package for easyRentacar, the low-cost car hire business backed by Stelios Haji-Ioannou. He has already floated easyJet and Stelmar Tankers, easyRentacar is the fourth enterprise he’s backed which has received outside capital. The financing will be used to further the growth of the company’s UK and European operations by increasing the number of sites in cities already covered and expanding into new markets.

The investment consists of GBP13 million equity from NBGI and a GBP13 million loan stock facility provided by Bank of Scotland. The bank already handles the lease financing for easyRentacar’s fleet through it’s Asset Finance subsidiary. This facility will now be expanded by GBP25 million to around GBP80 million, creating further opportunities for expansion and syndication. George Mitchell, chief executive of the bank’s corporate banking division, said: “We are delighted with this deal and pleased that Bank of Scotland has strengthened its ties with easyRentacar and easyGroup…The deal is a good example of how our Integrated Finance approach of debt-plus-equity stakes can prove to be an important source of funding to businesses.”

The company is planning an IPO in the next couple of years following the anticipated flotation of easyEverything next year. NBGI and Bank of Scotland will take equal equity stakes in the business and depending on easyRentacar’s value at the time they will own between 17.5 per cent and 32.7 per cent of the business in return for the investment.

Following the success of discount airline, easyJet and the easyEverything Internet cafe chain Stelios set up easyRentacar on the same low-cost principles. The company started trading in April 2000 as an Internet-based car hire company and now operates 14 sites in Europe. In March the company announced it was more than doubling the size of its fleet of A-class Mercedes and with 120,000 customers in the first 11 months of operation easyRentacar hopes to increase the size of its fleet to 20,000 cars in the next three years. The seventh business to come out of Stelios’ easyGroup business incubator will be Internet-based provider of credit cards and loans, easyMoney.

Pinsent Curtis Biddle acted for NBGI, easyRentacar was advised by Slaughter & May and Lovells advised Bank of Scotland.