Driving operational change
By partnering with and supplementing management, our operating team turned LPR from an under-performing non-core asset into a highly profitable and cash-generative business.
During our ownership, LPR was the second largest provider of pallet rental services in Western Europe with an established presence in five core European markets: France, Spain, Portugal, Benelux and the UK. Its customers operated exclusively in the Fast Moving Consumer Goods (“FMCG”) sector, predominantly in the food, beverage and hygiene industries that use pallets for the transport and storage of goods.
LPR was a non-core subsidiary of Algeco, a publicly-listed company in France which we took private in 2004. It was considered to carry little or no value by the markets because of very poor financial performance.
Despite its poor performance, we believed LPR presented several attractive characteristics, including its leading market positions across several European geographies and an impressive list of blue chip customers.
What we did
Throughout our ownership, our operating team was deeply imbedded within LPR in order to drive operational improvements via a three-point value creation plan:
- Improving the business’ cash generation and underlying return on capital through implementing strict pallet control.
- Introducing a more modular a detailed pricing model, reducing complexity in the sales process and increasing profitability.
- Increasing the quality of LPR’s customer base by exiting unprofitable customers and supporting the CEO to develop a key account management structure.
How we exited
LPR’s profitability and cash flow generation improved significantly during our ownership, with EBITDA increasing by over 40%.
In 2006 we appointed advisers in both London and Paris to run a sale process. The process received interest from both potential trade buyers and private equity houses, with various offers being made for the platform.
This culminated in our sale of LPR to AtriA Capital in July 2006, resulting in a gross multiple of 7.9x and a gross IRR of 175%.
Date of investment: September 2004
Deal type: Public-to-private/Private sale
Exit date: July 2006
Exit route: Financial buyer