In May 1995 Cinven led a £108 million management buyin of Wightlink from Sea Containers who were selling the business to reduce borrowings.
Wightlink ran ferry services between the mainland and the Isle of Wight using nine vessels on three routes. It had a dominant market position in a growing market where there were significant barriers to expansion and entry for existing and new competitors.
A new and experienced management team was recruited to reorganise and reinvigorate the business. There were opportunities to boost marketing, improve yield levels and make savings in operating costs. Existing earnings were suitably stable to leverage further debt while future growth in the market was a driver for increased gross revenues.
Following the buyin a new marketing strategy was implemented which produced gains in market share. New employment contracts were negotiated with unions that enabled greater workforce flexibility and overheads were reduced. Improved performance under Cinven’s ownership allowed for a recapitalisation in 1999 which permitted equity retiral. In October 2001 the business was successfully exited through a sale to a financial institution.
Multiple returned on investment: 2.8x