HG Capital poised to acquire majority stake in Zenith

Private equity company HG Capital could be about to acquire its second leasing company in less than two months by buying Zenith.

Fleet News understands that HG Capital has struck a deal to buy the Leeds-based leasing company weeks after it bought top 20 contract hire company Leasedrive.

Sources also suggest that the two companies will be merged and senior management from Zenith have already visited Leasedrive’s headquarters in Wokingham, with a formal announcement due in the next two weeks.

Fleet News first reported that the private equity company could be interested in adding Zenith to its portfolio in December.

However, Zenith’s commercial director Ian Hughes would not be drawn on whether a deal was in the offing, when he spoke to Fleet News at the time.

He said: “I’ve no comment to make on industry speculation.”

Zenith is the UK’s 12th biggest contract hire company, funding a fleet of 27,310 vehicles, while Leasedrive is the UK’s 14th biggest contract hire company, funding a fleet of 20,872 vehicles, according to the latest Fleet News FN50.

The combined risk fleet of Leasedrive and Zenith would equate to more than 48,000 vehicles and put it into the top ten of the FN50.

Zenith recently announced the completion of a significant refinancing of its credit facilities, following a rapid de-leveraging of the business over the last three years.

The transaction expanded the company’s panel of lending partners, bringing Lloyds and ICG alongside long-term funders RBS and HSBC.

HG Capital completed its acquisition of Leasedrive on December 6, 2013, a week after senior management first confirmed a deal was in the offing to Fleet News.

Lloyds Development Capital (LDC), which is part of the Lloyds Banking Group, had been looking to cash in its 52% stake in Leasedrive.

The private equity company had paid £80 million for its majority shareholding in 2008. HG Capital bought LDC’s stake in the business and the remaining 48%, owned by the senior management team, before allowing both parties to roll over part of their investment /equity to share a 20% stake in the new structure.

The investment came weeks after HG Capital sold online trading platform Epyx to the owner of the Allstar fuel card Fleetcor, in a deal worth about £13m.

Shortly after acquiring Leasedrive, Andrew Land of HgCapital, who joined the Leasedrive board, said: “We had previously identified the leasing sector as a core focus area and were particularly impressed with Leasedrive and the fantastic business built by its management.

“We see real growth potential for the company as more organisations recognise the potential of the company car as a recruitment and reward tool in the war for talent.”

Fleet News has contacted both Zenith and Leasedrive, but as yet has been unable to get a response from either company.