Inflexion sells Rhead in £36m trade sale

The £36m purchase price comprises £26m to be paid in cash to Inflexion plus an additional £10m reaped by Rhead's senior management team, £3m of which will split into two identical deferred payments for August 2016 and August 2017.

The trade sale will see Rhead become part of Costain's natural resources division before the end of the 2015-2016 financial year.

Inflexion is understood to have been eyeing an exit for Rhead as early as August 2014. At the time, press reports stated a sale was also being explored for London-headquartered marine travel specialist Griffin Global Group, which was ultimately divested for a 2.8x return to corporate ATPI in a £120m trade sale in December 2014.

Including Rhead, the GP has offloaded six companies so far this year. Notable exits include the £120m trade sale of British manufacturer Soil Machine Dynamics and a £105m SBO of pump provider Aspen Pumps which saw Inflexion reap a 14x return as it divested the company to 3i.

Most recently, the firm scored 7.7x its initial investment in employee software developer Reward Gateway when the company was sold to US private equity firm Great Hill Partners in a £140m SBO.

Previous funding
According to unquote" data, Inflexion became a minority shareholder in Rhead in June 2011. Although the GP's contribution was undisclosed at the time, equity was drawn from its £165m 2006 Buyout Fund, which typically deploys £5-15m for buyouts within the UK mid-market.

The firm has since backed Rhead's strategy to grow via acquisitions. Four bolt-ons have been sealed during its four-year tenure, including Australian energy consultancy JPA Associates and British project management advisory firm OTC Optima.

Company
Founded in 1985, Rhead is a consultancy specialising in the infrastructure, construction and asset management sectors. The business provides engineering, project management and conflict resolution services to clients in the energy, transport and defence industries such as National Grid and Wales & West Utilities.

With head offices in Coventry, Rhead is also active in the Middle East and Asia-Pacific regions, and employs 750 people worldwide. In 2014, the company posted £63.5m in revenues and an EBITDA of £5.2m.

People
Inflexion's work on the deal was led by managing partner Simon Turner and investment director Malcolm Coffin. Andrew Wyllie is CEO at Costain, while Nigel Curry holds the same position at Rhead.

Advisers
Vendor – Catalyst Corporate Finance (Corporate finance).

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