Caledonia Investments expands portfolio with £55m acquisition of Direct Tyre Management

Caledonia Investments plc has bolstered its investment portfolio by acquiring a majority stake in Direct Tyre Management Limited (DTM) for £55 million. This strategic move aligns with Caledonia’s focus on investing in high-quality, well-established businesses with proven management teams. The acquisition was completed with the participation of DTM’s management, who reinvested alongside Caledonia to secure 100% ownership of the company from Palatine Private Equity.

Growth and Technological Innovation

Founded in 2004, Direct Tyre Management has experienced significant growth, with turnover doubling from £30 million to £60 million in just the last two years. This rapid expansion has been driven by DTM’s ability to adapt and innovate within the tyre management sector, serving approximately 250 fleet customers across the UK. The company manages around 1.3 million tyres for a fleet of 285,000 vehicles, leveraging a proprietary technology platform that enhances fleet efficiency and reduces operational costs. DTM’s smart technology not only predicts and prevents potential roadside failures but also supports environmental sustainability by reducing waste and lowering the carbon footprint of its fleet customers.

Strategic Importance of the Acquisition

The acquisition underscores Caledonia’s commitment to investing in businesses that not only demonstrate strong financial performance but also lead in industry innovation. Tom Leader, Head of Caledonia Private Capital, emphasized the potential for DTM to expand its service offerings both within the UK and internationally. He highlighted the company’s consistent revenue growth and market-leading position as key factors that make DTM an exciting addition to Caledonia’s Private Capital portfolio.

A Focus on Sustainability and ESG

DTM’s former owner, Palatine Private Equity, played a pivotal role in guiding the company towards a strong focus on Environmental, Social, and Governance (ESG) principles. Under Palatine’s stewardship, DTM developed a value proposition that enables customers to make more sustainable choices, further solidifying its leadership in the tyre management sector. This focus on ESG will likely continue under Caledonia’s ownership, as the company seeks to build on DTM’s existing strengths while exploring new growth avenues.

Looking Ahead

With Caledonia’s support, DTM is poised to continue its trajectory of innovation and growth. Leigh Goodland, DTM’s CEO, expressed confidence in the partnership, noting that Caledonia’s long-term investment horizon and financial flexibility will allow DTM to maintain its reputation for outstanding customer service and cutting-edge technology. The acquisition positions DTM to further expand its services and solidify its status as the UK’s leading independent tyre management provider.

Legal and Financial Advisors

The transaction was supported by a host of legal and financial advisors. Travers Smith, OC&C, Deloitte, and PwC provided advisory services to Caledonia, while Clearwater Corporate Finance and Gateley represented the vendors. This acquisition not only reflects Caledonia’s strategic investment approach but also highlights the growing importance of technology and sustainability in fleet management services.

This acquisition is expected to have significant implications for the UK fleet management sector, particularly in how technology can drive efficiency and sustainability.