Bourne Leisure has bought back a 28 percent stake owned by Candover and Legal & General Ventures (LGV) in a deal that delivers a reported return on equity of more than two times for the private equity firms. Candover and LGV each owned 14 percent stakes.
Bourne Leisure was originally backed by a small mezzanine loan from LGV in 1997. “It allowed the founders to realise some capital,” said Adrian Johnson, managing director of LGV. “But we always had in mind that we would be part of a larger transaction involving the company at some point in the future.”
This duly happened when LGV teamed up with Candover to provide equity for Bourne’s acquisition of Rank’s holiday division in October 2000 in a deal worth €1.8 billion ($2.3 billion).
With a turnover of more than £670 million in the year to 31 December 2003, Bourne is the largest operator of caravan parks in the UK, trading under the Haven and British Holidays brands. Its other operations include the Warner hotel chain, three Butlins holiday resorts and Haven Europe.
Johnson said that since the deal in 2000, the main task was integrating the two businesses, while also undertaking some disposals of non-core assets. These included Oasis Lakeland Village, the holiday resort that was sold to Center Parcs for an estimated £100 million in August 2001.
Johnson said LGV’s deal pipeline has picked up considerably in recent times and it is considering “one or two” more deals in the leisure sector. “Leisure companies generally have the criteria we look for: cash generative, with good growth characteristics and where we can play a role in industry consolidation,” he said.
For Candover, the deal marks the eighth exit from the 15 investments made by its 1997 fund. In the last 12 months, the firm has completed seven full exits and three partial exits. The most recent came earlier this month when it sold its stake in Irish packaging firm Clondalkin Group to Warburg Pincus for €630 million.