Bain Capital and ADIA agree Merchants Fleet deal

October 2022 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

October 2022 Issue

In a deal that puts it at the vanguard of fleet and mobility, US fleet management company Merchants Fleet is to be acquired by private investment firm Bain Capital and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA).

The terms of the private transaction have not been disclosed.

The leadership team of Merchants – which includes Merchants Automotive Group, DBA Merchants Fleet and Merchants Auto – will remain in their current roles and will be co-investors in the business. Brendan P. Keegan, chief executive of Merchants, will also assume roles of president and chairperson.

Founded in 1962, Merchants is the fourth largest provider of fleet management services with over $2bn in assets under management and 165,000 managed commercial fleet units across North America.

Uniquely positioned as a unified solution provider, Merchants offers the broadest and most flexible fleet services spanning fleet leasing, fuel management, telematics, remarketing, fleet consulting, electric vehicle adoption and mobility to over 20 industries.

“When we initially provided growth financing to Merchants in 2020, we had our eye on a longer-term partnership,” said Olof Bergqvist, a managing director at Bain Capital. “As the fleet management industry continues to experience considerable disruption, we are excited to continue to support Merchants on their path of consistent long-term growth driven by connected vehicles, multi-modal transportation, efficiency requirements and data-driven intelligence.”

Following completion, Merchants will continue to operate independently, and benefit from additional resources under the new ownership that will help speed new service launches, technology innovation and expansion into new markets.

“The growth Merchants has achieved over the past five years is unrivalled in the industry, and the new ownership group share a steadfast commitment to keep our clients on the cutting edge of commercial fleet through continued innovation,” stated Mr Keegan. “The infusion of new capital affirms the merits of our core values and disruptive approach.”

Disruptive trends fuelling the growth of the fleet market include increased e-commerce penetration, energy transition and electrification, increased telematics adoption, and the need for more sophisticated data integration and analytics.

“Merchants is an innovative, growing business and, along with our fellow investors, we support the leadership team’s vision for the future of the company,” said Hamad Shahwan Al Dhaheri, executive director of the private equities department at ADIA. “Commercial fleet leasing is an area we understand well, having previously and successfully invested in the sector.”

The transaction is subject to customary regulatory and other approvals and is expected to close in the third quarter of 2022.

Serving as exclusive financial adviser to Merchants is Broadhaven, with BNP Paribas serving as financial adviser and WilmerHale serving as legal adviser. Davis Polk is serving as legal adviser to Bain Capital and the consortium, with Gibson Dunn serving as legal adviser to ADIA. BNP Paribas has acted as the sole acquisition financing provider for the transaction.

“While other providers grapple with the effects of a consolidating market, Merchants moves forward fearlessly at the vanguard of fleet and mobility with best-in-class solutions for fleet electrification, fuelling technology and last mile,” concluded Mr Keegan.

Fraser Tennant