US banking giant backs fourth buyout of Zenith in seven years

This time, a US investment banking giant is taking a 60 per cent stake in the fleet management business in a deal which values the company at 85m.

The backing of Morgan Stanley, through its private equity arm, is a sign that 130m-turnover Zenith Provecta is preparing for major expansion.

Mr Cope said: "We are excited to welcome our new partner and look forward to working closely on our shared vision developing the company's true potential in the coming years.

"The new partnership will allow the continued organic growth and potentially growth by acquisition."

He was among the seven people who launched the business in 1989 and worked up from salesman to become managing director.

Zenith Provecta now manages a fleet of 26,000 vehicles and has grown both organically and through acquisition to become a serious rival to bigger industry players such as Lex, Leaseplan and Alphabet.

With the backing of a major financial powerhouse, it has the firepower to make some potentially large acquisitions.

Mr Cope bought into the business in 2002 and led its first management buyout in 2003, which was backed by private equity firm 3i in a deal valuing the company at 18m.

Two years later, 3i sold its stake to Dunedin, another buyout firm, in a deal that valued the business at 25m.

Then, in 2007, Dunedin sold out to Barclays Private Equity in a transaction that valued Zenith at 44m.

After several years of strong organic growth, Zenith completed its first acquisition in 2008 when it bought Provecta for an undisclosed sum.

Mr Cope has earned many millions of pounds through the buyouts as the company's equity increased in value, but reinvested most of his earnings along with his fellow directors. The current management stake in Zenith Provecta is 15m.

He told the Yorkshire Post: "We are running our own business. If it goes well we make money; if it doesn't do well, we don't make money.

"That's the way it is. As a team, we have been in this business for 20 years-plus. We have been building and building for years and years and years. It's a continued story."

Mr Cope added: "Us as founders and investors have done very well and have made a significant amount of money by most people's standards.

"But there is very much an egalitarian spirit in the business and just about anybody who has been in the business any length of time or who has any level of seniority has been rewarded with equity."

More than half of the 170 employees had shares or share options in Zenith Provecta in the most recent deal and a large number of staff have made big financial gains over the years, said Mr Cope.

One deal watcher said: "It's a model that shows private equity working well in incentivising employees.

"Through share ownership, the company has been able to retain key staff and those staff have realised decent sums of money."

The company is not highly geared, said Mr Cope, and the latest buyout has the lowest level of bank debt – provided by Royal Bank of Scotland and HSBC – in proportion to the business.

Zenith Provecta is thought to be the UK's largest independent leasing, fleet management and vehicle outsourcing business and manages more than 27,000 vehicles on behalf of its corporate clients.

Brian Magnus, of Morgan Stanley Private Equity, said: "We are delighted to invest in Zenith and to support its high-calibre management team, which has successfully built the company over an extended period."

Jonathan Jones of law firm Hammonds and Martin Jenkins of accountancy firm Deloitte advised the vendors and management team.

The transaction is subject to regulatory approval.

Company's timeline

1989: Company founded with seven staff, including salesman Andrew Cope

1999: Mr Cope becomes managing director

2002: Management buy-in

2003: 3i backs 18m management buyout (MBO)

2005: 3i exits and Dunedin backs 25m MBO

2007: Dunedin exits. Barclays Private Equity backs 44m MBO

2008: Zenith acquires Provecta

2010: Barclays PE sells stake to Morgan Stanley Private Equity in 85m MBO