Grand Central Automotive Partners Announces Formation of Partnership in Franchised Auto Dealer Indus
Miami, Florida - (May 19, 2017) Grand Central Automotive Partners LP ("GCAP") in partnership with Alexander Alternative Capital GP, LLC announced today the formation of a $500 million fund to acquire interests in private, income producing automobile dealerships in North America.
GCAP is a partnership with a best-in-class dealership operator to purchase over 15 automotive retailers at a conservative fair market value. The private equity offering is unique because it generates current income through profitable dealerships, satisfying the pent-up investor demand and search for yield and high quality assets.
The objective is to provide hands-on, managerial and operational services, and to develop the portfolio companies' operations and increase their cash flow and current income from existing operations.
Grand Central intends to roll up more than 100 profitable dealerships across the United States with collective annual revenues above $7 billion. Using minimal leverage, the partnership looks to eliminate operational inefficiencies and unlock shareholder value by driving the bottom line on mature dealerships.
"We believe that 2017 is an opportune time to enter the franchised auto dealer industry," said Michael Corcelli, Partner of Grand Central Automotive Partners and Founder of Alexander Alternative Capital GP, LLC. According to the National Automobile Dealers Association, "Virtually all new cars and light trucks are bought in the U.S. through franchised dealers in over a $1 trillion market.
""Dealers are currently in the best position in decades in terms of capital allocation, technology, total sales and a wide array of other metrics," said Corcelli. This position is based on a strong improvement in auto sales since the downturn of 2009, with a seasonally adjusted annualized rate trending at 17.2 million units in 2016.
Some other notable money managers implementing economies of scales in the auto dealer industry include George Soros and Warren Buffett. It's an attractive space because the automotive retail business model is relatively insulated from fluctuations in new vehicle sales due to its diversified revenue mix, which includes new and used vehicle sales, wholesales, service and parts revenue and finance/insurance sales.
The Grand Central Automotive structured limited partnership offers preferred returns of 8 percent annually. There is a projected base case of 12 percent annual yield and a 19 percent net IRR.Ultimately, the auto group seeks the ability to access public markets, with a possible initial public offering opportunity within five to seven years unlocking the difference in earnings multiples between the private and public market for auto retailers.
ABOUT GRAND CENTRAL AUTOMOTIVE PARTNERS
Grand Central's lead partner brings over 20 years of automotive retail operating expertise with a focus on sales, financing and dealership turnarounds. Strong automotive retail strategy, sourcing, structuring, closing and monitoring potential acquisitions and divestitures. Proven management team to increase sales, service, and finance income while also improving operational efficiencies to increase profitability at our dealerships.
He was the owner of multiple auto dealer franchises around the country from New York and New Jersey to Virginia and California. The total sales in his dealerships exceeded $1.7 billion in 2016, and his businesses rank among the top dealerships in the nation in both number of units sold and customer satisfaction.
GCAP's Chief Financial Officer leads the finance, treasury management, fund accounting, fund administration, financial statement preparation, and overall infrastructure. He has nearly 30 years of wide-ranging experience in financial services and alternative investments. Prior to joining GCAP, he was the CFO and Investment Committee member of an $11 billion hedge fund platform.
Michael Corcelli, Chief Investment Officer
Mr. Corcelli began his career in the private wealth management side of the business at UBS. In addition to helping the firm grow its assets under management, he was responsible for portfolio management and tactical asset allocation for private clients. After leaving UBS, he formed Alexander Alternative Capital in Miami, a global macro hedge fund that started with shorting sub-prime mortgage companies. Additionally, he is Founder and Chairman of the Florida Alternative Investment Association (FLAIA), a 501(c)(6) non-profit organization which includes some of the most successful hedge funds and largest family offices both nationally and internationally.
In 2012, Mr. Corcelli started an initiative to double the Florida State Board of Administration's use of alternative investments from 10 percent to 20 percent, freeing up roughly $15 billion of new capital for hedge funds, private equity and venture capital. Mr. Corcelli holds a Bachelor of Science from the University of Miami.
Brian Valero, Head of Marketing and Business Development
Mr. Valero most recently worked as a Senior Marketing Analyst at Ramius, the $13 billion global alternative investment management business of Cowen Group. In his role as Senior Marketing Analyst, Mr. Valero was responsible for formulating marketing materials, researching alternative investment managers and maintaining client relationships for Ramius’ hedge fund and private equity products. Prior to Ramius, Mr. Valero worked as a Business Development Analyst for Lyxor Asset Management, where he was responsible for processing subscription documentation, opening investor accounts and ongoing maintenance of client relationships. Mr. Valero also completed a Marketing Analyst program at Permal Asset Management, a fund of hedge funds firm that at the time managed $23 billion. Mr. Valero earned his Bachelor of Arts in Economics & Political Science from Columbia University in New York.
Contacts:
For inquiries regarding Grand Central Automotive LP, contact Michael Corcelli at 786-574-5164 or by email at mc@gc-automotive.com; or Brian Valero at 786-574-5161 or by email at bv@gc-automotive.com.