CitySprint wins LDC cash to speed same-day delivery, Dunedin IT to wind down

CitySprint, which claims to operate the UK’s largest privately-owned national delivery network, will still majority owned by its management team remain the major shareholder.

FTSE-listed Dunedin Enterprise Investment Trust's largest stake was in CitySprint, with the sale generating proceeds of £26.1m for the investment fund.

The new investment from LDC will allowed the group to develop a newly created division, LastMileLink Technologies, which it called "a dedicated technology ‘hothouse’ which will accelerate the development of innovative new products for CitySprint and improve the delivery platform infrastructure".

The transaction will also support the ongoing roll-out of its On The Dot retail and consumer brand, which is a delivery service that allows shoppers to choose a one-hour delivery window.

Specialising on sectors including retail, pharmacy, pathology and auto parts same-day logistics, CitySprint has achieved average annual revenue growth of 19% between 2010 and 2015, helped by a series of 21 acquisitions, inlcuding Heathrow's baggage repatriation service.

In calendar 2015, it generated £146m in revenue, up 14% on 2014, with an underlying EBITDA of £16.8m.

"We have a really strong partnership with Dunedin and LDC is joining us, as a key strategic investor, at a very exciting time in our business as we capitalise on our first mover advantage in the same day market," said chief executive Patrick Gallagher.

For the Dunedin Enterprise fund, the proceeds represent a return of 2.75 times over five years on the original investment of £9.8m, while a total of £7.3m is being rolled over into the New CitySprint newco in partnership with LDC for an interest of 5% in New CitySprint.

Thus the net cash proceeds received by Dunedin Enterprise amount to £18.8m but the fund has decided to wind itself down and will put this proposal to a vote at May's annual shareholder meeting.