Car-Leasing Giant Revs Up £100m Windfall

Investors in the UK's biggest independent car-leasing group are toasting a £100m windfall just a year after the merger of two smaller rivals created an industry powerhouse.

Sky News understands that Zenith Leasedrive (ZLD), which is headquartered in Leeds and employs more than 500 people, has struck a refinancing deal with its lenders, paving the way for one of the largest dividends paid by a private company so far this year.

The company is owned by Hg Capital, a leading private equity firm, and was created in March last year from the combination of Zenith Vehicle Contracts and the Leasedrive Group.

It operates a fleet of more than 64,000 vehicles and focuses on serving blue-chip customers.

Jon Walden, the former boss of Lex Vehicle Leasing and ex-chairman of HR Owen, the quoted luxury car retailer, was recruited by Hg to take on the chairmanship of ZLD.

As part of the refinancing which has enabled the £100m payout, ZLD has agreed with HSBC, Intermediate Capital Group, Lloyds Banking Group and Royal Bank of Scotland to increase its borrowing facilities to £250m.

That expansion is likely to mean a string of further deals for ZLD, which wants to exploit the synergies available from growing scale in a sector such as vehicle leasing.

“This platform should also enable further strategic M&A [mergers and acquisitions], where HgCapital’s experience in buy-and-build and the company’s flexible capital structure makes Zenith Leasedrive a compelling acquirer,” Hg has said.

Plans for a string of other mergers in the industry have been mooted in recent months, including a sovereign wealth fund-backed takeover of Leaseplan, the world’s largest operator.

That deal, worth in the region of £3bn, recently stalled because of regulatory issues relating to the transfer of a banking licence held by Leaseplan, which is controlled by Volkswagen.

An Hg spokesman declined to comment.