While there are many weird and wonderful stories from the world of property, the ups and downs of investing, the ability to look into the future and spot an opportunity, there can be few stories which can match the foresight and the skill used to build up what is now know as National Car Parks and NCP – now two separate entities after being hived off at the end of the line.
This is one story which is very much worth reading!
Who founded National Car Parks
The history of National Car Parks actually goes right back to 1931 when the business was set up by Colonel Frederick Lucas but the real National Car Parks actually came about in 1959 with the merger of Central Car Parks (originally set up in 1948) and National Car Parks.
Central Car Parks was the brain child of business partners Sir Donald Gosling and Ronald Hobson who had the foresight to acquire a bombsite in London after the war which was actually in a prime location. That initial £200 which they used to acquire their first site was the first step in a business empire which would and still does literally dominate the UK car parking sector.
The ability of Hobson and Gosling to spot the opportunity of buying up old bombsites on the cheap was the basis for the future and stood them in great stead as they moved onwards and upwards in the ‘boring’ world of car parks.
The development of National Car Parks
On the surface the idea of owning a large number of car parks may not seem like the best use of many of the company’s prime sites in all of the major cities of the UK, but imagine the cash flow, imagine the limited work which needs to be done once the car park is actually built – imagine the pay back period on the initial investment. Once you sit back and consider the elements of the business you would actually be very hard pressed to find any other property that could convert into such a lucrative cash cow.
After the merger of National Car Parks and Central Car Parks the two partners began a seriously active expansion program which saw the company buying up old bombsites around the main cities of the UK as well as large garage sites which were easy to convert into car parks. There initial investment was very low as the bombsites need much work done to them and the garage sites easily paid for themselves due to the number of vehicles they could hold. Life was starting to motor ahead for Hobson and Gosling.
In 1986 we saw the creation of a holding company called National Parking Corporation which held the National Car Parks division and the growing number of subsidiaries the pair were adding to the business. One of the newer divisions of the company was the Green Flag businesses which seemed to be an excellent additional to the group – what better fit than a roadside recovery business for the UK largest car park company?
The exit point
By the mid 1990s the business had become one of the most successful private operations in the UK and was attracting the attention of some serious investors. When Prudential approached the group in 1994 it seemed as though the business which was initially set up for just £200 was going to be taken over for a mammoth £530 million, but unfortunately the deal fell through.
While many businesses would have lost focus under the pressure of a potential £530 million takeover it was very much business as usual for National Car Parks and the operation went from strength to strength. However, 1998 was the moment when the business really came of age as it was acquired by US giant Cendant for some £801 million – £271 million more than Prudential had been offering just 4 years earlier.
Even at this stage of the business the Hobson and Gosling families had retained an enormous 72.5% of the groups shares and banked £580 million between them. While this was the stage that the business would affectively change from a property company to a services led operation there is no mistaking the foresight and business acumen of Hobson and Gosling in creating what is one of the best known business operation in the UK today.
Life after Hobson and Gosling
There were major changes in the business after the founding families agreed to sell up with the company splitting up into the original National Car Parks and NCP. The NCP division was the services led operation which was aimed at local authorities and such services as the removal of vehicles, etc. The new owners also decided to sell off the Green Flag division to Direct Line as they sought to raise as much capital as possible to plough back into the services and original National Car Parks operations.
When Cendant hit financial trouble in 2004/05 the whole National Car Parks operation was on the move again with 3i paying £555 million for the business in July 2005. They then went about splitting the NCP and original National Car Parks division into two separate entities, retaining the services division and selling on National Car Parks to Macquarie European Infrastructure Fund II for an undisclosed fee in 2007.
It seems as though the business had finally gone full circle and the original National Car Parks division was now back to a pure car parks operation. No local services, no fixing cars and no complications, just straight old fashioned car parking operations and a return to the days of Hobson and Gosling – perhaps they had been proved right all over again, there was money in old land sites and there was money in ‘boring’ old car parks.
If there are any other property orientated businesses which have turned £200 into £801 million in just 50 years then we need to know about them. Who would have thought that old bombsites could ever be so useful? Who could have guessed that when Hobson and Gosling got together they would create a property based business which would outlive them?