UK-based mid-market player ECI has realised its 1995 investment in Highway Emergency Services, a supplier of emergency repair services to domestic households, valuing the company debt free at GBP36.75 million. The company has been sold to Home Service Limited, a subsidiary of South Staffordshire Group for an initial cash consideration of GBP27.6 million payable principally to non-management shareholders. A separate agreement has been reached with management shareholders, based on a growth related earn-out. The investment has generated a total return of over four times cost and an IRR of 33 per cent.
ECI backed the management buy-in buyout of the Norwich-based company in 1995, committing GBP1.5 million to the business. The team was led by Ronnie Lamb, who had previously grown the replacement car windscreen business Autoglass to sales of GBP120 million. ECI committed a total of GBP5.2 million to the company spread over a seven-year period.
At the time of the initial investment Highway was generating revenues of less than GBP5 million. Today, the company, which has 853 employees, has annual sales of over GBP40 million. For the nine months ended March 31, 2002, the company reported an operating profit of GBP2.4 million.
ECI partner Ken Landsberg, said: “One of ECI’s key areas of investment over the past few years has been in companies with long term contracts, either in the public or private sectors. Highway is a good example of this type of investment and others include Serviceteam, MM Group, Language Line and Sedgemoor College. We are currently actively looking for similar investment opportunities.”
Highway operates from 43 depots UK-wide. Last year, the group launched an emergency plumbing and drain service. Highway works either as an approved or preferred supplier of glass, frames, locks and garage doors for major household and commercial property insurers.