PAI hires Citi for upcoming M Group Services exit

Maryna Irkliyenko , Ryan Gould and Charlie Taylor-Kroll
09 February 2022

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PAI Partners has appointed Citi to explore a sale of its portfolio company M Group Services (MGS), a UK-based infrastructure services provider, three sources familiar with the situation said.

The sale process is expected to start later this year with prospective sponsor bidders starting to engage in coffee meetings with the company's management, the first source said. However, according to a fourth source familiar with the situation, no fireside chats with the management have taken place and there has been no decision taken to proceed with a sale at this point. A sale of the company could take place in or before Q3 2022, as reported by Mergermarket.

Mergermarket reported at the end of January that PAI was weighing a sale of the business and had begun inviting bank pitches.

The Hertfordshire-based company, which provides specialist services to energy, telecoms and transport infrastructure companies in the UK and Ireland, is expected to be marketed based on EBITDA of GBP 120m, as reported by Mergermarket.

Private equity funds such as Triton Partners, Montagu Private Equity, Electra Private Equity and Englefield Capital could end up expressing interest, as reported. Advent International – which sold French infrastructure company Circet to ICG last year – and Apax Partners could also look, as reported.

The upcoming auction comes in tandem with the ongoing process for UK-based utility and infrastructure peer Network Plus, one of the sources said. The founder-owned business, which is marketed based on EBITDA of GBP 50m, hired Rothschild last year to explore sale options, as reported by Mergermarket.

MGS reported revenues of GBP 1.2bn in the year ending in March 2021, down from GBP 1.3bn a year earlier, according to Companies House filings. EBITDA for the period fell to GBP 53.3m from GBP 71.4m. Adjusted for costs relating to the Covid-19 pandemic, the company generated a normalised EBITDA before exceptional items of around GBP 61.4m.

Its expansion over recent years has been helped by a slate of acquisitions including Babcock International's power business and Z-Tech Control Systems, a provider of critical services to the UK's water, energy and rail industries.

PAI and MGS declined to comment. Citi did not respond to requests for comment.