Nikko sells RoadChef to Israeli group for £375m

Nikko Principal Investments, the buyout arm of the Japanese securities firm, has sold UK motorway services group RoadChef to an Israeli property group, in a £375 million (€554 million; $729 million) deal.

Delek Real Estate, a listed Israeli property company, has bought RoadChef, which is the UK’s third largest motorway service station chain with 29 outlets. The deal will cost Delek about £375 million, which includes the assumption of securitized bonds. These represent a £50 million liability – the cost to the owner of cancelling the bonds – giving RoadChef a total value of about £425 million, a multiple of approximately 13.75 profits.

NPIL bought RoadChef in 1998 as its first UK deal, and has since been investing heavily in the business. In addition to redeveloping and refurbishing existing sites, it has also opened three new outlets and increased the workforce by 20 percent, to about 2,000 people. It also carried out one of the first “whole business securitization” deals, secured on the company’s brand and real estate. Last year RoadChef reported sales of £132.2 million, excluding fuel.

NPIL had not been actively looking to sell RoadChef, but was approached by Delek directly and entered into exclusive negotiations.

Brian Berry, chief executive of NPIL, said: “There is no doubt that RoadChef today is a stronger, higher quality and better invested business than it was when we acquired it.” He did not disclose returns, but said the company was pleased with the price it had received and expressed confidence in the new owners.

Vision Capital, a UK-based secondaries specialist, has also been a minority investor in the business since 2004, when it bought a structured credit portfolio previously managed by Cabot Square Capital. It has also realized its investment with the sale to Delek.

Delek Real Estate is part of the Delek Group, an Israeli conglomerate. Through Belron, its international investment arm, it owns more than 700,000 square meters of real estate in the UK, mostly on long-term leases to business and government. This includes 40 percent of the car parks owned by NCP, the UK’s largest operator, which has recently attracted trade union protests after its private equity owner 3i reportedly put it up for sale.