Parques Reunidos is one of the world’s largest companies in the leisure park industry. Founded in 1967, the company owns and operates 54 parks in 12 European countries as well as the United States and Argentina. It draws more than 26 million visitors a year to its amusement and theme parks, zoos, water parks and marine life attractions and employs 18,000 people worldwide during peak season.

A FRAGMENTED MARKET
RIPE FOR CONSOLIDATION

In 2003, Parques Reunidos, a Madrid Stock Exchange-listed company, was one of Europe’s top five amusement park operators and No. 1 in Spain, but it had been underperforming for several years. A group of skilled industry executives, led by Richard Golding, approached Advent International about investing in a management buy-in. We had long known and admired Golding, who had most recently built Parques’ main Spanish competitor into a successful business.

Working with the buy-in managers, our Madrid team launched a tender offer for Parques Reunidos. Completed in December 2003, the transaction was the first public-to-private investment by a private equity firm in Spain, as well as one of the country’s largest buyouts at the time.

What we saw in Parques was a solid platform from which we could expand by acquiring and turning around existing parks, which would be faster and less risky than building from scratch. At the time of our investment, the European market was growing steadily but fragmented, with 17 companies controlling the top 20 parks. In the US, by comparison, six operators controlled the top 50.

Broader market conditions were also promising. As Juan Díaz-Laviada, a managing director at Advent International in Madrid, noted at the time of the deal, “Favorable demographic trends, growing tourism and rising disposable income suggest enormous potential to build value in Southern Europe.”

BUILDING A STRONG FOUNDATION FOR EXPANSION

Before looking to expand, we supported the new Parques leadership team in improving the performance of the existing leisure-park portfolio and creating a best-practice model that could be applied across all assets. Immediately, the team focused on enhancing margins through tighter cost and spending discipline—for example, by centralizing sourcing of catering and merchandising services and installing a new financial and management information system. The company also implemented more cost-effective marketing and pricing policies and customer loyalty initiatives, which helped double the average spend per visitor. At the same time, Parques invested over €40 million to improve park infrastructure and facilities.

“The development of this best-practice model not only generated new efficiencies and improved the customer experience, it also created the foundation for our expansion strategy,” said Golding, who led Parques as CEO from 2003 through 2013.

The next step was to acquire similar businesses with the goal of increasing cash flow and diversifying earnings. The Advent-Parques team accomplished its five-year acquisition plan in just three years, buying parks in Belgium, France, Italy, Norway and Argentina, and branching out into new categories, including water and animal attractions. Advent’s international network was instrumental in identifying and evaluating acquisition candidates, many of which were either not up for sale or subject to a limited competitive process.

“The results of this buy-and-build strategy speak for themselves,” Golding said. During Advent’s four years of ownership, Parques Reunidos was transformed from an undervalued local player into Europe’s second-largest operator of leisure parks and a budding global player, poised for continued growth. The company expanded from 14 parks and attractions located only in Spain to 22 parks in seven countries, while the number of annual visitors rose from 5 million to 9 million. Revenue more than doubled from €85 million in 2003 to €194 million at the end of 2006, and EBITDA grew nearly threefold.

In March 2007, we sold our entire interest to UK private equity firm Candover Investments. Under its new owner, Parques continued its remarkable growth and is now the world’s third-largest operator of leisure parks.