Blackstone Group has put the Center Parcs rural resorts business up for sale.
Center Parcs, which runs five holiday villages in the UK, said on Monday it was “considering its strategic and financing options, which may include private or public equity or debt capital markets”.
Formula One owner CVC and Singapore’s sovereign wealth fund GIC are among those considering a bid for the business, which made £146.8m in earnings before interest, tax, depreciation and amortisation for the year to April 24 2014, up from £140m the previous year.
The Abu Dhabi Investment Authority and Carlyle, the co-owner of RAC, have also been linked to a possible bid for the company, which could value it at £2.5bn.
A stock market float in the second half of the year is also being considered if a private sale fails, with Rothschild advising the company, as first reported by The Sunday Times.
With large resorts set in forests, Center Parcs sells rural holiday-making combined with comforts like bars, restaurants and spas. Last year, the business had an occupancy rate of 97.2 per cent, typically families.
The company was founded in 1968 in the Netherlands, with the first “villa in the forest” opening in the UK in the late 1980s.
The potential sale of Blackstone’s holdings relates to the UK business, and not the Center Parcs resorts in France, Belgium, the Netherlands and Germany, which are under different ownership.
Center Parcs stressed that no decision has been taken as to “whether to proceed with any such transaction”.
Center Parcs’ ebitda for the year to April 24 2014
If CVC’s bid is successful, Center Parcs would also be the first investment for its strategic opportunities fund, said people familiar with the matter.
Set up last year, the fund is part of a new breed of private equity vehicles seeking to hold investments in companies for longer periods and lower returns than the buyout norm.
Such funds have drawn interest from institutional investors who have long-term horizons and sizeable amounts of capital to deploy, and for whom lower returns on private equity would still compare favourably with yields available on other investments such as government bonds.
Investors would also be able to pay lower fees in return for locking up capital for longer.
Blackstone acquired Center Parcs’ operating and property businesses in consecutive deals in 2006 for £1.1bn and considered exiting the company in late 2013.
However, it was reluctant to sell until it completed building a fifth site, which opened last June, said people familiar with the matter.
In 2010, it came close to selling a majority stake in Center Parcs’ property assets, but the deal with M&G, the investment arm of UK insurer Prudential, was eventually shelved.
Two years later Center Parcs refinanced its debt through a £1bn bond issue, enabling it to fund the construction of its fifth UK resort.
Center Parcs, Blackstone and CVC declined to comment.
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