CitySprint is the UK’s leading technology-driven same day distribution company. It operates the UK’s largest privately owned network with over 3,000 couriers, 40 service centres and leading technology solutions employed across a range of specialist sector products and services including retail, pharmacy, pathology and auto parts logistics.
We have known the company and its management for many years and originally advised on the 2010 management buy-out backed by Dunedin Capital Partners. This investment supported a period of rapid growth and we continued to work with the shareholders to support their buy and build strategy, which included 21 acquisitions. The Group produced consistent double digit EBITDA growth per annum whilst also investing significantly in the business. In 2015 CitySprint generated £146 million in revenue with an underlying EBITDA of £16.8 million.
Although Dunedin had achieved the objectives it had set with management when they invested, they could see there were great opportunities for CitySprint to continue to grow. Due to our understanding of the business and the sector, we were appointed by the shareholders to advise on the strategic options a year before the start of a potential transaction.
What difference did we make?
We attended CitySprint’s Board meetings, reporting on market trends, competitor activity, M&A activity and considered equity and debt funding options to ensure a transaction satisfied the objectives of all shareholders. We knew that CitySprint was going to be a highly attractive asset and wanted to ensure that any process gave the shareholders optionality including the ability for Dunedin to realise part of its investment whilst continuing to support the next stage of CitySprint’s growth. LDC had been following CitySprint’s progress and was attracted to the growth opportunity.
LDC’s investment supports CitySprint’s ongoing focus on new technology solutions aimed at capitalising on the £1.7 billion UK same-day market opportunity and ensures it can continue its buy and build strategy. The introduction of a new PE house and a second non-executive director to the Board will also bring new ideas and fresh challenges on strategic direction and future exit strategy.
The transaction has given CitySprint an optimum shareholding and equity structure to deliver the business plan over the next three to five years. The deal valuation of £175 million meant that Dunedin made a return of 2.7 times their original investment and they were able to retain an ongoing minority equity stake, with the CitySprint management team retaining a significant shareholding.
Chief executive, CitySprint