Carlyle Extends its Ride with Minicab Operator Addison Lee

Buyout firm Carlyle Group LP has decided to take a longer trip with U.K. minicab operator Addison Lee Ltd., abandoning an auction it embarked upon just over a year after buying the business for £300 million ($470 million). After a five-month auction process, Carlyle has called off adviser Credit Suisse Group AG and plans to expand Addison Lee by buying peers in the U.S., most likely from trade sellers and founder-owners instead, a source said. Addison Lee, of London, was founded with one cab in 1975 and now ferries 10 million passengers a year in its vehicles for private hire, and makes one million deliveries. It is still the main competition to London's traditional black cabs, which are the only taxis that can be hailed from the sidewalk as they pass. Minicabs have to be pre-booked, and Addison Lee customers can do that through a smartphone app. Despite recent commentary from Addison Lee founder John Griffin and from potential bidders, Addison Lee believes the arrival in Europe of car-sharing service Uber Technologies Inc. and peers has had a limited impact on its business. Addison focuses on the business market for cab services rather than the consumer market and estimates that Uber competes with it for only about 8% of its business. Early participants in the auction included BC Partners Ltd. as well as Singapore public transport operator SMRT Corp Ltd., but both declined to submit bids. Addison Lee had Ebitda in the year ended August of £64 million, which represents double-digit year-on-year expansion, and revenue of about £240 million, up from £172 million a year earlier. The company has yet to arrange financing for its U.S. expansion push. IBISWorld last month estimated the U.S. taxi and limousine services market to be worth $11 billion and predicted it would grow at a rate of 2.6% a year in the 10 years ending 2019. It also noted that the market is highly fragmented. Carlyle invested in Addison Lee from its €4.5 billion ($5.64 billion) Europe III fund, intending to drive expansion both in the U.K. and internationally. Carlyle and Credit Suisse declined to comment.

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