Evri owners prepare parcel delivery group for a £2bn Sale

Private equity owners are preparing Evri for a massive £2 billion sale, just two years after saddling it with debt and grabbing a £762million dividend.

Advent International, an American buyout company, is working with Rothschild advisers to explore Evri’s options. This could include a possible sale of the courier for £2 billion (including debt).

Advent piled on more than £1billion in debt after acquiring 75 percent of Evri’s shares in 2020, and then extracted the huge dividend in 2022. Advent has almost tenfold increased the net debt to £1.3 billion, six times Evri’s profits.

Advent paid German mail-order group Otto €1 billion (£850m) for its majority share in Evri formerly Hermes UK and for a minor stake in its German operation.

Peter Morris, an associate scholar at Oxford University’s Said Business School said that the debt raised for the dividend only serves to accelerate Advent’s payback of the deal. Morris stated that these so-called “dividend re-caps” allow private equity firms the opportunity to “take money from the table and transfer future risks onto lenders”. Advent declined to make any comment.

Sources close to Evri claim that the company has retained enough cash to fund its growth plan. They also say that £120m was invested under Advent to improve customer service, increase capacity and strengthen IT infrastructure. The courier will open a new automated warehouse in Barnsley, South Yorkshire in 2022.

Evri is reportedly considering a sale, while its smaller competitor Yodel is on the verge of bankruptcy. According to reports, Yodel is owned by the Barclay family and has lined up administrators just in case they cannot find a buyer.

Frank Proud of retail consultancy Apex Insight said that Evri “systematically” had won the majority of Yodel’s large customers, and its network of over 20,000 local messengers made it “very effective”.

Evri began in 1974 as a delivery network for the Grattan catalog. It has tripled its size in the last five years due to international expansion and the boom in ecommerce. The courier holds an 18% share of the UK’s market and delivers 720 millions parcels per year.

Yodel, Evri’s main rival, is in dire straits

The market cooled last year, as consumers reduced their spending. Evri’s sales for the year ending February 2023 were £1.46 billion. This was flat with the previous year. Evri’s pre-tax loss was £77 million due to higher interest costs.

Evri was criticized in 2022 when it buckled beneath the additional demands that were made after Royal Mail workers on strike went up to Christmas.

Evri delivered 99 percent of its standard and next-day deliveries on schedule in the last 12 months. In a survey conducted by Citizens Advice in the autumn of last year, both Evri and Yodel were ranked at the bottom of all parcel delivery companies.

Advent would be making another high-profit ecommerce bet if Evri were to sell. In 2021, Advent and two co-investors, who had bought the business four years earlier for €102m, sold a 35% stake in Polish parcel locker provider InPost. Advent has made a spectacular return on investment. However, InPost shares have dropped by 29 percent since the company floated.

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