LDC has backed the secondary buyout of CitySprint, the UK’s leading technology-driven same day distribution company. The transaction values the business at £175m and will build on the Group’s position in the high growth, last mile retail and healthcare delivery sectors.
CitySprint operates the UK’s largest privately-owned national delivery network with over 3,000 couriers, 40 service centres and innovative technology solutions employed across a range of specialist sector products and services including; retail, pharmacy, pathology and auto parts same day logistics.
The investment cements CitySprint’s first mover advantage in the £1.7bn same day market where it is the UK market leader and enables the Company to accelerate the development of its innovative final mile delivery offering through its newly-created accelerator division, LastMileLink Technologies.
The transaction will also back the ongoing roll-out of its “On the dot” retail and consumer brand, which is a delivery service that allows shoppers to choose a one hour delivery window.
CitySprint has achieved average annual revenue growth of 19% between 2010 and 2015, producing organic growth of over 60% over this period and further scale has been achieved through a series of 21 acquisitions. The Group produced consistent double digit EBITDA growth per annum whilst investing significant CAPEX in the business over the same period. In the year to 31 December 2015, the Group generated £146m in revenue, up 14% on 2014, with an underlying EBITDA of £16.8m.
The investment was led by LDC Director Andy Lyndon and Investment Director, Matt Newbold who will both join the board. The Company’s existing private equity backer, Dunedin, has retained an equity stake, while CitySprint’s management team led by CEO Patrick Gallagher holds a significant shareholding in the Group.
Martin Draper, Co-Head and Chief Executive of LDC, said: “CitySprint’s highly experienced management team has built a clear leadership position in the market thanks to a compelling technology-enabled proposition and a commitment to outstanding service. With the additional backing of LDC, it now has an exciting opportunity to continue scaling its presence in the UK and investing further in its IT platform, bringing further innovation to the market in order to drive growth.
“This investment demonstrates LDC’s commitment to supporting the growth ambitions of UK based companies, leveraging our capital, strategic expertise and operational experience to help them create significant and sustainable value.”
Patrick Gallagher, CEO of CitySprint, said: “LDC has an impressive track record in supporting the growth ambitions of some of the UK’s most dynamic and exciting businesses. After a period of substantial growth for the Company, LDC’s arrival as a key strategic investor comes at a pivotal time as we look towards our next period of expansion and development.
“The retail and healthcare sectors are being increasingly driven by consumer convenience and we continue to invest in these attractive high growth areas to build upon our unique market leading position. We are focused on delivering the very best in class technology to support our excellent people, the cornerstone of our business.”
LDC was advised on the deal by PwC, Hullbrook and Eversheds, while CitySprint was advised by Catalyst Corporate Finance and Squire Patton Boggs.
A banking syndicate comprising RBS, Clydesdale and HSBC provided debt facilities to support the transaction, with legal advice provided by DLA. Mike Barnes from Wyvern was debt advisor to the company.