Beck and Pollitzer (United Kingdom) - Nov 2007

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01 November 2007

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Hermes Private Equity has acquired engineering services business Beck & Pollitzer Ltd in a £55m quaternary buyout from Bank of Scotland Integrated Finance (BOSIF). Hermes had been tracking the business for some time and already knew the management team when Close Brothers Corporate Finance was mandated to run a formal auction process, which targeted private equity buyers. Hermes believes the relationship it built with management, especially as the process played out, helped it to win the deal. The deal sees Hermes take a 55% stake in the newco. Royal Bank of Scotland provided a debt facility of approximately £30m to support the deal.

Hermes was attracted to the deal due to Beck & Pollitzer’s clear market-leading position in a fragmented market. The company has good opportunities for growth as its clients seek to partner with a firm which has a proven international track record. Beck & Pollitzer will continue to invest in expanding its geographical presence and broadening its range of services.

Exit deal

BOSIF achieved an overall equity return of 2.9x funds invested, equating to an IRR of 48% over its three-year holding period.

BOSIF backed the £28.8m tertiary management buyout of Beck & Pollitzer in December 2004 from Gresham Private Equity (24 January 2005, page 33). Gresham acquired the business in 1998 in a £28m BIMBO deal from Schroder Ventures (now Permira) (23 March 1998, page 21). Gresham invested £7.2m in that deal alongside bank facilities provided by Bank of Scotland. Schroder Ventures acquired the company in 1994 from Transport Development Group for £10.1m (2 May 1994, page 7).

Company

Founded in 1863, Dartford-based Beck & Pollitzer has 15 offices in the UK, the Czech Republic, France, Germany, Hungary, Poland, Russia and Slovakia. It is also in the process of establishing operations in Turkey. The engineering company specialises in installing and relocating manufacturing businesses.

Beck & Pollitzer carries out a lot of its work in Central and Eastern Europe. In addition to benefiting from the continued trend of Western manufacturers to relocate to Central and Eastern Europe, Beck & Pollitzer, also expects to grow due to growing demand from manufacturers to set up new engineering facilities in that region. Increasing wealth and consumer demand in these markets are fuelling demand for new installations. The business has a turnover of approximately £60m and employs approximately 300 full-time staff.

People

Tim Thomas and Stephen Bonnard led the deal for Hermes, with Thomas joining the Beck & Pollitzer board. David Mowat and Aneeta Nayak led the exit for BOSIF. Paul Wood worked for Royal Bank of Scotland on the deal. Hermes is backing the current team of chairman Michael Barry and managing director Norman Davies.

Advisers

Management - Travers Smith, Hannah Manning (Legal)Purchaser - Clearwater Corporate Finance, David Ford, Marc Gillespie (Corporate Finance)Purchaser - Linklaters, Richard Youle , Tom Jaggers (Legal)Vendor - Close Brothers Corporate Finance , Gareth Davies, Manuel Sammut, Tim Evans (Corporate Finance)Vendor - Travers Smith, Andrew Roberts, Matthew Ayre (Legal)

Sourced from: UK & Ireland unquote" 357 (Nov 2007)