Private-equity firm GPB Capital thrives under the radar

on Jul23

Kenny Ross Subaru is part of Kenny Ross Automotive Group. GPB bought a majority stake in June.

GPB Capital

What: New York private-equity firm
Holdings: Under contract with majority stakes in 66 dealerships
Where: New York, New Jersey, Connecticut, Texas, California and Pennsylvania
Numbers: $1.2 billion in assets; more than 1,000 investors
M.O.: Requires sellers keep 15-25% stake, stay and run operations

In the past four years, GPB Capital has quietly grown by buying exclusive brand dealerships in small to midsize markets, and larger stores or groups in metro areas.

Today, the New York private-equity group is under contract and owns a majority stake in 66 dealerships selling 25 brands in six states. If it released figures, GPB would rank in the top 10 on Automotive News’ list of the top 150 dealerships groups based in the U.S., based on new-vehicle retail sales, asserted Scott Naugle, GPB’s managing director of automotive strategy.

“In terms of revenue, we’d be right in front of Staluppi, and growing,” he said. Staluppi Auto Group ranks No. 9 with retail sales of 67,731 new vehicles in 2016 and revenue of $3.04 billion.

On June 27, GPB bought a majority stake in nine Kenny Ross Automotive Group dealerships in the Pittsburgh market. Last week, it opened a new Buick-GMC point on Staten Island, N.Y.

Naugle: “We are retailers.”

“Our philosophy has been stay under the radar, but when people hear ‘private equity [is] buying dealerships,’ they think we have deep pockets, that we will buy anything and we’ll overpay,” Naugle told Automotive News. “We’re very discretionary buyers. We don’t buy turnaround stores. We like to keep the owner involved. We’re at that point where people know who we are, but we want them to understand who we are.”

GPB Capital manages $1.2 billion in assets. Its automotive team has industry veterans including former dealers, whom Naugle declined to name. Naugle, a certified public accountant by trade, spent 20 years with Holman Automotive Group in financial positions. Then he worked at DCH Auto Group as director of corporate finance and accounting for one year before Lithia bought it in 2014.

“We’re not Wall Street people at GPB Automotive. We are retailers,” said Naugle. “That’s our pedigree.”

That helped persuade Jimmy Ross to sell the majority stake of the group his father started in 1954. “They have people familiar with the car business, so they’re easy to talk to and flexible,” said Ross, former chairman of Kenny Ross Auto and now managing member.

Terms of the deal were not disclosed. But GPB’s deals usually require the seller to retain a 15 to 25 percent stake and keep running the business, Naugle said. The name on the building doesn’t change.

“When we go into these deals, we don’t expect to buy anyone out,” Naugle said. “Our philosophy is they’ve created something special, special enough for us to buy them, so why would we want to get rid of them?”

GPB’s dealerships are concentrated in the New York metro area, including Bill Kolb Jr. Subaru in Orangeburg; Rockville Centre GMC; and Nissan of Garden City. It also owns the FX Caprara group, with seven stores in northern New York state; World Jeep-Chrysler-Dodge-Ram in Shrewsbury, N.J.; and World Subaru in Tinton Falls, N.J., Ron Carter Auto Group in Alvin, Texas, and stores in California, Pennsylvania and Connecticut.

GPB Capital

What: New York private-equity firm
Holdings: Under contract with majority stakes in 66 dealerships
Where: New York, New Jersey, Connecticut, Texas, California and Pennsylvania
Numbers: $1.2 billion in assets; more than 1,000 investors
M.O.: Requires sellers keep 15-25% stake, stay and run operations



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