Case Study: NRG

26-06-2024

Becoming a market leading fleet solutions provider with a vast UK footprint – NRG Riverside is a specialist fleet solutions provider based in Skelmersdale. The business leases and maintains specialist vehicles, such as waste collection trucks, to local authorities and private companies.

Backing an entrepreneurial business with innovation at its heart – NRG Riverside was established in 1996 in Widnes and now operates close to 3000 vehicles and employs over 260 people across the UK. When we met the business in 2020, Steve Richardson and the rest of the management team had created a standout national fleet services business with innovative products and services.

The business had seen impressive growth, and we saw an excellent opportunity to develop its services further and continue its buy-and-build strategy.

We invested £16.5m in September 2020, and Palatine Partner Andy Lees and Senior Investment Director Tom Wilding joined the board as Non-Executive Directors.

 

Going for growth with added value

Contract Hire – During our investment, NRG Riverside became the leading fleet solutions provider to the waste market. The NRG Riverside team leveraged its leading position to win several significant new contracts. The business also expanded into infrastructure and highways to further increase sales volumes.

Flexi Hire – The expansion into new verticals and geographies allowed the business to grow the fleet whilst maintaining utilisation. The company secured new vehicles when the supply chain was disrupted during COVID restrictions, which gave them a significant competitive advantage in the market. The business also expanded into infrastructure and highways with significant wins in these new areas. We also supported and helped implement a strategic pricing initiative which significantly enhanced profit margins.

Workshops – Prior to our investment, NRG Riverside’s workshops were treated as a profit centre, which resulted in third-party work being prioritised over internal work and extended turnaround times for the flexi fleet. We introduced management consultants to work with management to implement a new operating model. The project significantly impacted flexi hire margins, with overall company profitability increasing and customer service levels improving.

De-merger—We originally acquired a majority stake in NRG Group in October 2020 which consisted of NRG Riverside and its sister company, Direct Tyre Management (DTM). As part of our investment strategy we separated NRG Riverside from DTM, appointing new management teams that allowed both businesses to focus on delivering independent sales strategies, digital roadmaps, and operational efficiencies. DTM remains in our portfolio and continues to deliver strong growth.

ESG – NRG Riverside has shifted its mindset from risk mitigation to exploring and leveraging ESG opportunities. The business made significant advancements to its people strategy, which focused on building an employee proposition that attracted and retained talent, allowing them to thrive in their roles.

Throughout the investment period, NRG Riverside identified energy and carbon reduction initiatives. The team introduced LED lighting and LPG fuel, procured around 50% of its energy from renewable sources and transitioned 80% of the company car fleet to EV or hybrid.

Robust governance systems were also in place, and several accreditations, such as ISO 14001, 50001 and 45001, were maintained and achieved during our investment.

 

The results

Deloitte were appointed as exit advisors to NRG Riverside with a process being launched during Q4 2023. We received interest from trade and private equity in the first round. Following second round bids, Astatine were granted exclusivity based on headline value, previous sector knowledge, deliverability and relationship with management. The deal completed in April 2024, generating a 2.8x overall money multiple for investors.

NRG Riverside has been an excellent investment for Palatine and represents a positive example of where we can add value through strategic initiatives such pricing, sales strategy, ESG and operational improvements.

Palatine has been an excellent investment partner for us, helping us to grow and become a more sustainable company. We look to the future with confidence and with a clear plan for further growth.  With recent internal promotions to further strengthen our experienced leadership team, we continue to offer the best customer-led experience from initial enquiry to vehicle delivery and future renewal. The growing relationships with our customers and their operations mean we are also well-placed to support the important transition to net zero emissions.

Darren Powell

CEO of NRG Riverside