British Private equity firm Caledonia Investments plc (LSE: CLDN) said it agreed to sell Park Holidays UK, the third largest holiday park operator in the UK, to private equity and asset management specialist Intermediate Capital Group plc (ICG) (LSE: ICP), for £362 million ($450 million). Caledonia will receive £197 million in cash, net of fees, for the sale of its 81.5% equity stake.
London-based ICG has over €21 billion in assets under management, and currently operates multiple strategies with investors from all over the world. The firm has grown to over 270 people with 11 locations around the world, from its original six founders in 1989.
The net proceeds represent a premium of 47% to Caledonia’s carrying value of Park Holidays at September 30, 2016 of £134 million and are in addition to £41 million of cumulative distributions that the Caledonia group has received from Park Holidays since it acquired the business in 2013. Overall, Caledonia will have realized a net IRR of 44% and a money multiple of 2.9x from its investment in Park Holidays.
Park Holidays was originally acquired by Caledonia in November 2013 for £172 million. At that time, Caledonia backed Park Holidays’ incumbent senior management team of Jeff Sills (Chief Executive), Al Loch (Chief Financial Officer), Tony Clish (Commercial Director) and Adrian Fawcett (non-executive Chairman), all of whom will remain in place following the sale to ICG.
Under Caledonia’s ownership, Park Holidays accelerated capital investment across the estate driving revenue growth in addition to increasing the number of parks it operates from 23 to 26. Park Holidays experienced strong growth in profitability with EBITDA up 79% from £20.4 million in 2012 to an estimated £36.5 million in 2016.
Completion of the transaction is subject to approval of the British Financial Conduct Authority which could take up to three months.
The move comes after Caledonia was said to have ended its efforts to sell Park Holidays following Brexit. In May, Caledonia hired PwC to explore a sale of Park Holidays at a valuation in excess of £250 million, as reported by ExitHub.
In September 2015, private equity firm Electra’s Park Resorts merged with Parkdean Holidays, owned by rival private equity firm Alchemy Partners, which created a £1 billion company that became Britain’s biggest holiday home park operator, with 73 sites across the country.
“Caledonia’s unquoted strategy is to invest in leading businesses which combine an ability to grow profits whilst also paying a healthy annual cash return to shareholders. Park Holidays has delivered in every respect and we congratulate Jeff Sills and his team, as well as the company’s Chairman, Adrian Fawcett, for their stewardship of the business over the past three years,” said Duncan Johnson, Caledonia’s Head of Unquoted Investments.
“We were attracted to Caledonia because of its unique investment model. Caledonia has proved to have been a very supportive financial partner over the past three years, which has enabled us both to acquire new sites and improve the quality of our existing estate,” said Jeff Sills, CEO of Park Holidays
“Park Holidays has been an outstanding investment for Caledonia and we are delighted with the progress it has made since we became involved in 2013. It exemplifies our ability to find and attract capable management teams and I am delighted that the outcome has been so successful for both us and Jeff Sills and his colleagues,” said Will Wyatt, Chief Executive of Caledonia.
With 25 holiday parks in the South of England stretching from Devon in the west to Suffolk in the east, Park Holidays says is the largest operator of parks in the south of England.
The company’s performance is said to have been buoyed by a rise in so called “staycations” among Britons. According to data from VisitEngland, £1.9 billion was spent on holiday parks and caravan trips in 2015.
Caledonia is a self-managed investment trust company with net assets of £1.6bn. Its heritage can be traced back to the shipping empire established by Sir Charles Cayzer in 1878. Caledonia continues to enjoy the backing the Cayzer family in its fifth generation, who own 48.5% of its share capital.
The Cayzer family shareholding provides both support to the firm’s long term value investment horizon and provides a foundation to its culture of conservative generational wealth management. Caledonia maintains a concentrated portfolio of international investments and funds, which are organised as pools of capital, with clearly agreed objectives and strategy.
The company, formerly known as the Foreign Railways Investment Trust Ltd, was incorporated in 1928. It was acquired by the Cayzer family in 1951 to hold their diverse interests and was renamed Caledonia Investments Ltd.
In 1955 Caledonia acquired the Cayzer family’s interest in the British & Commonwealth Shipping Co. Ltd, formed out of the merger of Clan Line Steamers, the world’s largest cargo carrying line, founded by Sir by Charles Cayzer in 1881, and the iconic Union-Castle Line.
In 1960 the company was listed on the London Stock Exchange and in 1981 it was renamed Caledonia Investments PLC. After its holding in British & Commonwealth was sold in 1987, Caledonia Investments became a diversified trading and investment company, which in turn was converted into a UK Investment trust company in 2003.