Secondary buyouts provide Bridgepoint exits

Bridgepoint Capital, which achieved 12 exits in 2003, has sold three investments in secondary buyouts this month. The firm sold IMO Car Wash Group to JP Morgan Partners in a £350m deal, Blagden Packaging Group to Alchemy for an undisclosed sum and Dennis Eagle to ABN AMRO Capital for £51m.

Bridgepoint’s 2003 exits include refrigeration firm Huure, Lloyds Werft, the shipbuilder and repairer, Gower Group, self-assembly kitchens and Artform, point-of-purchase display products firm.

Founded in 1965, IMO Car Wash is a London-based conveyor car wash business marketed under the IMO and ARC brand names. Bridgepoint backed the £114m buyout of family-owned business in 1998, alongside Phoenix Equity Partners and BNP Paribas. Management took a 20% interest in the business and Bridgepoint held a 51% stake. In January 2002 Bridgepoint funded IMO’s £80m acquisition of Toman Group from Harpen, part of the German utility RWE. The Toman Group was originally part of IMO but the German operation was sold in 1990 to fund the development of the UK business. It was subsequently acquired by the RAG group in 1994 before being sold on to Harpen in 1998. In 2002 analysts speculated that IMO could float at a valuation of approximately £300m.

Since the original buyout the company has doubled its number of sites to 800 and trebled its EBITDA to over £40m in 2003. IMO has 255 sites in the UK trading as ‘arc’ Clean Car Centres, over 300 IMO sites in Germany and 240 sites across ten other European countries. The company washes over 30 million cars a year. The exit is reported to have returned three times money to investors.

Completion of the transaction, which is subject to normal merger clearance, is expected to occur in the first quarter of 2004. Bret Holden, chief executive officer of IMO, will continue to lead the company following the acquisition. Stephen Welton, partner at JPMorgan Partners, said: “We look forward to helping the IMO management team under the leadership of Bret Holden take the business to its next stage of development, which will see an increased roll out of new sites across Europe.”

Bridgepoint, along with co-investor Bridgepoint Capital Partners, has benefited from Alchemy’s acquisition of Blagden Packaging Group, a Belgian manufacturer and reconditioner of steel drums. The size of this deal was not disclosed but both vending houses report a healthy return on their initial investments. The new buyout will facilitate add-on acquisitions as the European industry consolidates further. It also provides management with an increased and ratcheted equity interest.

Bridgepoint and CVC acquired Blagden in 1998 in deal worth €149m. The investors supported a buy-and-build strategy that has strengthened the company’s position in Europe. The business now has 19 facilities in eight European countries, including Russia.

Bridgepoint’s third realisation via a secondary buyout comes from the sale of Dennis Eagle to ABN AMRO Capital in a £51m deal. The UK company, which designs and manufactures refuse collection vehicles, was acquired by Bridgepoint in 1999 as part of the £30m buyout of Mayflower’s specialist vehicles group. Engineering group Mayflower acquired the group of companies, also including airport ground support vehicle manufacturers Douglas Equipment and Schopf, from Dennis plc in 1998. Bridgepoint reported a satisfactory return on its investment.

The future growth of the business will be based around continued growth in the UK and building on current expansion in export markets such as Ireland, Germany and France. 12% of Dennis Eagle’s £90m turnover is currently outside in the UK. ABN AMRO Capital’s £22.6m investment in Dennis Eagle is supported by senior debt and working capital facilities of £32.5m, provided by Royal Bank of Scotland. Total deal size is £61.5m.