Gresham's Manchester office backs £12m Drakes management buy-out. Outsourcing legislation spurs growth in fines collection market

Gresham, the private equity house, has backed the £12m management buy-out of Drakes Group, the UK's leading provider of bailiff and parking enforcement services.

The deal is the first generated by Gresham's Manchester office which was opened in September 2001 as the latest stage in Gresham's strategy of capitalising on business opportunities through regional offices.

Drakes provide bailiff services to enforce warrants on behalf of magistrates courts and enforces parking restrictions for local authorities. Although the bulk of Drakes' operations are based in London and the home counties, it has already won 30 per cent of available contracts from Greater Manchester for the enforcement of unpaid parking tickets and hopes to expand in the north as changes in legislation create more outsourcing opportunities.

Drakes dominates its two key markets with a 40 per cent share of available contracts for the execution of unpaid fines for magistrates courts and nearly half the available contracts from local authorities for the enforcement of unpaid parking tickets.

It also serves arrest warrants on behalf of the six of the 14 magistrates courts which currently outsource this activity, sending enforcement officers to arrest offenders who fail to pay unpaid fines and/or breach probation or community service orders. In addition, Drakes operates the largest on-street clamping and vehicle removal contracts for the City of Westminster, the UK's flagship council, and three other London boroughs.

The civil enforcement outsourcing market is forecast to grow at 15 per cent a year for the foreseeable future. Legislation by central government to make magistrates courts, local authorities and higher courts enforce the payment of fines they levy will help underpin that growth.

So, too, will the growing numbers of speeding and traffic light cameras generating fines which create welcome additional revenue for local authorities. An increased focus on easing parking congestion, enforcing bus lane contravention and traffic congestion charging will provide further growth opportunities.

On the basis of existing business and tenders already won, Drakes managing director Frank Millerick expects sales to rise from just over £9.7m in the year to end-March 2002 to £13m in the current year, accompanied by strong profits growth.

The management team of five led by Frank Millerick bought the business from Sidney Simcox. Drakes was founded - initially as a private investigative agency - 65 years ago in Hackney, East London.

Manchester-based Gresham investment director Tim Smallbone joins the Drakes board as a non-executive director. He says: "The fact that Drakes is the market leader in one of the fastest growing sectors of the outsourcing market made a compelling argument for Gresham to back such an experienced and committed management team."

The group uses 140 sales and administrative staff and more than 100 certificated bailiffs who are required to operate under high service levels.

Managing director Frank Millerick explains: "With our good track record on recoveries and highest quality service, we are ideally placed to expand rapidly. We see growth not only in our traditional business, but also in related areas such as child support agency contracts, illegal minicab enforcement, Inland Revenue warrants and commercial rent collection. Gresham's backing will enable us to pursue these opportunities to the full."

Drakes was introduced to Gresham's Tim Smallbone by Mark Watts, Manchester-based corporate finance director of Old Mutual Securities. Darryl Cooke and Mike Hinchliffe of Addleshaw Booth & Co were the legal advisers to Gresham.