Doughty Hanson in £250m Asco SBO

Greg Gille
28 November 2011

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Doughty Hanson has acquired oil and gas services provider Asco from Phoenix Equity Partners, a deal thought to be worth slightly less than ТЃ250m.

The deal would value Asco at around 8.5x its £29.2m EBITDA. Asco's management team reinvested in the business. Phoenix's returns remain undisclosed. Doughty Hanson is understood to have invested via its fifth fund, which closed on €3bn in 2007.

The Evercore Partners-run sale process started in the summer and attracted a mix of corporate and private equity suitors. Doughty Hanson's rivals in the final bidding stage reportedly included Cinven and AEA Investors.

Doughty Hanson believes that Asco will benefit from sustained demand for energy, and specifically from the trend towards specialist outsourced logistics in this area – a sector protected by substantial barriers to entry according to the buyer.

The firm also stated that Asco performed strongly in the downturn – its turnover has more than doubled since 2005. Other attractive factors include Asco's long-term customer relationships, brand reputation and ownership of key assets.

Debt
The deal was initially funded on an all-equity basis. In August 2012, it was announced that Doughty Hanson had secured a £205m senior debt package from a consortium of banks including Bank of Ireland, DNB, GE Capital, HSBC, ING, Investec, Lloyds, NIBC, and RBS. It is understood that this includes a c£75m provision for acquisitions and investments in systems and infrastructure.

Previous funding
Phoenix backed the £124m management buy-in of ASCO in 2006. The part of the business acquired by Phoenix was put up for sale via a KPMG-run auction by its vendors, Royal Bank of Scotland, Halifax Bank of Scotland and ICG, who had acquired it following a debt-for-equity swap.

Phoenix secured a significant majority stake in the company, with management and mezzanine providers Indigo owning the balance. In addition to the mezzanine debt provided by Indigo, HSBC Leveraged Finance supplied senior debt to leverage the transaction.

Under Phoenix's ownership, Asco's revenues rose from £240m to £516m. Phoenix initially focused on the company's existing operations, notably by appointing several new members in the management team – including CEO Billy Allan – and investing heavily in Asco's IT systems.

The group then completed 10 bolt-on acquisitions to broaden its base of operations, notably expanding in the UK, Canada, Trinidad, Azerbaijan and Australia.

Company
Established in 1967, Asco is an oil & gas logistics company. Its range of services includes offshore and onshore logistics, waste management and freight management. The Aberdeen-based group employs 1,600 staff and generates a £29m EBITDA on revenues of £516m.

People
John Gemmell led the deal for Doughty Hanson. Phoenix was represented by Richard Daw.

Advisers
Equity - HSBC (M&A); PricewaterhouseCoopers (M&A); Skadden (Legal).
Vendor – Evercore Partners (M&A); Travers Smith, Edmund Reed (Legal).