Barclays drives away with 2.7x exit on car leaser

Morgan Stanley has acquired a 60% stake in car leasing company Zenith for £85m, representing the fourth buyout in seven years for the company.

Morgan Stanley Private Equity has purchased a 60 percent stake in Zenith Vehicle Contracts Group in a management buyout from Barclays Private Equity.

The deal is worth £85 million, according to a source with knowledge of the situation, and is the fourth management buyout for the Leeds-based corporate care leaser in seven years. Barclays, which is completely exiting its investment in Zenith, will net a 2.7x muliple in the transaction.
London-based private equity investor 3i backed an £18 million MBO of the firm in 2003, which was followed two years later by another MBO, this time led by UK mid-market private equity house Dunedin Capital Partners, who valued the company at £27 million. In 2007, Barclays backed a £40 million buyout.

“We didn’t start out with that intention, it just sort of ended up that way”, said Zenith managing director Andrew Cope, talking about the buyouts. He explained the string of deals had been a tax-efficient way to inject capital into the business and to reward shareholders.

Cope said the deal was significantly weighted in favour of equity rather than debt, and was “the least leveraged deal we have done”.   
A spokesperson for Morgan Stanley confirmed the debt for the deal will be provided by Royal Bank of Scotland and HSBC. The equity-debt ratio was not disclosed.

This is the sixth investment from Morgan Stanley Capital Partners Fund V, which closed on $6 billion late 2009, said a company spokesperson.