The embattled Red Driving School group has been rescued out of administration in a move that safeguards around 400 jobs.
LVG, which owns Red Driving School and Red Instructor Training, has been bought by private equity firm Kelso Place, which has previously backed the Smythson luxury stationery brand.
The deal secures the future of the Red brand and Kelso said it had no plans for redundancies.
Red Driving School is the third largest in the UK, while the group’s instructor training division is the biggest in Europe, with a network of 22 colleges.
Brighton-based LVG also owns Red Fleet Training, as well as driving instructor accountancy service FBTC, a trade magazine for the driving instructor training industry called ABI News, and Practical Driver Instructor Aids.
Kelso said it made a “significant equity investment” in securing the deal - said to be worth several million pounds.
The driving school group collapsed last week due to funding woes, although administrator MCR stressed at the time that accounts suggested the business was “quite a healthy and profitable operation”.
Philip Weston, a partner at Kelso, said it planned to grow LVG following the takeover.
LVG was launched in 1992 and its workforce is spread across three sites - its head office in Brighton, as well as offices in Liverpool and in Billingham, near Middlesbrough.
It has annual revenues of around £40 million and has helped pass more than 10,000 trainee instructors in the last five years alone.
But the firm was forced into administration due to a funding shortfall which arose from a change in its banking arrangements.
David Downing, chief executive of the Red business, said: “Throughout this short period of administration, the company has continued to trade as normal.
“As a result of Kelso Place’s investment, Red is now in a very strong financial position.”
Kelso is known for investments in firms such as Symthson and Anya Hindmarch’s designer handbag business.
But it has previously bought a number of businesses out of insolvency to get them back on track and sell on, such as financial recruitment firm Nigel Lynn Associates and Sepura, which makes radios for the police.
Today’s news of the Red rescue takeover comes amid reported concerns among driving instructor associations that training schools have signed up too many trainee instructors amid the recession.
Trainees pay around £3,000 for their course, but many are understood to be left with little work once they qualify as instructor schools are flooding the market at a time when the recession has hit demand.