Target Information
Electra Private Equity PLC has announced the merger of its portfolio companies, including Park Resorts, South Lakeland Parks, Southview, and Manor Park, collectively known as the 'Park Resorts Group', with Parkdean Holidays. This transaction values the enlarged company at £960 million, pending approval from the Competition and Markets Authority and the Financial Conduct Authority. The merger's valuation of Electra's debt and equity interests reflects a notable uplift of £21 million, resulting in an increase in the diluted net asset value (NAV) per share by 52p, in comparison to the valuation of £239 million recorded on 31 March 2015.
Upon the completion of the merger, a new £550 million debt facility provided by Barclays, RBS, and JP Morgan is set to refinance existing debts. This refinancing is expected to yield cash proceeds of £96 million for Electra, which would raise the total cash proceeds to £106 million or 81% of the original investment cost. After the merger, Electra will hold a 45% equity interest in the combined group, collaborating closely with the management team and other stakeholders.
Industry Overview
The UK holiday park industry has witnessed substantial growth as domestic travel and staycations have surged, particularly during and after the pandemic. The sector serves a diverse customer base looking for affordable holiday options across scenic locations. The increasing preference for holiday parks has positioned companies within this market to innovate and enhance services to attract guests.
Park Resorts operates 49 coastal parks in England, Scotland, and Wales, employing over 3,500 people during peak seasons. This extensive portfolio provides a solid foundation for expansion and operational synergies with Parkdean Holidays, which manages 24 sites primarily in the South West and Scotland, promoting a wide range of self-catering accommodations.
The merger creates a powerful, nationwide entity with a total of 73 holiday parks, presenting economies of scale and increased competitive advantage. As consumer trends tilt towards domestic holidaying, the combined company is well-positioned to capitalize on the growing demand in the sector.
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Rationale Behind the Deal
Investor Information
Electra Partners LLP has over 25 years of experience as an independent private equity fund manager, having invested more than £4.5 billion across 200 deals. As of March 31, 2015, the firm managed over £1.6 billion in funds, including nearly £400 million available for new investments. Their flexible investment strategy allows for broader investments in the private equity market, focusing on buyouts, co-investments, secondaries, and debt.
Electra Private Equity PLC, its primary client, is a long-standing investment trust known for consistently outperforming private equity benchmarks. Over the last decade, Electra has recorded impressive growth, with a 251% increase in diluted NAV per share, asserting its robust position in the market.
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The merger between the Park Resorts Group and Parkdean Holidays presents a compelling investment opportunity for Electra. By consolidating their operations and resources, the new entity is expected to streamline operations, reduce costs, and enhance profitability. The combined revenue streams and customer bases from the two firms are likely to create substantial value, fostering growth in a thriving holiday park market.
Furthermore, as part of Electra's ongoing strategy to develop its investment portfolio, this merger exemplifies their adeptness at navigating market dynamics. It positions Electra favorably for potential future returns, particularly given the increasing popularity of domestic getaways. If managed effectively, the combined entity should perform well in both short-term and long-term scenarios.
In conclusion, the strategic fit between Park Resorts and Parkdean Holidays, along with Electra's proactive investment approach, reinforces the belief that this merger could be a transformative step that yields significant benefits for all involved stakeholders. This was a smart move that lays the groundwork for enduring growth in a flourishing sector.
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Parkdean Holidays
invested in
Park Resorts Group
in 2015
in a Other Private Equity deal
Disclosed details
Transaction Size: $1,346M
EBITDA: $127M
Enterprise Value: $1,226M
Multiples
EV/EBITDA: 9.7x