Overview
We invested in Leeds-based Zenith Vehicle Contracts Limited in July 2005, providing an £11 million funding package of equity and mezzanine finance to support the £27 million secondary management buyout. In under two years we realised this investment, returning an IRR of 45% and a 2x money multiple on our equity investment.

Deal Features
Andrew Cope, chief executive at Zenith, initiated and led the secondary MBO with the support of a strong team including finance director Mark Phillips. Cope had previously led the 3i- backed £18 million MBO in 2003. We had developed a strong relationship with the management team in 2003 and had tracked the success of their business and the team right up until the point of the secondary buyout. We viewed the management as an energetic, dynamic and creative team that had the drive to take the business to the next stage of its development.

In a competitive marketplace, we were able to demonstrate a deeper understanding of the fleet management business than other interested private equity houses. As a result, we were successful in obtaining exclusivity on the deal and became the preferred partner of choice for Zenith.

We were immediately attracted to the opportunity by the quality and track record of the management team, led by Andrew Cope, which had achieved exceptional growth delivering profits and cash generation ahead of business plan forecasts pre MBO. The company has an exemplary client retention record and has recently won a number of blue chip clients which underpins growth for three years of the business plan.

By working closely with the management team, we were able to accelerate the company's growth by targeting new customers, extending the product offering and maintaining the market leading service to existing customers. We have used the Dunedin network to introduce potential customers, review acquisition targets and introduce service providers to increase processing efficiencies. This acceleration in growth allowed us to exit in under two years which was well before schedule. Our exit was via a £40 million tertiary buyout to Barclays Private Equity.

Business Description
Zenith is a niche operator in its market and is now one of the UK's leading independent fleet management specialist to companies with car fleets of 250 to 1,500 cars. The company has a strong focus on providing excellent customer service and improving its offering through product innovation and effective use of technology. This strategy has been rewarded with new customer gains and exceptional customer retention among its blue chip client base which now includes Asda, Atkins, BUPA, Persimmon, Ernst & Young and BP.

Zenith's perspective
"Throughout the term of their investment, Dunedin has been a supportive financial partner and it has been a fantastic experience working with them. They have shared the management team's vision for growth from day one and have encouraged us every step of the way. They were the absolute standout of the people we spoke to, they were open and honest and acted with complete integrity." Andrew Cope, Chief Executive, Zenith