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Micheldever, the UK’s leading distributor of car, 4x4 and motorcycle tyres, was sold by Graphite Capital in February 2017 generating proceeds for ICG Enterprise of £35.9 million.
|ICG Enterprise exit value||£35.9m|
|Uplift to carrying value||41%|
|Underlying manager||Graphite Capital|
|Date realised||February 2017|
ICG Enterprise invested in Micheldever Tyre Services (“Micheldever”) both directly and through its commitment to Graphite Capital Partners VI. The company was the largest underlying investment at 31 January 2017.
Graphite had targeted the UK automotive aftermarket for several years, given its characteristics as a large and established market with significant consolidation opportunities in a number of sub-sectors. With the benefit of its strong relationships in the Southeast, Graphite was able to gain a competitive advantage over other potential acquirers, and completed the investment in 2006.
At the time of the £85 million buy-out, the company was the largest distributor of tyres to independent retailers in the UK with its six warehouses serving 2,500 customers. A separate retail business operated from a relatively small chain of 16 sites, including the UK’s largest tyre retail site at Micheldever Station. Over the period of Graphite’s ownership, Micheldever’s management team was significantly strengthened and investment in systems and processes contributed to market share gains and improved working capital efficiency. With the benefit of eight new warehouse sites completing national distribution coverage, the number of wholesale business customers increased to 6,000. Additionally, the retail business was expanded to 99 sites, which successfully established Micheldever as the third largest specialty tyre retailer in the UK by volume.
In February 2017 Graphite Capital sold Micheldever to Sumitomo Rubber Industries, a Japanese tyre manufacturer and distributor, for £215 million. The sale generated a return equivalent to 3.7 times the original investment cost and cash proceeds to ICG Enterprise of £35.9 million at an uplift of approximately 41% to the previous valuation.