Lyceum Capital defied the shakiness at play in the UK buyout market to sell five year-old investment Leasedrive Velo in an £80m secondary management buyout to LDC.
While many vendors retreat from sales amid a reluctance to accept lower prices, Lyceum put Wokingham-based vehicle management group Leasedrive Velo on the market.
“On the price we got for Leasedrive Velo, I believe that good quality businesses still attract good quality prices” said Dan Adler, the partner who led the exit for Lyceum Capital.
Lyceum acquired Velo, a provider of vehicle leasing, fleet management and car and van rental services to the UK corporate market, in 2003 and built it up both organically and through the 2007 merger with its main competitor, Leasedrive.
The merger of the two businesses went “very smoothly”, according to Adler, who cited the management team’s skill, the geographical proximity of the two businesses and their complementary nature as key to its success.
“There are a handful of big players in the fleet sector but not many mid-market players,” explained Adler of the combined company, Leasedrive Velo, a mid-market player.
“Leasedrive fetched a good price because it’s a unique business – it’s one of just a few businesses to offer a full range of fleet management services plus it’s an innovative company always trying to come up with tailor-made solutions for clients,” he added.
PricewaterhouseCoopers, John Lewis, Samsung and T-Mobile are among the company’s clients.
Since Lyceum’s investment in 2003, Velo has increased profits fivefold. Leasedrive Velo today has a turnover of £62m, which LDC aims to increase by a third over the next two years to raise its share of the UK’s £10bn fleet management service market.
“We were particularly attracted to Leasedrive Velo’s differing sources of revenues, which provide the business with significant downside protection,” said Kevan Leggett, managing director of LDC.
LDC beat competition from both trade and other private equity firms to win the deal. Its equity investment was supported by debt and asset finance facilities provided by Royal Bank of Scotland.