Bain Capital and ADIA to Acquire Merchants Fleet
Brendan P. Keegan, Merchant's CEO, will also assume roles of president and chairperson, assuming the chairperson position from outgoing owner Gary Singer.
Source: Merchants Fleet
Merchants Fleet today announced that Bain Capital and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) have signed a definitive agreement to acquire Merchants Automotive Group, which does business as Merchants Fleet and Merchants Auto.
Merchants will continue to operate independently. The transaction is subject to customary regulatory and other approvals and is expected to close in the third quarter of 2022.
The members of the Merchants leadership team will remain in their current roles and will be co-investors in the business. Brendan P. Keegan, CEO will also assume roles of president and chairperson, assuming the position from outgoing owner Gary Singer. Terms of the private transaction were not disclosed.
Founded in 1962, Merchants, which claims the title of “fastest-growing fleet management company,” experienced 5x topline growth over the last four years. Merchants is the fourth-largest provider of fleet management services with over $2 billion in assets under management and 165,000 managed commercial fleet units across North America.
According to the company, its business model is focused on “forward-thinking technology solutions, innovative fleet services, and the proactive adoption of electric vehicles.” The acquisition will allow Merchants to “benefit from additional resources under the new ownership that will help speed new service launches, technology innovation, and expansion into new markets.”
Merchants offers fleet services spanning fleet leasing, fuel management, telematics, remarketing, fleet consulting, EV adoption, and mobility to about 20 industries. During the 2021 holiday season, 4 million packages per day were delivered in vehicles managed by Merchants. The company touts existing reservations for 40,000 electric vehicles — an investment and commitment of $2.5 billion.
Acquisition to Fuel EV Growth
“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 Brendan and the Merchants team on their path of consistent long-term growth driven by connected vehicles, multi-modal transportation, efficiency requirements and data-driven intelligence.”
Julia Levinson, a vice president at Bain Capital, added, “Merchants is at the forefront of electric vehicle expansion as more companies look to improve their ESG performance.”
“The growth Merchants has achieved over the past five years is unrivaled in the industry, and the new ownership group — Bain Capital, ADIA and our leadership team — share a steadfast commitment to keep our clients on the cutting edge of commercial fleet through continued innovation,” stated Keegan.
“The infusion of new capital affirms the merits of our core values and disruptive approach. While other providers grapple with the effects of a consolidating market — business interruption, systems integration, confusion and employee impacts — Merchants moves forward fearlessly at the vanguard of fleet and mobility with best-in-class solutions for fleet electrification, fueling technology and last mile. There’s never been a better time to work for, or work with, Merchants.”
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Trends Fueling Fleet Growth
The fleet market includes corporate entities that operate fleets of 2.9 million vehicles collectively, excluding rental and government fleets, according to the Automotive Fleet Leasing Association’s (AFLA) 2021 US Corporate Fleet Insights Report. Data also shows that many fleets intend to grow or replenish their fleet in 2022 — despite vehicle supply chain challenges. Emerging trends fueling the growth of the category 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. Our investment in Merchants aligns with our approach of backing strong, proven management teams in executing growth strategies in sectors and markets where we have built strong conviction.”
“Since my father Irving Singer founded Merchants in 1962, we have grown alongside our clients through innovation and developing new service offerings,” stated Gary Singer, outgoing chairman and owner.
“Today’s news reflects decades of industry leadership and a remarkable transformation over the past four years, while also setting the stage to accelerate the forward trajectory that is well underway. As my brothers — Robert, Jeffrey, & Michael — and I step away, we are incredibly proud of what has been achieved and excited to pass the reins to the new ownership group. Merchants has the right team and management in place, the right partners in Bain Capital and ADIA, and the determination and grit to forge an exciting future.”
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