UK private equity firm Cinven has won the race to acquire NCP, the UK national car park business that was put up for auction by its parent company Cendant. Cinven will pay Cendant £820m for NCP – in line with analyst predictions of a price in excess of £800m – although lower than Cendant’s original asking price of £1bn.
According to a source familiar with the auction process, Cinven secured the deal because it was able to produce ‘a more deliverable offer’. Cinven’s deal involves the creation of a holding company, Parking International, which will acquire NCP with Royal Bank of Scotland providing debt for the acquisition.
RBS' effort to arrange financing for the deal was led by the group's head of structured finance, Leith Robertson. The bank has fully underwritten the transaction and arranged a bridge loan to finance it. It will pass on most of the assets to Cinven once it is cleared by the regulator. Royal Bank Private Equity is to retain a minority stake in NCP. A sale and lease-back exercise will be used to refinance the deal.
Ashurst Morris Crisp advised Parking International and Cinven in connection with the acquisition.
The acquisition of NCP represents the second largest LBO transaction this year. The deal is also significant because of the unusually competitive nature of the auction, co-ordinated by JP Morgan, which reflects to an extent the paucity of quality opportunities for larger buyout firms. The competitive nature of the bidding will have ensured that Cendant received a very good valuation for NCP.
It will have been difficult for Cinven's rivals to let the deal pass by, but for them to do so bears testimony to the discipline of the financial sponsors involved in the bidding process, who will have submitted similar and well-measured offers. One source commented: 'People nowadays are very good at working out what they're prepared to pay for their funding and are extremely unlikely to go beyond that.'
The deal, which is subject to regulatory approval, will make Cinven the major shareholder in Parking International. The other two bidders, namely Apax and BC Partners, are both understood to have made comparable offers for the firm. Apax was rumoured to be making the front running for the deal, although Apax never confirmed that a deal was on the table.
The deal is the second this year involving the acquisition of a car park business by a private equity firm. In March 2002, Bridgepoint Capital paid an undisclosed amount for Scanpark, Norway’s fourth largest car park operator. In 2001 the firm acquired Nordisk Parkering.
In April 2002, Cinven announced that the third Cinven fund had closed with commitments of E4.3bn, significantly in excess of the E3.5bn target.