3i exits HPI with Phoenix secondary

3i has sold its stake in the vehicle checking service provider for £70m in a secondary sale to Phoenix Equity Partners and which sees 3i achieve a 1.8 times return on capital.

Phoenix Equity Partners, the UK-based private equity firm, has acquired a 70 per cent stake in HPI Limited, the Salisbury based provider of vehicle checking services, in a deal valuing the business at £70m (E101m).

The sale provides UK-listed 3i Group with an exit on the business it backed in December 2000. 3i then backed Mark Rowley, the co-founder of IMVA, which bought HPI from Equifax with funding from 3i for £27m. The deal sees 3i exit completely having achieved a return of 1.8 times on its original investment.

Martin Rowley retains a 15 per cent stake in the business alongside Phoenix’s 70 per cent stake. Phoenix has invested £31m in the buyout. Royal Bank of Scotland, which is HPI’s existing banker, has also provided new term debt and working capital facilities.

“We backed [Rowley] to acquire HPI with a clear plan to integrate IMVA and HPI and drive growth through product innovation,” said Angela Lane, investment director of 3i. “This has been delivered and resulted in an attractive return on our investment.”

Phoenix Equity Partners manages four private equity funds with capital exceeding £500m.  Following its management buyout from Credit Suisse Group in March 2001, Phoenix is owned by its executive team.  Phoenix’s investment focus is on mid-market UK private businesses valued at up to £200m, with individual equity investments going up to £50m.

The deal is the second major transaction completed by Phoenix in 2003. In January, the firm led the £62m buyout of Vivid Imaginations, the manufacturer of Spiderman and Simpsons toys, from Jordan Group. The firm is currently investing from the £300m Phoenix Equity Partners IV fund.