‘Automotive superpower’ is goal for Zenith under new ownership

Zenith says investment from new majority shareholder Bridgepoint Capital will give it five years to build an “automotive superpower”.

HG Capital agreed to sell the leasing company to the private equity firm for £750million in a deal announced recently.

It brings to an end a three-year relationship, which first saw HG Capital sign an agreement to acquire a majority stakeholding in the parent company of Zenith Vehicle Contracts Group from Morgan Stanley Global Private Equity (MSPE) in 2014.

That deal was announced just a matter of weeks after the private equity firm had bought Leasedrive. Both businesses were brought under the single brand of Zenith last year.

The newly combined business was ranked 7th in the 2016 FN50 list of the UK’s top 50 contract hire companies, with a risk fleet of 58,392 vehicles – an 8% increase on the 54,248 vehicles reported in 2015.

Taking into account the vehicles for which it also provides fleet management services, that figure increases to about 85,000 units, with a focus on serving blue-chip customers.

Tim Buchan (pictured), chief executive officer at Zenith, said: “We thank HG Capital for its contribution and are pleased to welcome Bridgepoint as our new partner.

“We look forward to working together on our long-term strategy of continued investment in new markets, digital transformation, alternative vehicle asset classes, value proposition and platform developments.”

Zenith has invested heavily in its digital offering as it has sought to strengthen its customer-centric approach. Talk of continued investment in new markets suggests it could now tap into a growing personal contract hire (PCH) market.

Buchan told Fleet News that private equity was the most efficient way to get significant investment into the company. “This gives us four or five years of investment to build an automotive superpower,” he said. “It will enable us to look at other vehicle asset types and adjacent markets as well as organic growth. We are thinking about retail and how we build the business to be complementary to where we are today.”

Fleet News first reported that Zenith was looking at a “number of corporate finance options” after it was reportedly put up for sale for £700m in August.

However, at the time Buchan insisted that it should not be interpreted to mean a transaction was imminent.

Andrew Land, partner at HG Capital, said: “We have had a very successful partnership with the Zenith management team and are proud to have been part of the company’s success. The business model has been a great fit with HG’s investment strategy, providing mission-critical services to customers through long-term relationships and the use of proprietary technology.

“We have no doubt that Tim, Mark (Phillips) and the rest of the team will have continued success working with Bridgepoint.”

A major international private equity group, Bridgepoint says it is focused on investing in market-leading businesses valued between €200m (£170m) and €1bn (£850m) where it believes it can create significant value.

It says it has worked with more than 300 management teams across Europe and in many sectors to help them target, fund and then acquire competitors, improve their operations or even expand product and service ranges.

Headquartered in Leeds, with full-service operations in both Solihull and Wokingham, Zenith has more than 500 employees.

Buchan said there would be no change to the management team. He will continue to lead the board alongside Phillips, with representatives from Bridgepoint.   

Emma Watford, partner at Bridgepoint and head of its business services sector team, said Zenith is “best-in-class”, with a proven business model that has had an unbroken track record of growth over a long period.

She concluded: “It benefits from an exceptional management team and, with them, we believe the business can continue its impressive growth trajectory through its continued focus on customer service, technology and targeted acquisition activity.”