Consolidating fragmented markets
Throughout our ownership of VPS we worked with the business to pursue and acquire highly accretive buy-and-build opportunities, consolidating a fragmented European market for vacant property services.
At the time of our ownership, VPS Holdings Limited (“VPS”) was a leading provider of products and services for the protection and maintenance of vacant properties. Headquartered in the UK, the company operated in the UK, France and Holland, with smaller operations in Germany, Ireland, Italy, Belgium and Spain, plus previous operations in the US.
Providing a one-stop-shop for vacant property needs, VPS delivered services such as cleaning and clearing, guardian services and manned guarding, alongside the rental of security products such as electronic steel doors and proprietary alarm systems.
VPS became known to TDR through our investment in Phoenix Group when, in 2007, its board asked us to manage their underperforming private equity portfolio, which consisted of a large number of assets including VPS.
Over the following years we gained an in-depth understanding of VPS and its major markets, and were able to clearly assess the management and operational improvement potential. In 2010 Phoenix decided to dispose of its private equity assets and appointed an external advisor to manage this process.
We participated in this process in respect of VPS and we were always best placed to acquire the asset because of our significant knowledge advantage and VPS’s potential for operational transformation and ‘buy and build’ within its fragmented markets, making it particularly suited to our investment strategy.
What we did
VPS had significant operational transformation potential. TDR Operating Partners took two full-time interim roles in the company to ensure we hit the ground running with the operational enhancement opportunities, as well as recruiting a new management team.
Subsequently we worked alongside management on new product development, continued operational improvements and the integration of corporate acquisitions.
Having identified the fragmented nature of its market, throughout our ownership of VPS we worked with the business to pursue and execute on highly accretive buy-and-build opportunities in existing and new markets across Western Europe. This resulted in the expansion of the business from five to eight European countries.
For detail of VPS’s US business, please see MCS Group.
How we exited
In October 2013 we completed the transformational acquisition of Mortgage Contracting Services (“MCS”), a US-based provider of property services on behalf of mortgage lenders. Concurrent with the transaction, VPS’s US business was separated from the European group structure and combined with MCS to create MCS Group.
By de-merging the group, we were able to position VPS for an exit. In July 2014, through a competitive process, we completed the sale of VPS to PAI Partners.
We continue to hold MCS Group, and our returns for the investment will be assessed as a whole in due course.
Date of investment: March 2010
Deal type: Private sale
Exit date: July 2014
Exit route: Financial buyer