Business Services Sector Comment – July 2014

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There are plenty of signs that the recruitment sector will continue to buzz with the latest labour market statistics pointing towards positive growth and a fall in unemployment, private equity on buy-and-build strategies targeting bolt-ons and FM companies entering the market.

This month saw the announcement of four significant deals in the recruitment space:

The first deal saw Daily Mail and General Trust (DMGT) exit its digital recruitment business as online job board Stepstone, part of the Axel Springer publishing group, acquired Jobsite. The €112m transaction comes as no surprise, as DMGT had already sold multi-job posting service Broadbean to CareerBuilder, job search engine Jobrapido to Symphony Technology Group, and niche job site OilCareers.com to Dice. The acquisition will help build on Axel Springer’s already large portfolio of job boards, including Totaljobs.com, CWJobs.com, Caterer.com, CityJobs.com and eMedCareers.com.

In a deal reported to be worth €380m, Intermediate Capital Group plc, the listed UK-based venture capital firm providing mezzanine and equity financing, acquired Education Personnel Management Limited. Education Personnel is the UK’s leading recruitment specialist, supplying teaching staff to over 25,000 schools in England and Wales. The company consists of two specialist branded businesses, Teaching Personnel and Protocol Education, which when combined operate over 60 branches and employ more than 450 people. Protocol Education was a bolt-on transaction back in August 2011, when Education Personnel was owned by Graphite Capital Management LLP.

In the US, TrueBlue Inc’s €229m acquisition of Seaton Corp created the largest industrial staffing firm in the country. Seaton Corp is a Chicago-based recruiting and outsourcing provider through its PeopleScout, HRX, Staff Management and StudentScout brands. The company services clients in the airline, financial services, retail, manufacturing and transportation industries.

Lastly, Staffline Group plc moved a step closer to fulfilling their strategic goal of becoming the leading Welfare to Work provider by acquiring Avanta Enterprises. The €83m acquisition will create the UK’s third largest Welfare to Work provider and significantly expand Staffline’s presence in the East Midlands and North West of England. It will also help to balance the profits of the group between Welfare to Work and Staffline’s broader recruitment services. Staffline funded the acquisition through a €20m share offering.

Other recruitment transactions include the acquisition of Danske AS, a Norway-based recruitment firm, by Hamilton People AS; the acquisition of Spain-based InfoJobs SA, an online recruitment website operator, by Schibsted Espana SL; and specialist firm Ford & Stanley’s acquisition of UK Sigma Consulting, a leading automotive and engineering recruitment business.

The transactions send a clear statement about the continued strong interest in the sector and the appetite for deal making. Clearwater International expect to see further deals in this space as firms expand their geographic presence, diversify into new sectors and create new value added solutions beyond their job search offerings.

Deal Highlights

IFA consolidator Capital Professional, doing business as Bellpenny, has added €95m in assets under advice with the acquisition of Hansen Lloyd Asset Management for an undisclosed sum. The acquisition of the Essex-based firm is Bellpenny’s 18th deal since it launched in 2012, with backing from US investment firm Oaktree Capital and the UK’s largest property services group Countrywide plc.

Entreprenør Marius Pedersens Fond increased its stake in Marius Pedersen Group, a provider of solid waste management services in Denmark, the Czech Republic and Slovakia, from 35% to 100%. The increased investment facilitates the exit of Veolia’s 65% holding, valued at €240m, and will contribute to the group’s debt reduction and geographical refocusing strategy.

YFM Equity Partners has invested €6.3m in a €12.6m management buyout (MBO) of Intelligent Office UK, a leading business process outsourcing firm specialising in the legal sector.

RPS Group plc announced the cross-border acquisition of the entire share capital of GaiaTech Holdings Inc, a US-based environmental consultancy, for an enterprise value of €25m. The acquisition will help develop RPS’s presence in North America.

Boligselskabet Nordkysten announced the acquisition of DVB Helsingor, one of the largest housing associations in Denmark. The acquisition significantly increases the housing stock of Boligselskabet Nordkysten to 1,800 townhouses, apartments and single-family homes in Hornbaek, Ålsgårde, Elsinore, Snekkersten and Espergaerde.

Human resources consultancy Deminos has acquired OSL (South East) Ltd. OSL is an expert health & safety, training and Quality Assurance consultancy.

Bilfinger Berger AG, a provider of construction services, signed a memorandum of understanding to acquire GVA Grimley Holdings, a provider of property advisory and consultancy services. This acquisition will also represent an exit for LDC on its 27.5% stake in GVA.

Martin Bencher Group, a Denmark-based professional shipping and forwarding service provider, announced the acquisition of tti Logistics ApS, a Copenhagen-based provider of airfreight forwarding services, customs clearance, operations and logistics support products.

Arthur J Gallagher & Co, a US-based provider of insurance brokerage and risk management solutions, acquired Shilling Ltd, an employee benefits communication consultancy.

AIM listed Restore plc announced the acquisition of Filebase Ltd. The acquisition will help consolidate Restore’s position as one of the UK’s leading providers of records management services and, in combination with last month’s purchase of Magnum Secure, further strengthens the Group’s presence in the North East of England.

LKS Ingenieria SC, the professional services company offering services from consultancy through to architecture, acquired LKS Studio Prorail SA, an engineering consultancy.

TowerBrook Capital Partners L.P., the US-based private equity firm, has agreed to acquire Independent Clinical Services Limited (ICS), the UK-based company engaged in providing temporary nursing staff on a short term, last minute and emergency basis, from Blackstone Group L.P., another US-based private equity house, for an undisclosed consideration.

The management of Foster + Partners Limited (F+P), the UK-based architectural company engaged in providing infrastructure, architecture and product design services, has acquired a 40% stake in the company from 3i Group plc, the listed UK-based private equity house, for a consideration of €139m.

Middlewich Limited (ML) has agreed to acquire a 57.89% stake in Pochin’s plc, a listed UK-based company engaged in building and civil engineering contracting, property development and letting, house building and specialist plant hiring businesses.

Abbey Logistics Group, the UK-based transport company operating a fleet of 304 vehicles and 386 trailers across three divisions, has acquired the Winsford-, Middlewich- and Immingham-based bulk powder transport operations of Seafield Logistics.

Fastflow Pipeline Services, the UK-based provider of energy and utilities pipeline services, has acquired DW Contractors (Oxford) Ltd, the UK-based property maintenance and refurbishment company, for an undisclosed consideration.

Palatine Private Equity LLP, a UK-based private equity firm, has acquired EPI Group, the UK-based company engaged in providing seismic consultancy services to the energy industry.

Halliburton Company, the listed US-based provider of products and services in energy industry related to exploration, development, and production of oil and natural gas, has acquired Neftex Petroleum Consultants, the UK-based geosciences consultancy firm engaged in earth science research and developing geosciences products and services.

International Schools Partnership increased its investment in Colegios Laude S.L. from 50.7% to 100%. Colegios Laude S.L. owns and operates a network of private schools in Spain that follow the British and Spanish curricula.

In a €851m deal, a consortium of investors consisting of TPG Capital LP, Ontario Teachers’ Pension Plan and PAG Capital have signed a definitive agreement to acquire DTZ from UGL Limited. DTZ, the US-based company headquartered in Chicago but with significant presence in the UK, is a provider of real estate consulting and management services to investors and occupiers.

Colliers International has announced the acquisition of H2SO Property Consultants, the UK-based property consultancy firm, for an undisclosed consideration.

Garbet Cooperativa d’Inserció I, a leading Spain-based cleaning and maintenance firm, has acquired Feines de Casa Cooperativa, a cleaning services company.

The management of The Fresh Group, the UK-based provider of events, design, video, digital, exhibitions, print, and advertising services, has acquired the company in a management buyout transaction backed by NVM Private Equity.