Wanted by ECI: a firm in which to invest £700m
Ian Taylor
ian.taylor@travelweekly.co.uk
Private equity investor ECI has a new £700million fund and is looking for a travel business in which to invest.
ECI managing partner Chris
Watt said: “It’s the first time in eight years we’re without a travel business in our portfolio, and it’s a situation we’re keen to rectify especially as we’ve just raised a £700 million fund.” The firm recently sold escorted
tours operator Great Rail Journeys to investment firm Duke Street. Watt suggests the outlook
for travel is as positive as ever. He said: “The UK economy has been strong, notwithstanding a somewhat uncertain outlook around Brexit.” He noted: “Business certainty
is increasing given the lack of progress towards a deal, and we saw the foreign exchange impact post-referendum. There could be
a number of operating challenges for businesses around open skies and freedom of movement. [But] travel has proved remarkably resilient. It will bounce back.” Watt also dismissed fears of
a slowdown in the UK economy, saying: “UK economic growth is lagging behind the EU and US, but it’s still a supportive background for investment. I would back the travel sector to be relatively well-insulated [from any fallout from Brexit]. Travel spending is increasing – it is embedded in household spending.” He added: “Capital is still fairly cheap [and] debt is relatively affordable.” Watt described ECI’s recent
fundraising round as “relatively quick”, especially since it can take private equity firms a year or more to raise funds. He said: “We raise a 10-year
fund every five years. This is our 11th fund. We launched it in April and closed it in July. It was relatively quick. If you have a well-established team and a good track-record there is plenty of capital looking for deals.” Watt added: “It is a vote of confidence in the UK post-Brexit. Is there investor appetite to support growing businesses in the UK? Absolutely, there is. We would hope to find another travel business to invest in within the next year.”
“I’d back the travel sector to be relatively well insulated [from Brexit]. Travel spending is increasing”
WATT: ‘Travel is embedded in household spending’
Great Rail sale shows ECI’s investment ethos
ECI sold Great Rail Journeys in July.
Managing partner
Chris Watt said: “It was the clear global leader in its niche, serving an attractive demographic of travellers aged 55-plus who are keen to travel and take three, four, five holidays a year. “When we invested, it
was selling exclusively to UK customers. We tapped into the Australian market and latterly opened an office in New York to address US consumers.” He said ECI also asked: “If people are buying three or more holidays a year, but only one with us, what else are they spending on? Top of the list was river cruises, so we launched a river-cruise programme. We invested in March 2013 and came out with 3.6 times our initial investment.” He declined to reveal the
precise figures, saying they were commercially sensitive.
ECI identifies domestic and inbound sectors as ‘good bets’
Private equity firm ECI previously invested in travel management company Reed & Mackay and travel technology platform Cartrawler, among other firms. Partner Chris Watt points out ECI has held stakes in as many as three travel firms at one time in the past. He said: “Provided they are sufficiently far from one another in what they do and the customers they target, we’re happy to invest in multiple travel businesses.
“The domestic holiday market is a good bet. There is interest in that sector. We’ve had such a long hot summer – these holidays look increasingly good-value, particularly from the foreign exchange point of view. “I also expect inbound [businesses] to be attractive. “There continue to be deals,
some of which we looked at. We’ve invested in the sector over 20-25 years and there are always two or three businesses we’re looking at.
[But] we’re selective in what we do.” Watt added: “We have
UK investments across the consumer, TMT [technology, media and telecom] and business service sectors. We look at the opportunities and compete to win them. Some we elect not to go for. “We look for growing businesses in niche markets with the ability to weather a storm and manage through the economic cycle. That is something we see in travel, and we like working with ambitious
managements to maximise business opportunities.” Looking at recent deals, he said:
“There are two categories. One is businesses that are tech-enabled and high growth. Love Holidays is a good example. “The second is more traditional
but in an area where it is hard to replicate or [for consumers] to do it themselves. Great Rail Journeys is a good example. Neilson is another. If you want to stay at a Neilson resort, you have to book with Neilson.”
30 August 2018
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