BUILDING PRODUCTS & SERVICES UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
2019 | MERGERS & ACQUISITIONS UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
CONTENTS
INTRODUCTION...... 01 MARKET LANDSCAPE...... 02 SNAPSHOT OF UK HIRE COMPANIES...... 03 UK PUBLIC COMPANIES...... 06 GLOBAL M&A ACTIVITY...... 08 UK M&A ACTIVITY...... 10 VALUATIONS...... 12 PLANT HIRE & CONSTRUCTION...... 14 RESHAPING THE FUTURE AFTER BREXIT...... 16 MARKET DEVELOPMENTS...... 17 HELPING YOU ACHIEVE YOUR STRATEGIC GOALS...... 18 CASE STUDY...... 19 OUR CREDENTIALS...... 20 OUR DEDICATED TEAM...... 22 APPENDICES...... 23 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 01
INTRODUCTION
The plant, equipment & tool hire landscape continues to grow and develop as contractors opt to rent rather than deploy capital to buy their own fleet. The UK market has seen sustained and growing demand, and is expected to continue growing at a CAGR of 2.6% over the next five years to reach a value of £7.6bn.1 Public funding for large infrastructure projects, supportive government housing policies and low interest rates will continue to drive demand. In addition, general short-term economic uncertainty will push more contractors to hire rather than tie up capital in fleet. As Brexit plays out there may be short-term drags on growth in the construction market, which accounts for around two-thirds of the plant hire market. The commercial sector is forecast to face a number of challenges and the weak pound will increase the cost of imported materials. However, long-term fundamentals and the outlook are positive for the plant hire and services sector. M&A activity is rife across the sector, with trade and private equity buyers competing for quality assets. In the UK, despite high levels of consolidation activity, there still remains a largely fragmented supply base. Diversification into specialist hire and adjacent services enables alignment with growth sectors, while enhancing geographical coverage is a another strategic rationale for acquisitions. With Brexit on the horizon, skills shortages intensifying, new business models and technologies emerging, this is a good opportunity for hire businesses to review strategies and drive change to meet future demands.
Over 100 UK businesses report Average transaction multiple EBITDA margins in excess of in the UK of 6.0x EBITDA 25%
Over 90 UK businesses have 20% of UK plant, equipment CAGR in excess of 10% & tool hire transactions have Private Equity involvement
Over 300 global and 120 Infrastructure construction UK M&A transactions since to rise by 8.7% in 2018 and 2014 7.7% in 2019
1 Source: IBIS 02 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
MAINMARKET PAGE LANDSCAPE TITLE MAINSPECIALISMS PAGE SUBTITLE AND SERVICE RANGE ARE KEY TO SUCCESS IN A COMPETITIVE MARKET
A FRAGMENTED AND have firepower to do so have been building ANALYSIS OF MAJOR PLAYERS CHALLENGING MARKET market share through strategic acquisitions to increase capabilities, geographic coverage We have analysed the plant, equipment The UK plant, equipment & tool hire and create a more defensible market & tool hire landscape to identify the market is highly fragmented with UK public position. Ashtead, VP, Aggreko, Speedy major players in the UK market. Divisions companies representing just a quarter of Hire and AFI-Uplift have all made multiple of larger groups holding significant SUBHEADINGthe market. Low LEVELbarriers 1 to entry mean that SUBHEADING LEVEL 1 acquisitions during the last three years. asset fleets for internal use have not Bodythere textare many operators creating a highly Body text been included in our analysis, nor have competitive environment. Some have developed capabilities in companies whose principal activity is specialist market niches where it is possible High levels of competition and intense equipment manufacture. to drive higher margins. VP has targeted the price pressure have impacted less resilient development of market leading positions The analysis reveals a healthy contingent businesses. At the commodity end of the in niche sectors including rail, transmission, of high margin and high growth market, characterised by lower margins, there water, and oil & gas. Andrews Sykes and businesses: is little buffer if activity reduces. Hire rates have Carrier Rental Systems (a subisidiary of been relatively static in recent years, making it • 50 businesses report turnover in United Technologies) target environmental harder to sustain investment to grow. excess of £50m control equipment, while Centurion, which A number of businesses have inevitably started out as a specialist rental company • Over 100 UK hire businesses report succumbed to the pressure. Hewden Stuart to the oil & gas and mining sectors has EBITDA margins of 25%+ is a notable example, which went into diversified its services. • Over the last three years, over 90 UK administration in 2017 with debts of more Private equity continue to be active plant hire businesses have grown at than £200m. Management cited uncertainty players in the sector. Recent transactions over 10% CAGR caused by the vote to leave the EU as a include Business Growth Fund’s backing of major contributory factor, which adversely • Many fast growing companies are: Plantforce Rentals, the secondary buy-out affected a number of large construction -- part of a larger group of Kelling Group by Alinda Capital Partners projects. Other companies have been from Elysian, and The Carlyle Group’s -- backed by private equity impacted, for example HSS issued a number backing of EnerMech, replacing Lime Rock -- provide adjacent complementary of profit warnings, and has since refinanced Partners. Experience suggests private equity services and restructured the group. are often well positioned to help drive -- operate in a specialist area. In spite of the pressures, a great number of operational improvements and support other businesses are succeeding. Those that management to steer a defensible course. UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 03
SNAPSHOT OF UK HIREMAIN COMPANIES PAGE TITLE HIRE FLEET NBV CORRELATES MORE STRONGLY TO EBITDA MARGINMAIN THAN PAGE REVENUESUBTITLE
FIGURE 1: SNAPSHOT OF LARGER UK HIRE COMPANIES BY KEY INDUSTRY KPIS
60%
SUBHEADING LEVEL 1 SUBHEADING LEVEL 1
Body text Charles Wilson Body text 50% Engineers Ardent Hire
40% Gap Group Selwood P Flannery Plant Go Plant Hire
Andrews Sykes John 30% Nixon
EBITDA% Quattro VP Plant
Balfour Carrier G Walters Rental AFI-Uplift 20% Systems UK Select Plant TXM L Lynch Speedy Plant Hire
Mammoet Thomas UK Armstrong
10% Clive Barford Please note this analysis excludes Ashtead which is the UK market leader, reporting UK turnover of £472m and 35% EBITDA margin, while group revenues are Bubble represents revenue £m £3.7bn, with 47% EBITDA margin. 0%
100 200 300
Hire fleet net book value £m 04 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
SNAPSHOT OF UK HIRE COMPANIES PRIVATE EQUITY AND LARGE CONTRACTING GROUPS HAVE BEEN SUCCESSFUL IN DRIVING GROWTH
FIGURE 2: SNAPSHOT OF FASTEST GROWING BUSINESSES IN PLANT HIRE
60%
50% TXM Plant
Collins 40% Thorn Plantforce Plant Hire Rentals Earthworks Actavo Group Danfords Amberon Hawk Plant JRL Group Volkerbrooks P Flannery Plant Hire L&J Webb 30% Plant John Group Hanlon Story Gibson & Co Bros Contracting O'Brien 3 year CAGR% Contractors AGO Peri Holdings Bennie City Lifting Power 20% EOM Electrics Rail
King Lifting J Devine Civil Engineering
10%
Contracting Private Equity Private group backed business business 0% 0 10 20 30 40 EBITDA £m
• Please note this analysis excludes businesses which have made transformational UK acquisitions, such as Loxam which has exponentially increased its UK presence. • The analysis also excludes Ashtead, which is many times larger than the other businesses featured above and has achieved 22% CAGR over the last 3 years. UK subsidiary A-Plant has grown at 13% CAGR and reported 2018 EBITDA of £167m. UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 05 06 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
UK PUBLIC COMPANIES REPRESENTING JUST OVER A QUARTER OF THE UK MARKET
FIGURE 3: ESTIMATED UK MARKET SHARE OF UK PUBLIC COMPANIES
Ashtead (7.2%) Speedy Hire (5.9%) VP (5.4%) HSS Hire (5.0%) Aggreko (1.7%) Andrews Sykes (1.0%) OTHER (73.4%) Northbridge Industrial (0.4%)
AGGREKO ANDREWS SYKES ASHTEAD 1.7% 1.0% 7.2% 30% EBITDA margin 33% EBITDA margin 48% EBITDA margin • Generator specialist, offering • Very broad range of equipment temporary power generation services • Offers pumping, heating and cooling solutions through Sykes Pumps provided to diverse end-markets. and temperature control equipment. UK subsidiary operates under the Key end-sectors include construction, and the Andrews family of climate control solutions. A-Plant brand name, and supplies infrastructure, oil & gas and mining. a wide range of construction • A regular acquirer of power • 30 depots in the UK and a growing equipment for rental. generation hire businesses around presence in Western Europe and the Middle East. • US remains the group’s biggest & the world. Acquired Younicos in 2017, fastest growing market and at five which adds smart energy solutions to times the size of the UK, it is a core the portfolio. focus for group investment. High levels of acquisitive growth are also planned for Canada. • Ashtead plans to extend market share in the UK via responsible bolt- on acquisitions.
NORTHBRIDGE INDUSTRIAL SPEEDY HIRE VP 0.4% 5.9% 5.4% 17% EBITDA margin 20% EBITDA margin 26% EBITDA margin • Provides specialist industrial • Core market is construction rental, • Specialist rental business with equipment to the utility, oil & gas, where Speedy has relationships with seven core divisions serving rail, shipping, construction and public 85 of the top 100 UK contractors. transmission, water, civil engineering, sector markets. • Withdrawing from Middle East and construction, housebuilding and oil & • Growth through acquisitions in the renewing focus on the UK market, gas markets. UK and internationally. Future targets SME customers, its service guarantee • Acquired tool hire specialist will operate in the power-critical or and digital capabilities. Brandon Hire for £69.2m, which oil services markets. • Building its specialist and service is complementary to VP business offering by acquisition. Has acquired Hire Station. rail equipment and powered access • Further acquisitions will continue the businesses and entered the testing group’s focus on specialist rental and & inspection market with the developing market leading positions acquisition of Lloyds British. in niche sectors. UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 07
SUBHEADING LEVEL 1 Body text
HSS HIRE 5.0% 19% EBITDA margin • Focuses on the “maintain” and “operate” segments of the tool and equipment hire market, in contrast to providing large plant geared to construction activities in the “new build” segment. • Floated on the LSE in 2015 by Exponent Private Equity but issued a series of profit warnings due to intense competition from Speedy Hire and a move to a new operating model. • Recent refinancing completed, and restructuring of group underway, including sale of UK Platforms to Loxam, plus reconfiguring supply chain model to reduce costs in tool hire. 08 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
GLOBAL M&A ACTIVITY ACTIVE M&A SECTOR GLOBALLY
FIGURE 4: VOLUME OF DEALS DEAL COMMENTARY • The volume of transactions in the plant, 100 equipment & tool hire market has increased year on year since 2014. 80 • Over 300 transactions have completed since 2014 and while 2018 has seen 60 continued activity, some of the most 40 active acquirers including Ashtead, VP and Kiloutou are taking time to integrate acquisitions. 30 • The sector is attractive to private equity, 0 who represent 15% of all transactions. In 2014 2015 2016 2017 2018 the UK, this proportion increases to 20%. (9 months) Trade Private equity IPO • Cross-border transactions account for a rising proportion of deals, as businesses take advantage of opportunities to enter Source: Mergermarket, MarketIQ and company announcements new markets and build scale overseas. • The UK represents 18% of cross-border FIGURE 5: CROSS BORDER TRANSACTIONS bidders, but 29% of cross-border targets, indicating the high attraction of the UK Domestic Cross border Total Cross border % to overseas acquirers. 2014 46 11 57 19% 2015 55 11 66 17% 2016 57 16 73 22% 2017 69 19 88 22% 2018 31 10 41 24% 258 67 325 21%
Source: Mergermarket, MarketIQ and company announcements
FIGURE 6: PRIVATE EQUITY TRANSACTIONS
15%
Trade Private equity
85%
Source: MarketIQ and Mergermarket UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 09
GLOBAL M&A ACTIVITY UK AND US DOMINATE THE M&A LANDSCAPE
FIGURE 7: THE TOP 15 GLOBAL ACQUIRERS ACCOUNT FOR 27% OF ALL TRANSACTIONS
UK Europe North America Ashtead Kiloutou United Rentals VP Loxam Cooper Equipment Rentals Aggreko Cramo Maxim Crane Works Holding AFI-Uplift Boels Verhuur H&E Equipment Services Speedy Hire Atlas Copco TNT Crane & Rigging
FIGURE 8: VOLUME OF TRANSACTIONS SINCE 2014, BY BUYER AND TARGET COUNTRIES
Most active buyers
140 Buyer country Target country 120
100
80
60
40
20
0 Australia Canada Denmark Finland France Germany Hong Japan Netherlands Spain Sweden United United Other Kong Kingdom States
AUSTRALIA CANADA FINLAND FRANCE SWEDEN UK US
• Emeco Holdings • Cooper Equipment • Cramo • Kiloutou • Atlas Copco • Ashtead • Sunbelt Rentals Rentals • Ramirent • Loxam • Kranpunkten • VP (Ashtead) • Robit • Altrad Skandanavien • AFI-Uplift • United Rentals • Aggreko • Maxim Crane Works • Hewden Stuart • TNT Crane & Rigging • HSS Hire • H&E Equipment Services • BlueLine Rental
Source: MarketIQ and Mergermarket 10 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
UK M&A ACTIVITY A HIGHLY COMPETITIVE MARKET…
FIGURE 9: UK M&A HIRE TRANSACTION VOLUMES SINCE 2014
40
30
20
10
0 2014 2015 2016 2017 2018 (9 months) Trade Private equity
FIGURE 10: PRIVATE EQUITY TRANSACTIONS
20%
Trade Private equity
80%
Source: MarketIQ and Mergermarket UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 11
…WHERE ACQUISITIONS BRING STRATEGIC ADVANTAGE
COMMON STRATEGIC RATIONALES FOR ACQUISITIONS IN THE UK PLANT, EQUIPMENT & TOOL HIRE MARKET
Core strategic rationale for acquisition Deal example
Financial investment • Alinda Capital’s secondary buyout of Kelling Group from Elysian
Geographic bolt-on • Adastra Access (Walsall) acquisition of Yorkshire Hoist
Market share and product range • VP’s transformational acquisition of Brandon Hire
High growth markets (e.g. infrastructure) • Quattro Group’s acquisition of AB 2000
Specialist markets • Speedy Hire’s acquisition of Prolift Access and Platform Sales & Hire, both providers of powered access equipment • HSS’ acquisition of Apex Generators and All Seasons Hire
Enter adjacent markets • Readypower’s acquisition of Terrawise Construction (contracting services) • Speedy Hire’s acquisition of Lloyds British (TIC services)
Further penetration into UK market • Loxam’s acquisitions of Lavendon and UK Platforms • Boel’s acquisitions of Supply UK Hire, Already Hire, Artisan Hire Centre and Survey & Safety Equipment Hire & Sales
Enter / develop overseas markets • Ashtead’s acquisitions of Pride Equipment and CRS Contractors Rental Supply 12 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
VALUATIONS AVERAGE TRANSACTION MULTIPLE OF 6.0x EBITDA
DISCLOSED TRANSACTION VALUATIONS The vast majority of deals taking place in the UK market have been less than £50m in value, and just under a third of disclosed deals could be described as smaller transactions under £10m value. Overall, the average multiple in the plant hire market has been 9.6x EBIT or 6.0x EBITDA. These deals represent a relatively high quantity of large, and often specialist hire businesses.
FIGURE 11: DEAL VALUES SINCE 2014 (DISCLOSED DEALS)
14% £0-10m 30% £11-50m 14% £51-200m
£201m+ 42%
FIGURE 12: SUMMARY OF DISCLOSED TRANSACTIONS SINCE 2012
18.0 dotted line denotes average 16.0 14.0 12.0 10.0 8.0
Multiple 6.0 40 2.0 0 EBIT EBITDA EBIT EBITDA EBIT EBITDA UK transactions UK Private Equity Total plant hire
Source: MarketIQ and Mergermarket UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 13
COMPETITIVE TENSION PUSHING UP VALUATIONS Private equity have long been attracted to the plant, equipment & tool hire sector, with its asset-backed profile providing investment security and EBITDA profile ensuring attractive returns. We expect consolidation in the UK to continue apace and for proven businesses to be in demand. Private equity have cash ready to invest in the market, stiffening the competition with trade buyers and increasing the potential to drive high values.
QUOTED COMPANY TRADING MULTIPLES The UK market boasts some of the largest international plant hire companies, including Ashtead, which has a significant presence in the North American market. Average quoted company trading multiples in the UK market are 6.6x EBITDA and 11.7x EBIT and have averaged 7.0x EBITDA and 11.3x EBIT over the last twelve months. In international markets figures are slightly lower, with current trading multiples of 5.2x EBITDA and 10.5x EBIT, however, the average over the last twelve months increases in line with UK public companies to 7.1x EBITDA and 12.0x EBIT.
FIGURE 13: CURRENT YEAR PUBLIC COMPANY MULTIPLES
18.0 dotted line denotes average 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0 EBIT EBITDA EBIT EBITDA
UK International
Source: CapitalIQ and Mergermarket Information as at the time of writing 14 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
PLANT HIRE & CONSTRUCTION KEY MARKET DEPENDENCIES
CONSTRUCTION HIGHLIGHTS
CONSTRUCTION INFRASTRUCTURE PRIVATE HOUSING OUTPUT TO RISE CONSTRUCTION TO STARTS TO RISE 2.0% IN 0.6% IN 2019 AND RISE BY 8.7% IN 2018 AND 2019 AND 1.0% IN 2020 1.9% IN 2020 7.7% IN 2019
MIXED OUTLOOK FOR THE CONSTRUCTION SECTOR WITH INFRASTRUCTURE ACTIVITY BEING A KEY DRIVER • Construction is estimated to account for around two-thirds of the plant hire market. The CPA forecasts output to remain flat in 2018 before an increase of 0.6% in 2019 and 1.9% in 2020. • Growth over the next two years is set to be heavily dependent on housing outside London, buoyed by Help to Buy, and infrastructure. • Slower UK economic growth and Brexit uncertainty are impacting the commercial sector: output is forecast to fall by 7.1% in 2019 before remaining broadly flat in 2020. • Infrastructure continues to be a key driver of growth with road and rail projects including HS2 picking up in 2019. • The National Productivity Fund has increased from £23bn to £31bn and a £600bn pipeline of investment in infrastructure has been announced for the next ten years. • Infrastructure output forecast to rise to £23bn by 2020, which is the highest level on record. • Foreign investors see infrastructure as an attractive prospect, especially following the weakening in Sterling.
FIGURE 14: PRIVATE AND PUBLIC STARTS / COMPLETIONS
250,000 10% 8% 200,000 6% 4% 150,000 2% 0% 100,000 -2% 50,000 -4% -6% - -8% 2012 2013 2014 2015 2016 2017 2018E 2019F 2020P
Total housing starts Total housing completions Construction output %
Source: CPA UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 15
FIGURE 15: COMMERCIAL OUTPUT BY SUBSECTOR
35,000 30,000 25,000 20,000 15,000 £million 10,000 5,000 0 2012 2013 2014 2015 2016 2017 2018F 2019P 2020P
Offices Entertainment Education Retail Health Other
Source: CPA
FIGURE 16: INFRASTRUCTURE OUTPUT BY SUBSECTOR
25,000
20,000
15,000
£million 10,000
5,000
0 2012 2013 2014 2015 2016 2017 2018F 2019P 2020P
Electricity Roads Rail Water & sewerage Other
Source: CPA 16 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
RESHAPING THE FUTURE AFTER BREXIT AN OPPORTUNITY TO EMBRACE CHANGE AND DIVERSITY
WILL THE REAL BREXIT PLEASE HANDLING THE SKILLS NEW EMISSIONS LEGISLATION STAND UP? SHORTAGE EXPECTED IN 2019 While speculation and uncertainty Highways England estimates the There are increasing environmental abound, what we expect is for some kind requirement for a 50% increase in the requirements related to pollution and of transition agreement to be in place, workforce over the next four years. Above vehicle emissions. In October 2017, the to allow UK businesses adequate time all, recruitment is seen as the biggest London Emissions Surcharge came into to adjust, and for implementation of challenge currently facing the industry. effect, forcing operators in the region to the practical changes required. The CPA invest in more environmentally friendly The workforce is ageing and the next industry forecasts assume a five-year equipment. generation needs to be trained. The sector agreement to ensure an orderly transition. needs to work on developing opportunities In May 2018, the Government published its Currently, economic indicators suggest and career pathways that are attractive Clean Air Strategy, which will be finalised in “business as usual” with IHS Markit/ CIPS and competitive with other sectors. 80% March 2019, alongside legislation to tackle reporting manufacturing business optimism of respondents to a CPA survey did not air pollution. rising in September 2018, with 53% of firms employ apprentices, highlighting an The establishment of a register of off- expecting production to increase over the obvious gap in developing the availability road machinery has been touted, which next 12 months. of apprenticeship training and taking would enable local enforcement, including advantage of the Apprenticeship Levy. What will the likely impact be on the plant compliance checks, information on hire market? The sector needs to upgrade its image, retrofitted equipment together with an messaging and appeal to attract young emissions labelling scheme. It could be In short, fortunes will be mixed. While people into the sector in the first place, a harmful for businesses that don’t have some projects may stall, reducing plant hire programme which should cascade through ready access to investment funds to requirements, slowing investment could colleges and schools. The alignment of upgrade their fleet. benefit some operators, with contractors young people with digital developments in more likely to lease or rent equipment the sector will drive significant benefits. to avoid substantial capital outlay while construction activity is reduced. Price Brexit may be the catalyst needed for pressures may intensify as currency change. It will create opportunities fluctuations hit contractors’ cost base. to diversify the workforce, improve productivity and consolidate the fragmented supplier base.
HIRE FIRMS WILL NEED TO ASSESS HOW THEY CAN MEET THESE CHALLENGES Explore opportunities in new markets? Build up capabilities in specialist equipment or emerging technologies? Diversify services, both to cross-sell and take advantage of growth sectors? Harness digital capabilities to drive operational improvements and efficiencies for customers? These are all options but it is clear that companies will need to update their strategies to meet the challenges ahead. UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 17
MARKET DEVELOPMENTS NEW BUSINESS MODELS AND TECHNOLOGICAL ADVANCES
DO TRADITIONAL HIRE MODELS NEED OFFSITE CONSTRUCTION AND TELEMATICS DRIVING UPDATING? INTELLIGENT MACHINERY INDUSTRY BENEFITS The sector has experienced a fairly low level The Government is pushing offsite of technological change but new models are construction as a means of tackling the SAME DAY DELIVERY emerging which could disrupt the market. £15bn productivity gap in construction. In theory, offsite construction will reduce • Telematics combined with GPS could Customers are increasingly demanding more the need for plant and tools. However, provide the visibility required to flexible rental options and service. Today’s the reality is that true automation of enable a shift towards a same-day 24/7 environment demands agility, flexibility offsite construction is some way off due delivery model and improved cost visibility. to the upfront investment required and its New business models are emerging to meet suitability for standardised projects only. this challenge, for example: The industry will innovate incrementally, FLEXIBILITY • Nationwide Hire and Shareplant act as and there will be new equipment required • Move towards a utilisation model equipment hire brokerage firms, bringing for offsite construction, including intelligent rather than fixed term agreement hire businesses together. Nationwide machinery, which will provide opportunities Hire provides a link between 9,000 for the hire market. • Open up the possibility of new flexible supplier locations with customers options such as hourly charging Intelligent machinery is expected to gain offering supply of equipment same day market acceptance, as automation aids across the UK. operators and improves on-site performance • Speedy Hire has launched a national and efficiency. Robotic bricklayers which can OPERATIONAL IMPROVEMENTS roll-out of its Capital Commitment lay 3,000 bricks a day are already in use and • Minimise downtime campaign, which guarantees customers futuristic concepts are frequently touted same-day delivery on any of its top such as Volvo’s autonomous wheeled loader. • Improve efficiency 50 products anywhere in the UK when • Provide safety KPIs ordered before 3pm.
• Other firms, particularly those in the There are many differing views on the rate commodity end of the hire market, may of change but all agree there will be change need to decide whether they should ahead. One only needs to look back at how follow suit, or at least join one of the far technology has evolved in the last 30 brokerage platforms or devise a strategy years alone. to compete. 18 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
HELPING YOU ACHIEVE YOUR STRATEGIC GOALS
Our corporate finance professionals provide BDO MERGERS & ACQUISITIONS the full spectrum of advisory services to help you achieve your strategic goals. We offer the breadth and depth of advisory SELL SIDE services you would expect from one of the • Corporate strategy world’s largest accountancy firms. • Support through entire sales process • Preparation for sale • Modelling.
BUY SIDE • Bid support • Management advice • Refinancing • Modelling.
STRATEGIC ADVISORY • Reorganisation / share buy-back • Investment / partial cash-out • Growth capital / fundraising.
PLC • Public to private • Listing rules • Buy and sell side advice • Preparation and advisory.
DEBT ADVISORY • Refinancing • Restructuring • Stapled debt. UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 19
CASE STUDY ACQUISITION OF READYPOWER ENGINEERING BY PRIMARY CAPITAL
CLIENT KEY HIGHLIGHTS BUSINESS EVOLUTION Readypower is one of the foremost Securing a favourable working Advised by BDO, Readypower went on accredited suppliers of professionally- capital adjustment. to acquire Terrawise Construction, to operated plant hire services to the form one of the UK’s largest specialist regulated rail sector Cutting through inconsistent and civil contractors. Rebranded as constantly moving historical Readypower Rail Services, the group CLIENT financial data. has extended its services from plant Primary Capital hire to become the UK’s specialist Deconstructed the commercial rail fleet and service provider. BACKGROUND information to get comfortable with the BDO advised Primary on the MBO sustainability of the turnover growth, of Readypower Engineering and margins and utilisation levels (not arranged the debt finance through monitored by the business). PNC Business Credit
HEADQUARTERED PRIVATE EQUITY ACQUISITION Wokingham £31M £13M TURNOVER EBITDA
The level of commitment and dedication shown by the BDO team throughout the process was second-to-none. They showed a rare ability to delve right down into the detail of Readypower’s financial performance whilst not losing sight of the key high-level strategic value drivers. BDO were a pleasure to work with and were a core part of Primary’s deal team from the beginning to the end of the process; they were instrumental in helping us get the deal across the line. ALISTAIR ARMSTRONG Partner, Primary Capital 20 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
A SELECTION OF OUR CREDENTIALS UK PLANT HIRE
MBO OF READYPOWER ACQUISITION OF ACQUISITION OF BFT ACQUISITION OF ENGINEERING BY TERRAWISE BY MASTCLIMBING BY SILTBUSTER BY WORKDRY PRIMARY CAPITAL READYPOWER EQUISTONE GROUP INTERNATIONAL
Plant hire and engineering Engineering services for Rental of mast climbing work Hire of portable water services for the rail sector the rail sector platforms treatment solutions
ACQUISITION OF AFI- ACQUISITION OF APEX ACQUISITION OF RB SALE OF NDS-PLANT BY UPLIFT, ACCESS RENTAL GENERATORS, UK FARQUHAR NETWORK RAIL GULF AND HI REACH BY PLATFORMS AND ABIRD BY ELLIOTT GROUP RUTLAND PARTNERS SUPERIOR BY HSS HIRE
Powered access rental services Generator and platform hire Temporary Rail equipment hire businesses accommodation hire UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 21
BUILDING PRODUCTS & SERVICES
SALE OF CRH SUBSIDIARY ACQUISITION OF VJ SALE OF TECSEDO TO RE SALE OF SCRIGNO GROUP MAVOTRANS TO TECHNOLOGY BY PANELS BACKED BY THE TO CLESSIDRA CAPITAL OAK ISLAND CAPITAL PRIMARY CAPITAL RIVERSIDE COMPANY PARTNERS PARTNERS FROM SIG PLC
Supplier of metal based Distributor of technical fixings, Manufacturer of panels for Manufacturer of frames for sliding construction accessories fasteners and consumables overhead doors doors and windows
SALE OF ML ACCESSORIES SALE OF HOLDRITE TO SALE OF TROJAN SALE OF A MAJORITY TO SLV RELIANCE WORLDWIDE MANUFACTURING INTEREST IN SÄLZER CORPORATION GROUP TO ASSA ABLOY TO SCHÜCO
Lighting products Manufacture of pipe and Architectural hardware Manufacturer of high security plumbing products products for buildings
SALE OF ASCOT DOORS SALE OF OSA DOOR SALE OF LAUK LIGHTING SALE OF ELLARD TO TO DORMA PARTS TO ARGENT TO H&K DISTRIBUTION INDUTRADE INDUSTRIAL
Doors and shutters Industrial doors End-to-end lighting solutions Supplier of drives, motors and controls for doors
SALE OF BILCO SALE OF SMART TO ACQUISITION OF APPLIED SALE OF TOPPESFIELD TO TO TYMAN ACPRODUCTS COMFORT SOLUTIONS BY FM CONWAY CARVER GROUP
Access products Pipe and plumbing products HVAC products Road surfacing 22 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
OUR DEDICATED TEAM SECTOR INSIGHT AND THOUGHT LEADERSHIP
EXPERTS IN THE SECTOR BDO CORPORATE FINANCE UK Our Building Products & Services team was established to work with leading mid-market privately owned businesses and private equity who, like us, believe strongly in the OF UK’S MOST opportunities available in the sector. ONE ACTIVE ADVISERS Our UK team has mapped over 2,000 building product and services companies within the UK, analysing historical financial trends, profitability by sub-sector and high growth COMPLETED DEALS companies. In addition to our sub-sector publications, we publish annual Publications on the 1,200 GLOBALLY IN 2017 Building Products & Services sector, analysing and providing insight into M&A activity, active companies, valuations and market drivers. With deep expertise in the sector we understand DEAL VALUE company strategy, market and commercial drivers and have advised private equity and >$54.4BN portfolio companies at all stages of the investment life cycle. AN AWARD WINNING CORPORATE FINANCE BUSINESS JOHN STEPHAN MITHUN PATEL CONSISTENTLY PARTNER SECTOR CO-LEAD DIRECTOR SECTOR CO-LEAD IN THE LEAGUE TABLES TOP FOUR +44 (0)7979 706 731 +44 (0)7794 059 291 OF DEALS ARE [email protected] [email protected] 30% CROSS-BORDER ALAN CHAN SAPNA SANDHER CORPORATE FINANCE ASSISTANT DIRECTOR ASSISTANT DIRECTOR 2,000 PROFESSIONALS IN THE UK +44 (0)7800 682 871 +44 (0)7800 682 898 COUNTRIES PROVIDING DEDICATED [email protected] [email protected] 100 CORPORATE FINANCE SERVICES MATTHEW GOODLIFFE AMY MAYER SENIOR MANAGER EXECUTIVE
+44 (0)7800 682 418 +44 (0)7583 029 594 [email protected] [email protected] SUSANNAH PERKINS EMMA LEVELLE SENIOR RESEARCH MANAGER RESEARCH ANALYST
+44 (0)7800 682 066 +44 (0)121 352 6236 [email protected] [email protected] UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 23
APPENDICES 24 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
GLOBAL TRANSACTIONS IN 2018 (Q1 – Q3)
Date Bidder Country Target Country Target Product Line Sep 2018 John Nixon UK Mechplant UK Provides contract plant hire services (North East) Sep 2018 PP O'Connor UK Galvac UK Provides vacuum excavation equipment Group Sep 2018 United Rentals US BlueLine Rental US Provides equipment rental services to the construction, commercial and industrial markets Sep 2018 Boels Verhuur Netherlands Artisan Hire Centres UK Provides machinery and tools rental services Aug 2018 Private Group Brazil Ouro Verde Brazil Engages in the rental of heavy machinery and equipment Led By Brookfield Business Partners Aug 2018 Cross Country US Rain 2 Day US Provides temporary water solutions such as liquid storage, irrigation, Infrastructure clear water transmission lines, dewatering and sewer by-passes, as Services well as equipment rental services Jul 2018 TNT Crane & US Allison Crane & US Provides crane contracting services Rigging Rigging Jul 2018 Nationwide France UK Platforms UK Hires powered access equipment to third parties via a network of Platforms / Loxam depots in the UK Jul 2018 Mateco / TVH Germany Flesch Germany Operates an equipment rental agency Group Arbeitsbuhnen Jul 2018 Maxim Crane US Tri-State Crane US Provides crane rental, heavy rigging, plant maintenance and lifting Works Holding services Jul 2018 Stal & Sweden Hyrcenter Nerike Sweden Provides equipment hire services Hyrmaskiner i Varberg Jul 2018 CEDA Canada Breakthrough Canada Owns and operates a fleet of pressure trucks, hot oilers, fluid haulers, International Oilfield Services tank trucks, hydro vacuum, and combination vacuum units Jul 2018 United Rentals US BakerCorp US Provides tank, pump, filtration and trench shoring rental solutions International for a broad range of industrial and construction applications Holdings Jun 2018 Molson Group UK Finlay Group UK Supplies and hires materials processing equipment Jun 2018 Loxam France No Ve Italy Powered access rental company Jun 2018 Corrum Capital US RGCX US Railcar leasing company Management Jun 2018 Sunbelt Rentals / US Above and Beyond US An equipment rental company specializing in the rental of Ashtead Group Equipment Rentals scissorlifts, boomlifts and telehandlers May 2018 Fullsteam US Rental Management US Operator of an equipment rental management software platform that caters to industrial, medical, and logistics equipment rental businesses May 2018 Morris Leslie UK Chertsey Plant Hire UK Provides plant hire services Plant Hire May 2018 Quattro Group UK AB 2000 UK Hires operated plant and equipment May 2018 Pro Oil & Gas US Elite Production US Provider of flowback and well testing, torque and test and crane Services Services rental services May 2018 TH White UK Outreach UK Supplies hydraulic handling, lifting and access equipment for hire UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 25
Date Bidder Country Target Country Target Product Line Apr 2018 Emeco Holdings Australia Matilda Equipment Australia Provides mining equipment maintenance services and earthmoving equipment hire for the mining and construction industries Apr 2018 Renta Group Finland Stal & Hyrmaskiner Sweden Provides construction machinery rental services i Varberg Apr 2018 Private Group United Arab Byrne Equipment United Provides plant and equipment rental services in the Middle East Led by Itqan Emirates Rental Arab Investments, Emirates Tamar VPower Energy Fund I LP and CITIC Pacific Apr 2018 GAP Group UK MV Trench Support UK Hire of shoring equipment to the construction industry Apr 2018 Boels Verhuur Netherlands Already Hire UK Provides commercial and industrial equipment rental services Mar 2018 Hitachi Japan Acme Business US Engages in equipment rental services Construction Holdco Machinery Co Mar 2018 P27 Bidco UK Frost Investments UK Provides short term refrigeration equipment rental Mar 2018 Oceaneering US Ecosse Subsea UK Provides subsea technology, equipment hire and offshore International Systems engineering consultancy services specialising in Oil and Gas, Offshore Wind, Wave and Tidal industries Feb 2018 HTL Group UK Gee Force UK Hire & sale of hydraulic, pneumatic, electronic and manual bolting Hydraulics equipment Feb 2018 Sole Source US Premier Flow US Provider of critical rental tools at oil well sites Capital Control Feb 2018 Aggreko UK A Contact Electric US Provides specialised medium and high voltage electrical distribution Rentals and transformer rental equipment Jan 2018 Sdiptech Sweden Multitech Site UK Provides a full range of site services including temporary electrics, Services equipment hire, temporary plumbing installation, testing certification, generators and fuel Jan 2018 H&E Equipment US Rental US Provides non-residential construction-focused equipment rental Services services Jan 2018 Workdry UK Siltbuster UK Provides hire of portable water treatment solutions International Jan 2018 Cooper Equipment Canada Modern Industrial Canada Construction and industrial equipment rental company Rentals Rentals Jan 2018 Cramo Finland KBS Infra Germany Provides construction site logistics services, including rental of construction site equipment Jan 2018 Private group led UK Kelling Group UK Owns and leases specialty equipment supporting the maintenance by Alinda Capital and upgrade of rail, road, telecommunications, street lighting, Partners electric transmission, and other critical infrastructure Jan 2018 Blue Machinery UK Murray Plant Hire UK Provides equipment for hire to the construction, mining, demolition Group and quarrying industries 26 UK PLANT, EQUIPMENT & TOOL HIRE REVIEW
A SELECTION OF THE MOST RECENT PE INVESTMENTS AND GROWTH STRATEGIES
Company Date of Private equity Former Business description & buy-out history investment investor private equity investors EnerMech Oct-18 The Carlyle Lime Rock EnerMech is a £361m turnover provider of equipment rental, cranes, hydraulics, Group Partners pumps and valve services for offshore oil & gas platforms, rigs and other vessels worldwide. Plantforce Rentals Aug-18 Business Growth n/a Plantforce is a £20m turnover UK-based provider of heavy equipment rentals in Fund South West England. Kelling Group Jan-18 Alinda Capital Elysian Capital Formed from Access Hire Nationwide and Welfare Hire Nationwide, Kelling Partners provides specialty equipment for rental in the maintenance and upgrade of rail, road, telecommunications, street lighting, electric transmission, and other critical infrastructure. BFT Mastclimbing Nov-17 Equistone n/a UK independent specialist for the specification, rental and installation of Mast Climbing Work Platforms. Go Plant Fleet Jul-17 Endless n/a £80m turnover group formed from the merger of Essential Fleet Services (acquired Services from Kier in 2015) and Go Plant (acquired from Davidson Homes in 2017). Readypower Rail Feb-17 Primary Capital n/a Readypower is engaged in the provision of construction and demolition equipment Services rental and leasing to the construction industry. Beck & Pollizer Sep-16 Graphite Capital Hermes Private Provides engineering services, which includes mechanical installations, industrial Equity, BOSIF, removals and related services, forklift truck and crane hire and transport. Gresham TXM Plant May-16 LDC n/a TXM Plant is the largest supplier of road rail vehicles in the UK and associated attachments to Network Rail and its major contractors. With over 600 employees, TXM deliver RRV Hire, POS Services and Principal Contracting services across mainland UK. Ashtead Apr-16 Consortium of Phoenix Ashtead Technology provides machinery and equipment rental services to the Technology Investors offshore oil and gas industry and the environmental monitoring and testing industry. Hawk Group Dec-15 Business Growth n/a Shropshire-based Hawk Group provides plant hire and earthworks services. Fund Incorporated in 2012, the Company provides self drive and operated plant from its fleet of over 2,000 items both nationally and internationally. Ardent Hire Aug-15 Searchlight & n/a Ardent Hire was formed through the merger of One Call Hire and Fork Rent in Solutions Duke Street 2015. The new company now claims to have the largest joint telehandler and Capital excavator fleet in the UK. Searchlight and Duke Street have provided over £100m investment to the group. Ainscough Hire Feb-15 Oaktree Capital TPG Capital, Ainscough is the largest crane hirer in the United Kingdom, operating a fleet of Caird Capital, cranes available for lifting and engineering solutions. Based in Wigan and with 24 Bank of depots nationwide, the company has more than 500 cranes, ranging from 200 Scotland tonnes capacity up to the 1,000 tonne capacity flagship. Centurion Group Sep-14 SCF Partners n/a Centurion Group provides specialist rental equipment and services on a global scale to both the oil and gas and mining sectors, comprising six business units. In 2014, SCF brought together four businesses to form Centurion Group. In 2016, SCF merged Centurion with ATR Group, a leader in the rental, sale, and inspection of specialised equipment. In 2018, SCF went on to merge Centurion with other businesses to create a formidable global player in the energy supply & infrastructure services market. AFI-Uplift Jun-13 Rutland Partners Equistone AFI-Uplift is one of the largest powered access companies in the industry, providing Partners scissor, boom, and mast lifts and equipment rental services, with £100m turnover and £27m EBITDA. UK PLANT, EQUIPMENT & TOOL HIRE REVIEW 27 www.bdo.co.uk Copyright ©2019BDOLLP. All rightsreserved. Publishedin the UK. licensed to operate within the internationalBDOnetwork of independentmember firms. BDO NorthernIreland, apartnership formed inandunder the laws of NorthernIreland, is BDO is the brand name of the BDOnetworkand for each of the BDOmember firms. investment business. 7EU. BDOLLPisauthorisedandregulated by the Financial Conduct Authority to conduct members’ namesis open to inspectionat our registered office, 55Baker Street, London W1U and forms part of the internationalBDOnetwork of independentmember firms. 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