Further consolidation looking likely in the commercial fleet sector

A spate of high profile acquisitions and buy-outs have signalled the next round of industry consolidation among van and truck funders and management companies.

Prohire, the HGV contract hire company, completed a management buy-out (MBO) in April after private equity investors acquired a majority stake in the business for an undisclosed sum to support its growth plans.

NorthEdge Capital supported the MBO which was led by managing director Dave Barlow.

And, in a separate move, a group of investors, through a consortium led by Alcentra and Värde Partners, has acquired Fraikin Group, the van and truck leasing and fleet management company, for an undisclosed sum.

This latest round of investments follows Dawsongroup’s acquisition of Transflex Vehicle Rental from the now defunct TOM Group. 

The trade, business and assets of Transflex, along with 80 staff, including sales director Gary Henry and finance director Tina Lynas, transferred to Dawsongroup on April 16.

Steve Miller, Dawsongroup chief executive, told Commercial Fleet his company had been on the acquisition trail for the past few years and the company will continue to look out for acquisitions if they are ‘the right fit’ for the business.

Further consolidation in the sector looks likely as Prohire’s Barlow is also keen to continue acquiring businesses.

Prohire is headquartered in Stoke-on-Trent with an additional office in Tunbridge Wells, Kent, and is a supplier of outsourced solutions to commercial fleets, including procurement, funding and fleet management.

The business acquired Sunrent in December 2016, increasing the scale of its fleet to around 3,500 units. This enabled Prohire to increase turnover by more than 20% to £40 million this year. 

Barlow said the Sunrent acquisition spurred the company to seek further investment to make more purchases.

NorthEdge director Phil Frame and the company’s investment executive Greg Holmes will both join the Prohire board in a non-executive capacity to assist its growth strategy through acquisition and organic means. 

Barlow explained: “The main purpose of the MBO is to help fund the future expansion of the business. This will be through organic growth, but also through acquisitions.”

He said that buying Sunrent, a van rental business based in London and the South East, was so successful that it encouraged the company to look beyond organic growth. 

Prohire customers should expect “business as usual” following the buy-out, but Barlow said the NorthEdge investment will mean the company will be upgrading its software platforms and increase headcount for its account managers and business development team to support future growth.

Barlow would not put a specific figure on growth ambitions for Prohire.

Elsewhere, the Fraikin acquisition has meant the business has been able to recapitalise, helping to significantly reduce its debts by £437m.

FTI, Fraikin’s parent company, had been looking for an investor for the past two years. A deal with refrigerated vehicle rental firm Petit Forestier fell through last year after opposition from the French Competition Authority. 

Pierre-Louis Colin, Fraikin group chief executive, said: “Fraikin is embarking on a new phase with this agreement to restructure the group’s debt and arrange this controlling interest transaction.

“We now have all of the necessary ingredients to go forward and propose a bold, long-term strategic plan that harnesses the full potential of the company.”

Fraikin provides services for more than 58,000 vehicles in 15 countries. In the UK, it funds almost 1,000 vans, with more under fleet management, and more than 2,000 trucks.

Barlow said companies that will succeed in the challenging commercial fleet market in the UK will be those that can keep on top of legislation and help customers through an entire vehicle’s life, rather than just at procurement.

He said fleets are thirsty for management data to increase uptime and to make changes to improve productivity.

Barlow concluded: “All our customers have a challenging operational landscape and keeping on top of compliance is priority for them.

“Regulation is going to come further down the weight categories to LCVs and the industry is facing challenges like the Direct Vision Standards and complying with low-emission zones like ULEZ in London.

“We really see an opportunity to be a bespoke provider, rather than pushing customers into wholesale vehicles.”

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