Premium sectors primed for buy and build booms

Greentech, ecommerce, infrastructure and what's lighting up the British Business Bank funds?

Hello Rainmakers,

Congratulations to everyone who’s either completed a deal this week, or enjoyed themselves at our summer party in Birmingham last night.

For our end of week wrap up we’ve pulled together a few sectors prime for a burst of buy and build activity.

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GREEN ENERGY BUY AND BUILD AT A PREMIUM

Last Friday we speculated that private healthcare deals might be attracting a premium in the expectation that an incoming Labour government wants to use their capacity to drive down waiting times

The Green industrial plan and the ambitions to install ground source heat pumps is also driving interest in the sector, where we’re seeing more buy-and-build activity.

This week Hometree, a residential energy services company, acquired Sheffield-based renewable energy installer, IMS Heat Pumps.

Hometree was founded in 2015 with an initial focus on home emergency breakdown and insurance, but you go where the opportunity is and it has since expanded into renewable installations and financing, positioning itself to install low-carbon home energy solutions and has signed up over 100,000 customers who rely on it to keep their homes running smoothly with emergency heating, plumbing, electrical repairs and maintenance plans, which are delivered by a nationwide network of over 5,000 engineers and installers.

In addition, through its Hometree Finance division, the company has a portfolio of residential heat, solar and battery leases which it finances and owns, so homeowners can benefit from lower energy bills, without the upfront cost of installation.

With targets set to have 600,000 heat pumps installed in the UK by 2028, Hometree says it aims to capitalise on this by acquiring IMS Heat Pumps.

Emma Bohan, managing director of IMS Heat Pumps, said she’s watched the renewable home energy industry grow and grow.

It’s all part of BlackRock’s buy and build strategy where it has backed Hometree with more than £85m in funding to support its acquisition strategy.

It is also backed by one of Europe’s largest asset managers in Legal & General Capital, alongside a range of specialist energy investors including Energy Impact Partners, Inven Capital and 2150.

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KEEPING THE LIGHTS ON

Also high on the list of hot sectors has to be critical national infrastructure.

Renew, a Leeds-based engineering services group, acquired Salford-based Excalon for £26m, which will allow Renew to expand into the electricity transmission and distribution market.

Excalon is an infrastructure contractor specialising in the provision of high voltage and extra high voltage infrastructure to the UK electricity sector.

It has a number of long-term frameworks with electricity Distribution Network Operators (DNOs) across the UK.

The UK electricity DNO market is regulated by Ofgem and operates in five-year control period funding cycles.

Also, Stockport-based energy transition and utilities infrastructure services company, OCU Group, has acquired Scottish engineering business, RJ McLeod.

McLeod is based out of Glasgow and Dingwall and has a more than seven-decade history of delivering complex engineering solutions to a wide range of clients in Scotland.

The acquisition increases OCU Group’s revenues to more than £800m and grows the capability and capacity for work in supporting the critical UK energy transition.

Also, a £300m deal to fund the UK’s first commercial-scale liquid air energy storage (LAES) plant at Carrington in Manchester was agreed when Highview Power secured the backing of the UK Infrastructure Bank and energy industry leader Centrica in the £300m funding round, alongside a syndicate of investors including Rio Tinto, Goldman Sachs, KIRKBI and Mosaic Capital.

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BUY AND BUILD IN THE EDTECH SECTOR TOO

Unseen Group, the Manchester-based software and employability solutions provider, has received a multimillion-pound investment from Pelican Capital, including acquisition funds, it announced on Thursday morning (June 13).

The Manchester-based group, trading as GradTouch Ltd, also secured a multimillion-pound acquisition facility from ThinCats. It’s an exit for Maven too, but also these funds will be used to pursue strategic acquisitions in the early careers sector.

This infusion of capital equips Unseen with the resources to expand its operations and enhance its portfolio with cutting-edge Rec-Tech and Ed-Tech businesses. This will bolster its market offering and drive its strategic acquisition strategy.

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SWEET SPOT FOR BRITISH BUSINESS BANK FUNDS

We’re curious about what the investment sweet spot is for the regional funds and their fund managers. 

When the new contracts were awarded, Ken Cooper of the British Business Bank was excited that some of the state aid rules that restricted investments had been lifted. 

In the South West this week a digital e-commerce and marketing specialist, Evo Agency, received a six figure investment boost from Business Bank’s South West Investment Fund (SWIF) via appointed fund manager FW Capital.

The agency says the investment will create up to 20 new jobs over the next five years at the Somerset-based agency.

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CONGRATULATIONS TO ALL THE WINNERS

It was our Rainmaker awards in Birmingham last night and Paul Franks, managing partner of Beech Tree Private Equity was named Rainmaker of the Year, as the West Midlands corporate finance finest were recognised at a packed awards evening.

Around 300 people joined us at a summer party at the Macdonald Burlington, Birmingham, to celebrate the best deals and teams from the past 12 months, as voted for by the corporate finance community themselves in a one-firm, one-vote system.

On the 3rd and 4th of July it’s the turn of Manchester and Leeds.

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