Montagu acquires ferry business

HSBC’s former private equity unit has agreed to pay £142m for The Isle of Man Steam Packet Company, pipping ABN Amro Capital and JP Morgan Partners to the purchase.

Montagu Private Equity, the private equity firm spun out of global bank HSBC earlier this year, has acquired The Isle of Man Steam Packet Company, according to a statement.

 

Montagu has agreed to pay £142m (E205m) for the business, sold by shipping and transportation business Sea Containers. Sea Containers is selling the business as part of plans to reduce company debt.

 

Montagu was not available for comment.

 

The ferry company, set up in 1830, was the first regular shipping link between the Isle of Man, England and Ireland and is the oldest continuously operating passenger shipping company in the world. Its services include passenger and freight services between Douglas and Heysham Port with a number of fast ferry sailings between Douglas, Liverpool, Belfast and Dublin.  The acquisition also includes the only city centre to city centre service to Ireland with a fast ferry service between Liverpool and Dublin.

 

Steam Packet operates SeaCat, a catamaran carrying 700 people between the Isle of Man and the British mainland. It also runs the Lady of Mann and Ben-my-Chree, two conventional ships that can carry 900 and 500 passengers respectively. Sea Containers bought 43 per cent of the business in 1985 and acquired the remainder in 1994. Sea Containers has reported a $100m profit on its investment.

 

“This is exactly the king of high quality business that we like to invest in with stable revenues and predictable earnings streams,” said Simon Pooler, a partner at Montagu Private Equity. “Steam Packet has an exceptional management team and good growth prospects as the economy of the Isle of Man develops.”

 

Montagu has yet to publish details of the financial arrangements for the transaction. The firm is understood to have beaten off competition from two private equity rivals with experience of the ferry industry. ABN Amro Capital already owns Channel Islands operator Commodore Group following last year’s management buyout in August.

 

Fellow financial investor JP Morgan Partners acquired Red Funnel Group, a Southampton-based ferry and towage business, for £71m in late 2000.

 

The deal marks Montagu’s fourth large acquisition since gaining independence from HSBC in March. Last month, the firm made two investment, buying UK-based packaging business Linpac for £860m, and French metering systems company Actaris for E420m from LBO France.

 

In May, the firm acquired Marlow Foods from AstraZeneca for £70m. That month it also completed the sale of Risdon Pharma, the Franco-German pharmaceuticals business in a deal worth E125m.

 

Montagu was advised by Ernst & Young and DLA. Debt funding for the deal was provided by Bank of Scotland Corporate Banking.