Industrial sector comment-February 2013

Dato

Clearwater’s Industrials Team has just returned from a road show in India. Our meetings with numerous fast-growing Indian companies provided an invaluable insight into the strategies of these increasingly prominent players.

With many of them experiencing growth in the range of 20-30% per annum, these companies are having to define very focused and clear investment strategies. For many, the domestic growth opportunities are so significant that they are turning their attention to sizeable investments in their core operations. At the same time, however, they are keen to harness new technologies, routes to market and relationships with new customers. To this end, the subject of acquisitions is also featuring prominently on the agenda.

It is evident that in order to satisfy the increasing sophistication of their domestic market, these cash-rich companies are seeking targets which would supplement their existing product portfolios, particularly for the players in the aerospace, automotive, flow products, materials handling equipment and power equipment sectors. Their focus is therefore on differentiated Western-based players which would fit neatly into their “near-shore far-shore” strategy, offering high quality production capabilities which could be adopted in their domestic market.

Deals

Norman Hay Plc has acquired Sterr & Eder Industrieservice GmbH, a provider of industrial services to the automotive and foundry industry. The acquisition enables Norman Hay to expand its global geographic footprint, as well as diversifying its product range and current service proposition to existing customers.

British Rototherm Company Ltd has acquired IRPCO Instrumentation Ltd, a process and control instrumentation business. The acquisition is in line with British Rototherm’s growth strategy to build upon core product and service offerings within the temperature, pressure and flow segments.

Alstom SA has completed the acquisition of Tidal Generation Ltd, a manufacturer of tidal steam turbines from Rolls Royce plc, subject to the achievement of critical milestones. The acquisition enables Alstom to further develop the broadest portfolio in the renewable power industry for hydro, onshore and offshore wind, geothermal, biomass and solar power.

Travis Perkins Plc has acquired Solfex Energy Systems, a renewable energy distribution specialist for £8m. Solfex will be a valuable addition to the Plumbing and Heating Division of the Travis Perkins Group and the acquisition complies with the group’s strategy to offer customers an integrated approach to energy efficient building.

Voith Industrial Services Holdings GmbH has acquired ThyssenKrupp Services Ltd, a provider of technical cleaning and technical services to Jaguar Land Rover, BMW and Ford along with other automotive and non-automotive customers. The acquisition strengthens Voith’s position as a leading service provider to the UK automotive industry.

Hyder Consulting Plc has acquired BCH Engineering Consultants Pty Ltd, an Australian based consultancy providing specialist structural and marine engineering design services in the oil & gas and resources sectors. The acquisition will enable Hyder to develop relationships with clients in Australia’s Pilbara region.

Clyde Blowers Capital has acquired Parsons Peebles Generation Ltd, who specialise in the manufacture of HV motors and generators for a variety of industries. The acquisition is part of Clyde Blower’s strategy to continue investing in mission critical engineering firms serving the oil and gas, power and mining sectors.

Enermech Ltd has acquired Valve Tech Engineering Pty Ltd, an Australian provider of servicing, engineering, modification, testing and supply of valves to the oil and gas, power generation, petrochemical and refining industries throughout Australia. The acquisition is a strategic fit for Enermech, extending its geographical reach and customer base and is the first of five acquisitions that Enermech has planned for the next six months.

Rotork Plc has acquired Schischek GmBH, a designer and manufacturer of explosion-proof electric actuators, principally for the heating, ventilation and air conditioning marketplace. The acquisition will enhance Rotork’s existing range of explosion-proof actuators and provide Rotork with exposure to an attractive new end market.

AESSEAL Plc has acquired AV Technology Ltd (AVT), a provider of conditioned-based maintenance services and engineering consultancy. The acquisition will enable AVT to expand internationally supported by AES’s financial strength, international footprint and reputation.

Mott MacDonald Group Ltd has acquired Procyon Oil & Gas Ltd, an engineering, management and development consultancy to a broad range of clients in the upstream oil and gas industry. The acquisition will strengthen Mott MacDonald’s ability to provide all phases of upstream design, process engineering, construction management and operation for clients in both the offshore and onshore arena.

Continental AG has acquired ASL Vision Ltd, a UK headquartered manufacturer of surround detection for vehicles. The acquisition will further develop Continental’s competence in the camera sector and Continental will further develop intelligent surround view systems with features such as free-space and object recognition in the future.

The management team of Winder Power Ltd, a manufacturer of power distribution and generation equipment, acquired the company in a management-buyout backed by Enterprise Ventures Ltd. The transaction provides an exit for YFM Equity Partners Ltd.

Intertek Group Plc acquired Tickford Test Technology Ltd, a vehicle engine testing company. Tickford complements similar services already provided by Intertek in the US especially, as well as in Asia and will enable both Intertek’s US and Asian customers to divert their European based testing requirements to Tickford as well as Tickford’s UK customers to Intertek in the US and Asia.

Private equity firm Business Growth Fund Plc has co-invested with Kern Energy Partners Management Ltd and NES Partners to acquire Magma Global Ltd, a manufacturer of high performance carbon fibre pipes for the oil and gas sector. The investment will support Magma in building a manufacturing facility with deepwater access in Southampton capable of producing up to 250km of pipe per year.

Hyder Consulting Plc has acquired Power Systems Project & Consultancy Services Ltd, a UK specialist, independent high voltage simulation, analysis and electrical design business. The acquisition reinforces Hyder’s presence in the dynamic and fast growing energy sector.

Keller Group Plc has acquired Geo-Foundations Contractors Inc, a Toronto-based specialist geotechnical contractor. The acquisition builds on Keller’s track record of expanding into higher growth geographic regions through both organic and targeted acquisitions.

Sun European Partners LLP has acquired a majority stake in Paragon Print and Packaging (Holdings) Ltd, a UK provider of packaging and outsourced services to the private label fresh and chilled food markets. The transaction provides an exit for private equity firms Equistone Partners Europe Limited and LDC and will further strengthen Sun’s portfolio in the packaging industry.

Babcock International Group Plc has acquired LGE Process Ltd, a designer and builder of plants for the processing, storage and handling of liquid gases to the marine and onshore liquid gas sectors. LGE will be combined with Babcock’s Design Services (DS) business unit creating a strong business, well positioned to further develop into commercial marine markets, particularly within the oil and gas market.

Wabtec Corporation has acquired Napier Turbochargers Ltd, a UK provider of turbochargers and related parts for the worldwide power generation and marine markets. The transaction will enable Wabtec to grow in the ower generation and marine markets.