Zenith drives forward with Morgan Stanley deal

MORGAN Stanley Private Equity has completed a deal to take a 60% stake in Yorkshire company Zenith Vehicle Contracts, one of the UK’s largest independent fleet management specialists.

Barclays Private Equity, which backed a management buyout of Zenith in 2007, has exited the company following the latest deal.

It’s the fourth buyout of the business in seven years and is believed to value Zenith at around £85m.

Zenith’s management will retain a 40% stake in the company following the deal, the terms of which have not been disclosed.

Andrew Cope, chief executive of Zenith, told TheBusinessDesk.com: “This deal sees Zenith operating as normal with the same management team who are all big investors in the business.

“We are doing this primarily because Morgan Stanley and Zenith have a shared growth vision in this space and they provide a lot of opportunity in the market. Morgan Stanley are a very good partner because they understand the space.

“We plan to continue our growth, which will be largely organic, but possibly include acquisitions.”

Established in 1989, Zenith is one of the UK’s largest independent leasing, fleet management and vehicle outsourcing businesses. It manages more than 27,000 vehicles on behalf of its corporate clients.

Zenith completed its first buyout with venture capital group 3i in December 2003 when it was valued at £18m, and was involved in subsequent deals with private equity groups Dunedin in June 2005 and Barclays PE in June 2007.

A number of Yorkshire-based professionals, who have worked with Zenith on their series of buyouts, advised on the deal.

Jonathan Jones, of Leeds-based Hammonds, led a team from the law firm which advised management, while Martin Jenkins headed up a team from Deloitte in Leeds who advised the shareholders on their exit, while Tim Simpson, of Park Place Corporate Finance in Leeds, advised the management team on their reinvestment in the business.

Michael Reeves, partner at Clearwater Corporate Finance, advised Barclays Private Equity on the transaction.

RBS and HSBC banks provided debt financing for the deal, with David Handy, Martin O’Shea and Sarah Blackburn of law firm Addleshaw Goddard’s banking team advising them.

Brian Magnus, head of MSPE in Europe, which is part of the global banking giant, said: “We are delighted to invest in Zenith and to support its high calibre management team, which has successfully built the company over an extended period.

“We look forward to working closely with them to ensure its continued growth and success.”

Steve O’Hare, director at Barclays Private Equity, said: “We are pleased to have had the opportunity to support Zenith since 2007, during which time the company has grown both organically and through acquisition.

“This sale delivers a strong return to our investors of over 2.7 times the original investment. We believe this new ownership structure will support Zenith’s continued growth prospects.”

The transaction is subject to regulatory approval.