A driving school which went into administration last week has been saved by a private equity specialist who has pledged to keep on its 200 staff.
The group of companies operating under the Red brand have an annual turnover of £40m. All the Red Driving School instructors are franchisees and hence not directly employed, but its head office in Crowhurst Road, Hollingbury employs about 200 people.
Kelso Place has made a “signficant equity investment” from its £100m special situations fund. Part of the money will be paid to MCR, the administrator , with the rest being injected into the business.
Philip Weston, Partner at Kelso Place said today: “RED is a very strong, stable and profitable business, which experienced a short term funding difficulty when its financing facilities were changed suddenly. We have made a significant cash investment in RED in order to solve its funding problem and to ensure that it is able to continue operating successfully for the long term.”
David Downing, Chief Executive Officer of the RED business, added: “Throughout this short period of administration, the company has continued to trade as normal. As a result of Kelso Place’s investment, RED is now in a very strong financial position, which will enable us to maintain our high levels of customer service and cement our market leading position.”
Kelso Place says it has purchased a number of businesses out of insolvency and has a track record of successfully growing those businesses over a number of years before exiting.
Examples include financial recruitment firm Nigel Lynn Associates, which was sold to Premier Recruitment Group in 2005, Sepura, a leading global supplier of TETRA radio terminals, which was sold via an IPO on the London Stock Exchange in 2007 and i2S Group, a building technology business, which sold its controls division to Carrier Corporation, a unit of United Technologies Corporation, in late 2009