Global firm invests in £32.8m in Manchester construction company

A North West contractor is gearing up for its next stage of growth following a £32.8m investment by a global construction firm.

South Africa’s biggest construction business, Wilson Bayly Holmes-Ovcon Limited (WBHO), which last year delivered revenue of £1.8bn, has taken a stake in Manchester-based main contractor Russells Construction, set up by brothers Andrew and Gareth Russell in 1997.

Both will remain as shareholders and joint managing directors, and in day-to-day control of the business.

WBHO – which also owns one of Australia’s largest contractors, Probuild, and last year bought into London concrete frame specialist the Byrne Group – has acquired a 60% holding in Russells Construction for £32.8m.

In a separate deal, WBHO has also bought 32% of shares in sister company Russell Homes for £3.2m.

Andrew and Gareth remain the majority shareholders in Russell Homes.

The tie-up will allow both businesses to grow and will unlock the potential for Russells Construction to compete for major projects.

Andrew Russell said: “It’s business as usual for our staff, suppliers and customers, there’s no changes in management or how we will be operating our business, but obviously this partnership opens the door for some exciting new opportunities for the future.

“We’re already competing successfully against many of the big national players and delivering major multi-million pound projects throughout Manchester, the North West and beyond.

“This investment supports the existing growth plan, to establish ourselves as a Tier 1 contractor.”

He added: “We’re confident the substantial strategic support and financial backing WBHO provides will, when combined with the knowledge and skills of our management and site teams on the ground, put us in an excellent position to secure an even larger volume of higher value projects throughout the North West and start to look at large-scale public sector opportunities.”

Russells Construction has more than quadrupled turnover in the last decade to £90m at the end of this financial year.

The business, which employs 160 staff at its Trafford Park headquarters, expects to post in excess of £104m next year, with a potential pipeline of a further £40m.

Projects include the recent appointment in May to redevelop the Grade II-listed building known as Dantzic, owned by Hermes Investment Management, on the corner of Dantzic Street and Hanover Street in Manchester city centre.

Russell Homes has more than 400 units in progress or delivered this year, with a further 1,500 in various stages of planning.

Gareth Russell added: “WBHO has invested in our team, their skills and experience, the projects we’re delivering and in the pipeline we have built up.

“Much of how we operate and our ethos aligns with their business, which was important when we made this decision, and we’re looking forward to working with them.

“Our success over the last 20 years comes down to promoting a team ethos within our business, the dedication, loyalty and commitment of our staff, and sensible, sustained growth based primarily on retaining clients and delivering on our values and promises.

“We will continue building on this, but now with the added support of a major global player behind us.”

The growth model is one which has already worked for WBHO, which bought into Australian contractor Probuild Constructions in 2001 and saw the business become one of the country’s largest contractors within a decade.

Paul Foley, from WBHO, said: “We have been seeking growth opportunities globally and identified Russells Construction as an excellent strategic fit for our UK ambitions, with strong and steady growth, a secure forward order book, and a healthy pipeline.

“In addition, the investment in Russell Homes offers us entry into the UK residential market which is a particularly exciting prospect.

“People are a construction company’s greatest asset and right from the top-level of management through to those working on-site, Andrew and Gareth have built a fantastic team.

“We feel their approach, the culture and ethos they have created, fits neatly with our own.

“They have a thoroughly impressive track record and the ability to achieve so much more with the right support behind them, something we are very happy to provide to assist the business achieve its growth ambitions.”

A corporate team at Addleshaw Goddard, advised WBHO on its acquisitions.

Led by partner Shelley McGivern, the deal is part of WBHO’s expansion strategy to further diversify its income stream and solidify its UK presence, and follows its acquisition of a shareholding in Byrne Group in 2017.

Shelley McGivern said: “Both Russells and Russell Homes are an excellent fit for WBHO both culturally and strategically, and we are delighted to have advised on another significant deal for them.”