Strong returns on NCP exitEuropean private equity firm, Cinven, today announces that it has agreed the sale of NCP to 3i for an enterprise value of £555 million. NCP was one of the early investments made by the €4.4 billion third Cinven fund in 2002 and Cinven’s exit sees the fund making a return of about three times its original equity investment. Including this divestment, the third Cinven fund will have returned more than €2 billion to investors through a combination of exits and refinancings. This sale of NCP follows the successful IPO of Foseco plc in April 2005, an investment made in September 2001 by the second Cinven fund that generated equity returns of 3.7 times (including the fund’s retained stake in Foseco).
The investment case for Cinven’s acquisition of NCP involved a radical strategic repositioning of the company from an asset based, off-street parking business to an off street and on-street parking services business that could leverage the significant opportunities arising from local and regional government outsourcing and traffic management initiatives.
The financing of the acquisition separated the property assets from the operations of the business and these were then subject to a sale and leaseback agreement. Thereafter, the Board, led by Bob Macnaughton (CEO) invested in additional resources at operational management level in order to support NCP’s new strategic direction. The breadth of services provided by the business have been expanded dramatically and NCP has since captured a clear leadership position in parking services, being three times the size of its nearest competitor.
The company now has contracts with 31 of the UK’s local or regional government authorities, and manages over 900 car parks including car parks at 10 of the principal UK airports and 57 railway and London Underground stations. In total, NCP manages or operates 230,000 parking spaces and handles more than 60 million customer transactions per year.
As a result of these strategic initiatives, EBITDA has doubled to over £42 million, over 30% of which is generated from new lines of business. This growth in profitability, in combination with a strong cashflow profile, has enabled Cinven to return 70% of the original investment to investors ahead of the sale.
Citigroup Global Markets Limited acted as exclusive financial adviser to Cinven and NCP on this transaction.
Jonathan Clarke, partner of Cinven, said today: “When we acquired NCP, we saw the opportunity to invest in a strong business with a highly experienced management team that needed a supportive partner in order to undertake a significant repositioning in terms of strategic direction. The progress made in leveraging the various opportunities in the local and regional government sector, as well as well as elsewhere, has been highly successful with over 30% of EBITDA now being generated from these new lines of business and NCP is now the undisputed market leader in UK parking and traffic management.”
Gordon Moore, partner of Cinven, added: “This has been a successful investment for the third Cinven fund, creating a significant increase in equity value and an IRR of almost 50%. We wish the management team well in developing the business further.”
Bob Macnaughton, Chief Executive of NCP added: “In 2002 we saw the potential benefit of changing the direction of the business and in Cinven found a partner that had the expertise and financial muscle to help us achieve our goals. NCP has been transformed dramatically in the past three years and we are now providing a much broader range of services to both individuals and public sector customers.”