Tech drives UK logistics deal activity

UK logistics deal activity was driven by technology businesses, according to the latest Q1 figures.

Nearly half of the 15 transactions completed in the logistics sector in the first quarter of 2021 involved software businesses, such as fleet telematics, workforce and supply chain management, shipment tracking solutions and warehouse management systems. 

These included: the sale of fleet telematics and software provider Matrix Telematics to Bridges Fund Management via an MBO; and LDC-backed Mandata’s acquisition of Stirling Solutions, combining the expertise of two of the UK's longest established transport management software providers for the logistics and haulage industry.

Overall, activity in the UK logistics sector continued to follow an upward trend, as seen in Q4 2020, with transaction volumes returning close to pre-pandemic levels. 

The ‘UK & Ireland M&A Update – Q1 2021’ – the latest report from accountancy and business advisory firm BDO LLP - revealed that the aggregate disclosed deal value for Q1 was £285 million, with more than a quarter of deals (27%) being cross border.

Jason Whitworth, M&A partner at BDO LLP, explained: “Against a backdrop of disrupted supply chains, increasing freight costs and new Brexit requirements, as well as shifting consumer demand, logistics providers are under increasing pressure to run more effectively and efficiently. Hence, systems that offer improved control and visibility of distribution and the ability to scale operations will attract investors. 

“The investor interest is widespread, from private equity, family office investors, specialist consultants and existing logistics technology specialists, through to traditional logistics operators. They are targeting software businesses across all aspects of the industry such as fleet telematics, workforce and supply chain management, shipment tracking solutions and warehouse management systems.”

UK private equity continued to show an active interest in the domestic market, with 33% of Q1 deals involving PE-backed investment, such as Matrix Telematics, Mandata, and the MBO of Leeds-based logistics, transportation, warehousing and supply chain management specialist, Ligentia, which was backed by UK private equity house, Equistone.

The report also highlighted that the BDO FTSE Logistics Index has bounced back to levels 77% ahead of where the index started in July 2019. This performance far exceeds the FTSE All-Share Index which is 8% down over the same period. 

Whitworth added: “Where key qualities across scalability, tech and management all come together, competition for investment opportunities is fierce, and valuations are being driven up. Looking forward, with the re-opening of non-essential retail stores in the UK, a retail boom on the back of pent-up demand is predicted by some. This may be at the expense of some online trading, but whatever the volume shift, it will no doubt have an impact on the demand for logistics services once more, and so the industry will need to remain agile to move with the times.”