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Endless backs Yorkshire entrepreneur in FMG buyout

The Leeds-based firm is acquiring around 50 percent of the road incident specialist as part of an MBO

Leeds-based turnaround specialist Endless is backing Yorkshire entrepreneur Andrew Cope in the management buyout of FMG, a specialist in incident management and roadside recovery, according to a statement from the firm.

The financial details of the transaction were not disclosed and Endless declined to comment.

Endless has acquired a stake of around 50 percent in FMG using capital from its £220 million (€278 million; $345 million) third fund, a 2011-vintage.

Cope joined FMG as executive chairman in April 2014 after acquiring a “significant stake” in the business, FMG said in a statement at the time. Prior to this Cope led vehicle leasing business Zenith through five private equity buyouts between 2003 and 2014.

As part of the transaction Cope will increase his investment and shareholding, with CEO John Catling and the rest of the senior management team also increasing their shareholdings. Founder Nick Brown will remain as a shareholder.

Yorkshire-based private equity fund manager Spirit Capital has sold its stake in FMG which it acquired in 2008. It is understood that the sale generated a good return for Spirit.

FMG provides outsourced incident management services for a range of clients, including insurance companies, corporates with large car fleets and vehicle leasing companies. FMG also provides roadside recovery services for the Highways Agency and a number of Police regions and local councils.

In the past two years FMG has grown the fleet it manages by almost 60 percent to just under 250,000 vehicles.

Endless was attracted to the deal both by the opportunity to work with Cope, with whom the firm has looked to work in the past, and by FMG’s potential for organic growth, Endless partner Darren Forshaw told Private Equity International.

“The business really has consolidated its thoughts and its focus into its core areas, which is the fleet incident management side and the roadside recovery part to the business. And we think that those areas are quite fragmented markets that we think we can do a lot to attack and grow market share.”

As a management buyout, this is an unusual transaction for Endless, which is known as a turnaround investor.

“It’s not something that we’ve pushed an awful lot, but we have done a number of buyouts in the past,” Forshaw said, adding that buyouts will be an “increasing feature” in the firm’s latest investment vehicle.

Last December Endless held a £525 million (€664 million; $823 million) first and final close on its fourth fund, which came to market in September with an initial target of £400 million (€506 million; $627 million), bringing the firm’s total funds under management to around £1 billion (€1.26 billion; $1.57 billion), PEI reported earlier.

2014 was a record deployment year for Endless, which saw the firm seal deals valued at nearly £150 million. The strong pipeline has continued into the New Year, Forshaw said.

“We’re getting quite a lot of turnaround opportunities through, which is what we’re well known for, but as well, whilst we’ve expanded our remit into more mainstream opportunities and non-core acquisitions out of larger groups, those areas are very buoyant for us,” Forshaw said.