Investment Completion: Cargostore

News: Investment News | 6 February 2020

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Connection Capital clients invest in £24m secondary MBO of global specialist container provider.

£7.5m of private capital will support growth in global offshore wind, oil & gas, international aid and defence markets.

Clients of Connection Capital, the specialist private client investment business, have invested £7.5m of private capital in the £24m secondary management buyout (MBO) of global specialist container business Cargostore Worldwide Trading Ltd.

The transaction sees the Management team led by CEO Justin Farrington Smith reinvesting alongside Connection Capital’s clients. The investment, coupled with new debt finance facilities provided by DunPort Capital Management, will provide Cargostore with significant capital to fund the next phase of the company’s growth plans. Cargostore’s current private equity backer, Agathos, will also retain a minority stake.

Established in 1993, Cargostore provides specialist transport and storage container equipment for hire or sale worldwide, primarily for the offshore wind power, oil & gas, international aid and defence markets. Based in London, UK, it has 30 strategically positioned storage facilities and depot locations around the world to service its diversified blue-chip international customer base.

Cargostore: Ahead of the curve
Further growth is set to be driven both by the rapid expansion of global offshore wind power installations and by favourable changes to regulatory requirements for offshore containers to be of the highest DNV certification. Cargostore is ahead of the curve: it has the world’s largest fleet of offshore “DNV-certified” refrigerated containers, meaning it is well placed to capitalise on the favourable market dynamics and specialist customer requirements.

Cargostore has an excellent reputation in the industry for its customer service-focused business model. This has enabled the company to perform strongly in recent years, growing to c.£4m profit, with trading underpinned by significant recurring revenues from long-standing relationships with blue-chip customers.

Bernard Dale, Head of Private Equity at Connection Capital says, “This investment is an exciting addition to our portfolio and is the 15th MBO that we have backed.”

“Cargostore is a market leader in a fast-growing niche offering attractive returns on capital, with significant room for further growth thanks both to the increasing emphasis on offshore wind power in global energy policy, and favourable regulatory drivers that play to its offering.”

“As a well-run, geographically diversified operator, it is in an excellent position to deliver on these opportunities, so we are delighted to ensure that the business has ample capital for capex-led growth. Overall, we consider that this asset-backed MBO investment provides very good returns prospective as the company gains scale, while affording our clients portfolio diversification into overseas markets, but with UK-based leadership. Our intention is to support the further expansion with investment in specialist container assets across the globe.”
Justin Farrington-Smith, CEO of Cargostore says, “Connection Capital’s investment will be instrumental in enabling us to consolidate our competitive advantage and leverage favourable market dynamics to deliver our future growth plans. With a healthy pipeline of new business opportunities for 2020, building on a core base of long-standing customer relationships, it’s a great position to be in as we enter this new decade.”

William de Laszlo, Founding Partner of Agathos commented, “Cargostore has performed very strongly since our original MBO three years ago. We are delighted to be retaining a stake in the business and being part of its next phase of growth under the stewardship of Management and Connection Capital.”

£14.5m of debt facilities for the transaction and for expansion capital investment were provided by DunPort Capital Management.

Cargostore’s shareholders were advised by DC Advisory, DMH Stallard, BDO, PwC and CIL. Connection Capital was advised by Gateley, KPMG, Grant Thornton and Marsh. Cargostore’s management was advised by Browne Jacobsen.