9:11 am, November 29, 2023
Used car sales business Cinch has increased its stake in listed car dealer group Vertu Motors once again in ‘another disruptive move’.
The firm, owned by BCA and We Buy Any Car owner Constellation Automotive Group, has upped its stake from 4% to 6%.
Vertu issued its second notification of major holdings this month to the stock market this morning following the first declaration made that Cinch’s shareholding had crossed the 3% reporting threshold earlier this year.
Cinch and its parent Constellation is ultimately owned by private equity house TDR Capital, the firm behind Asda and Euro Garages.
One city source said: ‘This is clearly another disruptive move and look how well it worked out for them with Lookers – they could dictate where that business went and the price – and I wouldn’t be surprised if we see Cinch continue to increase their holding.
‘It’s all about influence and disrupts a perfectly good business with solid management and great relationships with manufacturers.
‘It’s 6% now but they won’t stop there – this is likely to become a 15-20% holding.’
Constellation Automotive Group and Vertu Motors both declined to comment on the news when contacted by Car Dealer.
TDR, again through Cinch, held a 20% stake in Lookers and blocked the first attempt by Canadian car dealer Alpha Auto Group to acquire the business.
It later backed an improved offer for Lookers and cashed in its shares as part of the deal.
Carl Smith, an analyst at Zeus Capital, told Car Dealer: ‘Vertu is one of the few remaining public market opportunities for Cinch to acquire UK motor retail assets.
‘It’s hard to tell at this stage whether Cinch’s building stake is a financial investment, as it was for Lookers, or if they are intending to make a bid for the entire company.
‘What remains clear is that Vertu’s value is attractive, given its high levels of asset backing, strong track record, and ability to grow via consolidating the market.’
Another source said this could be the firm attempting to repeat the success it had with its investment in Lookers.
‘Clearly they did very well out of the Lookers holding and were able to block the first offer from the Canadians – they’re probably planning to do it again,’ said the source.
Constellation Automotive Group took Marshall Motor Group private last year after a £325m swoop on the listed business. Profit at Marshall has since nearly halved, its latest accounts revealed.
David Kendrick, CEO at accountancy firm UHY Hacker Young, told Car Dealer: ‘I believe this is a strategic move as opposed to a plan to buy out.
‘As we saw with Lookers this worked extremely well and also delivered a significant return.
‘I believe the same is likely here, although the OEMs may be starting to twitch.’
Last week, former Marshall CEO Daksh Gupta told the Car Dealer Inspiring Leaders Podcast that he left the role when he realised decisions would no longer sit with him as the CEO.
He said: ‘I think people can get why I made that decision. It’s nothing against Constellation or any of the individuals there. It’s just a personal preference that I think I would have struggled personally in that environment.’
You can watch that Podcast in full below or find it on Spotify, Apple Podcasts or whichever podcast platform you prefer.
