London-based private equity firms Electra (LSE: ELTA) and Alchemy Partners are said to have hired investment banking firm Rothschild to explore the sale of Parkdean Resorts, a £1 billion company that became Britain’s biggest holiday home park operator, with 73 sites across the country, after last year’s merger of Electra’s Park Resorts with Alchemy’s Parkdean Holidays.
“The timing of the sale will be boosted by the weak performance of the pound since the EU referendum,” according to The Telegraph. The British pound has tanked by 12% against the dollar and by 11% against the euro since the referendum result.
In a separate move, Rothschild & Co, the French arm of the banking dynasty, recently agreed to buy Marseille-based wealth management business Compagnie Financiere Martin Maurel for £190 million, creating a private bank with combined assets under management of £27 billion. Baron David de Rothschild, the bank’s chairman, said: “Our two companies share an independent family model that is a real strength when compared to our competitors.”
Parkdean Resorts has seen bookings rise 11 percent after it invested millions on upgrading its sites. The company reportedly invested £36 million in 2015 and is said to be channeling a further £40 million into the business this year, according to the Daily Mail. It is bringing in 400 new and upgraded caravans and lodges, offering double glazing and central heating.
The company’s revenues jumped from £371 million in 2014 to £401 million last year, while underlying earnings increased by 16pc to £106.6 million, The Telegraph said.
“We have done very well on holiday bookings this year, which have continued to build on last year,” Parkdean chief executive John Waterworth said. “That’s partly due to changing the product mix and putting in better accommodation, and partly due to expanding the number of holiday hire units within existing parks.”
“There has been a trend for shorter breaks that has been going on for the last 25 years,” he commented further. “A foreign holiday does not appeal to everybody – some people want a short break where substantial travel is not involved. What we have seen is growth in the popularity of UK short breaks from the domestic market. It has been building very gradually and it continues to build.”
A trend for taking shorter breaks instead of longer holidays lengthened the holiday season and boosted Parkdean Resorts’ performance, with the company selling 492,000 holidays in 2015, it said.
“Parkdean Resorts is confident of another successful year of growth, with holiday sales for the year 9% ahead of 2015,” Waterworth recently said, according to the Chronicle. “The group has been acquisitive since its formation and we see further opportunities in this highly fragmented sector via both single parks and multi-site portfolios.”
Less than a month ago, Parkdean Resorts acquired the five-star Vauxhall Holiday Park resort in Great Yarmouth, in its first acquisition since last year’s merger. Vauxhall comprises 390 caravans and lodges, 48 apartments and 180 touring and camping pitches across 41 acres.
Electra Private Equity PLC is a London Stock Exchange listed investment trust focused on buyouts and co-investments, secondaries, debt investments, listed securities and funds. The firm was formed in 1935 as Cables Investment Trust Limited by Cable & Wireless and Globe Investment Trust, and renamed as Electra in 1975. At March 31, 2016, Electra’s investment portfolio was valued at £1.7 billion.
Alchemy specializes in investing in distressed and undervalued or underperforming businesses and other special situations through debt and equity across Europe. The firm currently has over £1.5 billion of assets under management.
Rival Caledonia Investments Ends Efforts to Sell Park Holidays
Electra’s and Alchemy’s contrarian Parkdean Resorts move comes a week after rival private equity firm Caledonia Investments plc (LSE: CLDN) reportedly ended its own efforts to sell caravan park operator Park Holidays following Brexit, Britain’s decision to quit the European Union.
Caledonia’s Park Holidays 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’s thinking being that “earnings will rise much faster because Brexit means that more and more people will opt for staycations. They’ll be put off from going abroad because of the collapse in sterling and terror attacks across Europe,” a person familiar with the matter told the British Press Association.
In May, Caledonia had put RV caravan park operator Park Holidays up for sale, at an expected valuation in excess of £250 million, and has reportedly hired PwC as its financial advisor. In 2013, Caledonia acquired Park Holidays for £172 million.
In a separate recent deal, Caledonia acquired Gala Bingo, the UK market leading retail bingo operation, from Gala Coral, for £241 million. 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.
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 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.