PracticeConsultingDeal paves way for EasyRentacar IPO

Deal paves way for EasyRentacar IPO

EasyRentacar, the discount car-hire business, has secured £26m in new financing through the Bank of Scotland (BoS) and NBGI Private Equity, the venture capitalists, which could see the company float within the next four years.

The unique deal – a blend of equity, debt, and venture capital finance – represents a major breakthrough for the ‘Easy Empire’, established by Stelios Haji-Ioannou in 1995 and which now includes an airline business (easyJet), internet caf‚s (easyEverything) and easyValue.com, an online price comparison service. Haji-Ioannou is also head of Stelmar Shipping, the tanker fleet operator he founded in 1992.

The finance package will fund expansion of the car rental business across another five European cities in addition to the 14 in which easyRentacar already operates. BoS, which also provides lease financing for the group’s vehicle fleet, has agreed to a £13m loan facility in addition to taking an equity stake in the business. Depending on the eventual Initial Public Offering (IPO) valuation, BoS and NBGI will jointly own between 17.5 and 32.7 per cent of the car rental business, with current estimates putting market capitalisation at £80m.

Structured deal aims for long-term returns

EasyRentacar is one of the first companies to secure funding via Bank of Scotland’s Integrated Finance product, in which packages of £10m-£30m are structured from a mixture of senior debt, mezzanine, loan stock and equity. With a focus on generating returns from long-term running yields rather than short to medium-term equity appreciation, BoS ? a leading bank providers of private equity ? hopes to strengthen the longer-term relationship between finance provider and corporate. ‘Integrated Finance complements the activities of private equity houses like NBGI, by providing an exit from firms that are not achieving the high yields of growth now expected by VCs’ said BoS. The bank also stresses they are ‘happy’ to concede higher equity stakes to the management, usually giving them a controlling interest in the firm.

NBGI Private Equity, the UK-based venture capital firm, has a history of investing in the car rental and automotive industry. It has a £9.5m stake in LSUK, a vehicle parts and service business, and also backed the acquisition of 41 Lex Autocentres from Lex Service plc, later rebranded as Nationwide Autocentres.

PE finance all the rage – EVCA

Private equity is becoming an increasingly popular source of finance for firms wary of digging too deep into debt. The online ventures of Haji-Ioannou’s rapidly expanding business were funded in their early stages by venture capital, and easyGroup’s chairman says he feels comfortable with this method of funding. The European Private Equity 2000 survey, sponsored by the European Venture Capital Association and PricewaterhouseCoopers, said that last year saw the largest amount of cash ever invested by private equity and venture capital firms. Funds invested totalled a record Euro 34.9bn (Pounds 21.24bn) in over 10,000 companies, an increase of 39 per cent since 1999 (Pounds 15.28bn). The UK continues to lead Europe in this area, with 37 per cent of total funds raised (Pounds 10.77bn)
EasyRentacar scored a huge success last year when it signed an exclusive deal with Daimler-Chrysler to use the German-US carmaker’s Mercedes A-Class models. Since then, it has secured the supply of another 9,000 A-class Mercedes to its existing fleet of 4,000. EasyRentacar had 120,000 customers on its books in the first 11 months of operation.

This article first appeared on bfinance.co.uk.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

3m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

9m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

10m Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

11m Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

11m Stephanie Wix, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

10m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

10m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

10m Kevin Reed, Writer