Zenith can aim high after bank boost on funding

HSBC Corporate Banking has completed a multi-million pound securitisation deal for Leeds-based Zenith, which will provide the company with income through the capital markets.

Zenith chairman Andrew Cope said the deal would allow the £150m turnover company to develop much more aggressively.

He said Zenith was in “acquisition mode” but cautioned that this didn’t mean it would buy firms in the near future.

He also revealed that Zenith, which was founded in 1989, had recently signed a “huge” 3,000 car outsourcing deal with a support services business.

He added: “We have continued to invest heavily in our service delivery infrastructure.

“The size of the new funding facility is substantial and highly scaleable and will be sufficient to fund all of our anticipated growth plans.”

Chief financial officer Mark Phillips added: “During times of market stress and restricted supplies of credit, there is a flight to quality. We deal with some of the world’s strongest businesses and as a result have been able to demonstrate very clearly to investors that our asset base is of extremely high quality. There is a pool of capital out there that is keen to invest money securely in top-quality assets.”

Chief executive Tim Buchan added: “What this new funding structure means is that we can accelerate the innovation and investment in our systems and people for the benefit of our customers.”

Zenith is one of the UK’s biggest independent leasing, fleet management and vehicle outsourcing businesses. It has 180 staff and manages a fleet of more than 33,000 vehicles.

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.

Last year Morgan Stanley Private Equity acquired a significant stake in the business in a management buyout.

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. Last year, an analyst told the Yorkshire Post: “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.”

Although bullish about the prospects for Zenith, Mr Cope said he still had concerns about the global financial system.

He added: “Our most important concern is about further destabilising of the banks and financial markets. We think the next four years are going to be fairly rocky.”

HSBC’s head of corporate banking in Yorkshire, Martin Lunt, said: “Zenith’s growth has been delivered by staying at the forefront of the latest fleet thinking, developing new ideas, services and delivering quickly to the market.”

Victoria Lindsell, who is based in HSBC’s London-based Asset Backed Finance team, structured the securitisation.

HSBC’s Leeds-based global relationship manager Peter Helliwell, who has worked with the business for four years, will manage the company’s banking needs. Wragge & Co advised HSBC.

Zenith’s product and service portfolio covers fleet and accident management.

The company also operates a salary exchange scheme which enables employees to buy a new car, at no or very little cost to the employer.

CHAIRMAN WHO HAS REAPED REWARDS

In August 2010, Leeds businessman Andrew Cope reaped another multi-million pound windfall after completing the fourth management buyout of Zenith in seven years.

An American investment banking giant revealed that it was taking a 60 per cent stake in the fleet management business in a deal which valued the company at £85m. The backing of Morgan Stanley, through its private equity arm, was a sign that Zenith was gearing up for major expansion.

Mr Cope was one of seven people who launched the business in 1989. He has worked his way up from salesman to become managing director.