MidOcean sells Center Parcs ahead of IPO

MidOcean Partners sold holiday park operator Center Parcs to broker Collins Stewart ahead of the company’s floatation on London’s Alternative Investment Market. Arbor plc, a specially formed vehicle funded via a placing to Collins Stewart’s institutional investor clients, paid £285m for the company, which listed on December 11. Arbor paid £232.5m in cash and issued loan notes of £52.5m.

MidOcean was launched in February 2003 by the managers of DB Capital Partners to acquire Deutsche Bank’s $3bn portfolio of late stage private equity investments. DB Capital Partners, co-investing with Pierre & Vacances, acquired the Center Parcs group in 2001 from Scottish & Newcastle in a £700m deal. After a £460m sale and leaseback of the group’s UK properties last November, MidOcean sold its 50% stake in Center Parcs Europe, with properties in the Netherlands, France, Belgium and Germany, for €270m. The buyer was strategic partner Pierre & Vacances, the French developer and operator of tourist residences and holiday parks.

The sale of Center Parcs is the sixth exit achieved from the portfolio this year and brings total realisations to $1.2bn. Other exits have been secured through sales of Jostens, Dyncorp, America Media, and Huntsman International. The deal brings the overall return on the UK holiday business to five times MidOcean’s original investment. Graham Clempson, European managing partner of MidOcean, said: “We are extremely pleased with this result for MidOcean Partners which is not only a great outcome on the investment itself but also for our fund as a whole. We are equally pleased to have worked with Collins Stewart on this innovative method of introducing a stable growth company like Center Parcs to the public market.”

Linklaters and Merrill Lynch advised midOcean Partners. The sale of Center Parcs UK is the second time this year that Linklaters has advised on a transaction of this type, which allows an IPO-based structure and valuation to the be used as part of a private auction sale process. Recently Linklaters advised on Suez’s sale of Northumbrian Water, which was also listed by Collins Stewart.

Center Parcs UK has four “villages” located in Nottinghamshire, Wiltshire, Suffolk and Cumbria, each comprising a combination of woodland and water, with a range of accommodation in individual villas or apartments and an extensive range of indoor and outdoor sport and leisure facilities. For the year to 30 April 2003 Center Parcs UK generated sales of £160.7m and an EBITDA before exceptional operating items of £35.3m, despite receiving no contribution from one of its properties due to fire damage.