A manufacturing firm is set to invest in its new Teesside subsidiary after securing a multi-million pound capital injection from a private equity investor.
Team Valley-based Express Engineering will accelerate its expansion strategy thanks to the investment by mid-market private equity investor LDC, which has taken a minority equity stake in the business as part of the transaction.
Part of Lloyds Banking Group, LDC backs management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions.
Founded 40 years ago, Express Engineering has grown to employ 375 staff, suppling precision engineering services to the aerospace, sub sea oil and gas exploration and production and power generation sectors from its Gateshead facility and a factory in Sao Paulo, Brazil.
The significant deal enables the management team, led by founder and chairman Chris Thompson and managing director Nigel Davison, to continue to grow the business and capitalise on the bouyant international oil and gas sector.
In August the firm, which turned over £30m for the year ended March 2013, saved 76 jobs when it stepped in to buy engineering firm Burdon Limited out of administration and the entire workforce transferred to the new owners, who also acquired the manufacturing equipment at the Stokesley Industrial Estate factory.
The deal also comprised a virtually completed, freehold, 25,000 sq ft factory which will be finished to accommodate further expansion of the Stokesley operations, and it is understood that part of the LDC investment will fund the growth plans.
Nigel Davison said: “The investment, alongside the operational support from LDC, will strengthen our ability to service a flourishing domestic oil and gas sector, further develop our manufacturing operations in Brazil and explore other foreign market opportunities for growth.”
Chris Thompson said: “Over the past five years we have invested significantly in our premises, our equipment and our people, putting us in an excellent position to take advantage of improving markets.
“This will enable us to further expand operations within the North East region and in doing so, win new business around the world.”
Express and its management team were advised by Newcastle-based PwC Partner Paul Mankin and Martin Hulls of Ward Hadaway.
LDC was advised on the acquisition by Dan Renton from Deloitte’s corporate finance advisory team, while legal advice was provided by Jonathan Jones of Squire Sanders.
A package of senior debt facilities to support the transaction was provided by Express’ long term banking partner Lloyds Bank. The deal was led by Director Jimmy Williamson from Lloyds Bank’s Acquisition Finance team and Commercial Banking’s Head of Mid Markets for the North East and North Cumbria, Mike Mullaney.
Charlie Barker, assistant director at business advisory firm Deloitte said: "LDC’s investment in Express Engineering is the perfect example of an exciting investment-for-growth deal and it certainly reflects the mood of the market. Deals are moving at their fastest rate in many years as banks and private equity houses are keen to invest combined with increasingly positive end market conditions.
“Express Engineering is an exceptional, internationally regarded business grounded in the strong manufacturing and oil and gas industries of the North East - making it an attractive investment for both debt and equity.
“The Deloitte team involved advisors from across our practice meaning that we could offer a locally delivered service within a short timeframe; we’re pleased to see the deal come to fruition so quickly so that the business can focus on doing what it does best, serving demanding customers with exceptional levels of service.
“The deal is further evidence of increased confidence and positive market conditions, as demonstrated in our recent CFO survey which showed that that CFO optimism is close to a three year high. The deals market has been through a measured period but now we are seeing an upturn in activity as a result of renewed optimism.”