Fleet News

Business as usual after Zenith’s third buy-out

Zenith Vehicle Contract’s chief executive Andrew Cope has been personally ringing customers to reassure them it is business as usual following the third management buy-out of the firm in four years.

The deal, backed by Barclays Private Equity, values the company at £40 million and gives the management team a “war chest” for possible further expansion of products and services, or even acquisition.

One of the biggest success stories in the leasing industry in recent years, Zenith’s first management buy-out in 2003 valued the company at around £18 million. The second, in 2005, saw the firm worth £27 million and was supported by Dunedin Capital Partners.

Zenith now has 18,000 vehicles under management, up from 6,000 in 2003.

Mr Cope said: “The management buy-out will allow the management team to grow the business significantly over the next five years in partnership with a supportive private equity partner.

“Our strong growth in both fleet size and profitability has been delivered by successful product innovation and our desire to provide a first class personal service to customers.

“Zenith has thrived on its independence and different way of doing things. What was especially important to us was to secure the long-term future of the business while continuing to hold the majority stake in the company.”

Steve O’Hare, investment director at Barclays Private Equity, who will be a non-executive director on the board, added: “Zenith differentiates from its competitors in offering flexibility, a proactive approach to its customer base and the high quality of service it delivers.

“The business has grown market share and future indicators continue in this vein.

“We believe Zenith can be used as a platform for future organic growth.”

Expert’s view: Colin Tourick, fleet consultant

“Well-run leasing businesses can provide excellent returns for shareholders. However, these firms are cash hungry, which is why so many are now owned by banks, where cash is not a scarce resource.

Small short-term profit tends to be preferred to the possibility of a bigger gain over a longer period. So it would not be suprising if Zenith’s various owners have been happy to take the profit and move on if.

It is a tribute to Zenith’s management that they have attracted a string of investors to put increasing amounts into the business, while they still retain a large proportion of the shares and are left alone to continue to look after clients and develop the business without interference.”

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