Magnesium Capital, BMO Global acquire Cyberhawk

Katharine Hidalgo
29 March 2019

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Magnesium Capital and BMO Global Asset Management have acquired Edinburgh-based energy asset inspection service Cyberhawk.

Funds managed by BMO have acquired a majority share in the business. Management reinvested and continues to hold a stake.

The transaction represents a full exit for Scottish Equity Partners (SEP) and Scottish Investment Bank.

Magnesium is a fundless sponsor. In this transaction, the firm advised funds managed by BMO in Edinburgh that provided the equity for the deal. Magnesium managing partner Ian Jones and Andrew Carnwath, a director in the private equity team at BMO, will join the board of Cyberhawk.

Following the transaction, the company plans to expand into the US, develop its iHawk technology and pursue strategic M&A activity. Jones told Unquote: "This is a fast-growing but developing space that is quite fragmented, so we see plenty of M&A opportuntity over the coming years." It has recorded a compound annual growth rate of 30% since 2011.

Debt finance was provided by existing lender Clydesdale Bank's growth finance team.

Previous funding
In 2012, SEP invested an undisclosed amount in the company.

SEP led a £1.25m investment in Cyberhawk in 2013. Scottish Investment Bank also contributed to the funding round.

The company received debt financing of £2m from Yorkshire Bank and Clydesdale Bank in 2016.

Company
Edinburgh-based Cyberhawk delivers high-precision inspections of energy assets globally, using unmanned aerial vehicles or drones. With offices in Abu-Dhabi, Kuala Lumpur and Houston, Cyberhawk has flown more than 30,000 commercial missions in more than 30 countries around the world. Its services range from condition monitoring and 3D visualisation to monitoring site construction progress. It employs 60 people and was founded in 2008.

People
Magnesium Capital – Ian Jones (managing partner).
BMO Global Asset Management – Andrew Carnwath (director, private equity team).
Scottish Investment Bank – Kerry Sharp (director).
Cyberhawk – Chris Fleming (CEO).

Advisers
Equity – EY (financial due diligence); Burness Paull (legal); Intuitus (IT due diligence).
Vendors – Acuity (M&A); EQ Accountants (financial due diligence); Thorntons (legal).