Kier Group has sold its FPS (Fleet and Passenger Services) division to private equity firm Endless for £17.9m, as part of a management buy-out.

The disposal of the company, to be renamed Essential Fleet Services, includes the transfer of FPS's finance lease debt of approximately £32m (as at 30 June 2015).

FPS is a provider of specialist vehicle contract leasing and fleet management services to public sector clients, as well as Kier's local authority highways and utilities businesses.

FPS became part of construction and services company Kier as a result of the May Gurney acquisition in 2013.  In the year ended 30 June 2015, its estimated third party revenues and profit before interest and tax are £34m and £5.6m, respectively. May Gurney acquired the business, originally called TransLinc, for £34.9m in 2011.

Haydn Mursell, chief executive at Kier, said: "FPS was acquired as part of the May Gurney transaction. However, in light of our strict return on capital requirements, we concluded that it would be appropriate to dispose of FPS to a specialist operator which will be managed by the existing management team."

Ray O’Toole, managing director, and David Liston, operations director, led the management buyout. O’Toole said, “This is a really exciting time for our company and for our people and we are delighted to have Endless as our new partner.  Endless was immediately aligned with the growth ambitions of the management team and the future for Essential feels very bright.  We are also grateful to Kier for enabling us to quickly deliver this buyout once it was clear that Essential did not fit with its core strategy."

Mathew Deering, partner at Endless, added: “As soon as we became aware that Essential was non-core to its parent’s strategy, we knew we wanted to back Ray, David and the team in the transition to an independent business.  We are delighted to have partnered with Kier to become the new owners of a strong and well-invested business with an attractive long term growth plan, and we look forward to working with Kier as a valued customer to Essential moving forward.”

Kier and Essential Fleet Services have entered into a five-year agreement under which Essential Fleet Services will continue to supply Kier with fleet services to its local authority highways and utilities businesses.

Yorkshire-based Endless assisted in Andrew Cope's management buy out of fleet services provider FMG earlier this year.