Great Rail Journeys purchase 'unlikely to signal flurry of acquisitions'

The purchase of Great Rail Journeys by private equity firm Vitruvian Partners last week is unlikely to signal a flurry of travel company acquisitions despite the continuing strength of the sector and pressure to find buyers.

That is according to Christopher Jones, managing partner at corporate finance advisory firm Clearwater, which advised Vitruvian on the deal.

Speaking at the Barclays Travel Forum in London on Tuesday, Jones said: “There is a big pool of 40 to 50 travel assets owned by private equity in the UK, so these assets will come up for sale at some stage. [But] buyers are thinner on the ground. There is an excess of supply, so it’s a buyers’ market and buyers are being selective.”

He said: “Travel has had a great run – Great Rail Journeys is our ninth travel deal in two years.”

More: Great Rail Journeys acquired by Vitruvian Partners

But he noted there are “very few” trade buyers and said: “There is a queue of [private equity-owned] assets that needs to be released.”

Jones described the “queue” of private equity (PE) firms seeking buyers for companies as “a case of ingestion”, but he added: “The great thing is these assets are still trading really well.”

He said Great Rail Journeys was “well known” in PE circles, noting Vitruvian was the company’s third PE owner and previous owner Duke Street had “invested strongly in the customer proposition”, making it “an attractive high-margin business”.

Jones added: “Vitruvian sees what we see in travel. It’s hugely attractive. It’s one of the, if not the, most-attractive consumer sub-sectors because consumer intent to spend on travel just doesn’t stop.”

However, he said: “A lot of investors have disappeared to technology. The population of assets is large and the population of private equity [firms] that want a deal in travel is pretty narrow, and once a PE firm has done one deal it might do a second, but it’s not going to do a third.”

Martin Alcock, owner and director of Travel Trade Consultancy, noted “one or two big deal processes had started” this year but “lots of deals have been postponed” amid the economic uncertainty triggered by the US imposition of trade tariffs.

A senior finance director told the forum that more private equity capital “than ever before” is currently being returned to investors “to keep them happy”.