Support services sector comment – January 2011

Date

It’s that time of year again when every man and his dog makes sweeping predications about the year ahead. Will this year be as grim as the last or can we look to the future with renewed optimism?

One area that should expect a slightly rosier year is the renewables sector. Following a period of initial excitement about all things “Green” the sector had a less than exciting year from an M&A perspective with fewer deals than expected in 2010. As advances in innovation and technology continues however consolidation on a global scale looks set to continue and increased returns will continue to attract interest from financial investors. Already this month French private equity investor, Demeter Partners has invested €15m in Belgian wind energy group, Electrawinds and specialist renewables investor IMPAX has acquired Conergys’s French and German wind operations. Global investment firm, The Carlyle Group recently announced the launch of a fund to directly support large wind, solar and other energy projects and BNP Paribas Clean Energy Partners aims to add more wind, solar and biomass projects to its portfolio after raising €437m from institutional investors.

Also this month, Itochu, the listed Japanese trading group acquired a 30% stake in Spanish solar thermal power company, Abenengoa Solar. Itochu has been actively growing its energy group and continues to seek opportunities in the sector. Jacobs Engineering, the US listed engineering services company announced its plans to acquire European power companies and referred specifically to a “key acquisition in the UK”. And there’s no shortage of UK acquirors with Ecotricity, the UK green electricity company announcing its plans to buy electricity suppliers or generators, and low carbon technology business ENER-G recently announced the acquisition of SmartHome Controls (SHC), a designer, manufacturer and installer of intelligent heating systems. The acquisition forms part of ENER-G’s on-going strategic growth programme.

Deals

Clearwater advised on the buyout of Asperity Employee Benefits Ltd to Inflexion Private Equity for £25.5m. Asperity is the UK market leader in flexible employee benefit programmes. Its technology powers employee discounts, salary sacrifice schemes, total reward systems and reward and recognition programmes. Inflexion will work with Asperity to continue growth by exploiting the significant UK market opportunities as well as accelerating the company’s international presence.

UK based low carbon technology group Ener-G has acquired smart energy specialist SmartHome Controls (SHC) as part of its strategic growth programme. SHC designs, manufactures, installs and maintains intelligent heating, ventilation air conditioning and lighting control systems. The company will form part of ENER-G’s building energy and controls business. Financial details were not disclosed.

UK gas and electricity supplier British Gas has acquired JK Environmental Services for an enterprise value of £7m. JK Environmental provides environmental services, sewer cleansing and tankering. The acquisition will enable British Gas’s electrical and dyno services business to build on its position as the UK’s largest domestic drain-cleaning service.

Rapidly expanding Green Compliance has acquired pest control specialist Enviroguard (UK) Ltd for £1.59m using cash and the proceeds of its recent issue of equity. Enviroguard provides pest control and prevention services to public sector, retail and leisure businesses. The company has 14 staff, and in the year to July 2010 reported a net profit of around £274,000 on a turnover of £1.1m. The deal is Green Compliance’s second this month, following the acquisition of FDSA Fire Protection Services for £550,000.

The Capita Group plc has acquired SunGuard Public Sector Holdings Ltd (SPS UK) for a consideration of £86m. SPS, the UK based business of US-headquartered SunGard Data Systems Inc, is a supplier of ICT, radio network services and communication systems to the emergency services and to central and local government. SPS UK’s largest clients include police forces and police administrative bodies, local authorities, the Highways Agency and Airwave Solutions. The acquisition brings new market opportunities to the Capita Group, particularly in the area of ICT solutions and outsourced services to fire, police and ambulance authorities, while also complementing Capita’s existing services for the public sector.

The Capita Group plc has acquired hotel bookings and meeting management agency BSI Holdings for £42.5m. BSI’s current clients include Marks and Spencer, Easyjet and the Crown Prosecution Service. It made a pro forma operating profit for its financial year to 30 June 2010 of £3.9m on turnover of £12.3m. Capita plans to combine the business travel booking agency with its travel management division, Capita Business Travel. It says the vision is to “create a significant, innovative and influential player of scale and competence in the travel sector”, delivering solutions in technology and service. As part of the acquisition BSI MD Trevor Elswood will take up the post of MD of the new merged business with immediate effect.

General Physics Corporation has acquired Plymouth based national skills and training provider Academy of Training for an undisclosed sum. The deal is General Physics’ second in 5 weeks and follows the acquisition of niche leadership and organisational development consulting firm, Bath Consultancy Group, in November. Academy of Training provides apprenticeships and NVQ programmes in areas such as childcare, hairdressing, business administration, customer service, and health and social care for adults.

John Wood Group plc has acquired PNS Ltd, a UK provider of production services to the oil and gas industry. The £600m acquisition will reinforce John Wood’s position in the market for brownfield production services with specialist expertise in asset integrity commissioning, decommissioning pre-operations support and training.

August Equity owned Funeral Services Partnership has acquired 3 funeral services companies, for an undisclosed sum. Gillman Funeral Services, A.V. Ridout Funeral Directors and C&T Radmall Services have been bolted onto August’s FSP, which it bought back in September 2009 for £23m.

Waste water company Nature Group plc has acquired International Slop Disposal (I.S.D.) B.V. and Ecoscrub Solutions B.V., from Port Invest B.V. for a total consideration of £16m. The enlarged business will have operations in Norway and Western Europe and a client list of international shipping companies.