A management buy-out at Leasedrive Velo worth an estimated £80m has seen the company’s directors take a bigger stake in the independent fleet management and leasing company.
The MBO was backed by Lloyds Development Capital (LDC), a private equity house, with funding and senior debt facilities provided by the Royal Bank of Scotland (RBS). Asset finance for Leasedrive Velo’s vehicle fleet will be provided via an agreement with Lombard, RBS’s leasing and asset finance subsidiary.
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Leasedrive Velo’s former majority stakeholder, Lyceum Capital, had been looking to sell the fleet lessor for some time, having successfully partnered the management team – led by Roger Partridge as chief executive officer, Roddy Graham as commercial director, and David Bird as chief operating officer – since the merger
between Leasedrive and Velo in January 2007.
Chief executive officer of Leasedrive Velo Group, Roger Partridge said: “Lyceum Capital, the private equity company which had originally acquired Velo in 2003 and which became the majority stakeholder following the merger of Leasedrive with Velo at the beginning of 2007, had been keen to sell its interest following the
successful integration of the two companies.”
Kevan Leggett, managing director of LDC said: “Leasedrive Velo has built a quality reputation which is a key differentiator in this competitive and growing market. We were particularly attracted to its differing sources of revenues which provide the business with significant downside protection.”
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By GlobalDataCommercial director of Leasedrive Velo, Roddy Graham said that the
success of the MBO in the current “difficult” climate for companies
looking to attract funding “underlines the strength of our business
model”, adding that in management’s view, the LDC-backed buy-out
will enable Leasedrive Velo to “maintain its integrity, with
partners which are committed to the long-term success [of the fleet
lessor]”.
He added that Leasedrive Velo and Lyceum were parting company “on
excellent terms”. Lyceum issued a memorandum of understanding in
summer 2007 regarding a possible sale of Leasedrive Velo, which
attracted “considerable interest from many within the corporate
finance market”, Graham said, although none of the potential
suitors were judged a good enough fit by the management.
Instead, the management team decided that a buy-out was the “next
logical step”, and settled on RBS – which had in the past attempted
to fund Leasedrive’s two previous management buy-outs – for senior
debt and corporate banking facilities, and LDC as a funding
partner. LDC now owns 52 per cent of the equity in Leasedrive Velo,
which in its results for 2007 made pre-tax profit of £4.6m on
turnover of £56m.
“Working with RBS and LDC means that we have a bank and an investor
who are basically saying, ‘we’re in it for the long haul,’” Graham
added. “We anticipate that it will be business as usual in coming
months, with a change of bank on our cheques probably the most
visible difference on a day-to-day level.”
