Control business generates fourfold return for PE House

Date

Intelligent buildings specialist i2S Group Limited has sold its controls division to Carrier Corporation. Clearwater Corporate Finance advised the shareholders of i2S, including the London-based private equity firm Kelso Place Asset Management, on the sale which will see Kelso achieve a return of 3.9 times its original investment. Kelso retains a majority stake in the remaining data communications business, ITM Communications Limited.

i2S is a leading provider of integrated building control and data communication systems, primarily for commercial office buildings and data centres. Employing around 110 people in key locations around the UK, including London, Maidstone, Milton Keynes and Cambridgeshire, i2S has a client base that includes leading names such as Canary Wharf, Fujitsu, HP Enterprise Services, Aviva, Nomura, UBS and Amec.

Kelso Place made its initial investment in i2S in late 2003, when it purchased the business and assets of ARQ Communications Limited from administration and undertook a rapid turnaround of the business.

After stabilising the business and creating a strong platform for growth, Kelso Place worked closely with management to complete three acquisitions and one disposal, which have transformed i2S into a high margin, high growth intelligent building and energy control systems company.

Carrier Corporation is the world’s largest provider of air-conditioning, heating and refrigeration solutions, with a focus on the innovation of environmentally sound products. It is owned by United Technologies Corporation (UTC), a diversified company whose segments include Carrier heating and air conditioning, Hamilton Sundstrand aerospace systems and industrial products, Otis elevators and escalators, Pratt & Whitney aircraft engines, Sikorsky helicopters, UTC Fire & Security systems and UTC Power fuel cells.

Paul Newell, partner with Clearwater Corporate Finance said: “Kelso Place’s skills have helped to turn a once-failing business into a fast-growing company. The disposal of the controls division has allowed it to achieve an impressive return on its investment while retaining a majority stake in the core business. It has also given Carrier Corporation the opportunity to extend its portfolio of innovative products.”

Philip Weston, partner of Kelso Place and chairman of i2S Group, said: “i2S provides an excellent example of the value that Kelso Place creates. Having taken the business out of administration, we worked closely with management to refine the strategy and then create additional value through tactical acquisitions and their subsequent integration. Together, this has helped transform a low margin loss making business into the high margin, high growth market leader we see today. By leveraging our turnaround and corporate finance expertise, we have been able to work alongside management to create far more value than would typically have been the case in a normal turnaround.”