Private equity firm to buy technology group for £223m

Private equity firm Montagu has agreed to buy listed Sheffield technology firm Servelec for £223.9m.

Servelec, which announced in September a return to profit for the first half of this year – just over 12 months on from issuing a profit warning and seeing a shares slump – provides software, hardware and services to the healthcare, social care and education, oil and gas, energy and utilities sectors.

The company, which was founded in 1977, was valued at £122m when it listed on the London Stock Exchange’s main market in 2013.

Montagu’s bid for the entire company values it at £100m more.

In those four years Servelec has pursued a combined organic and acquisitive growth strategy, completing four acquisitions, funded by internally generated cash and bank debt. It now employs around 600 staff.

“Servelec Group has made good progress in the four years since its IPO, growing both organically and through acquisition,” said Servelec’s chairman Richard Last.

“The offer from Montagu represents an attractive and certain value, in cash, today for our shareholders. Investors who invested at the IPO will have achieved a total return of approximately 185% on that investment, including dividends.

“We are pleased that Montagu will continue to support the ongoing organic and acquisitive growth strategy in place.”

Scarlet Bidco, the vehicle that Montagu is using to buy Servelec, said it will explore “all options” to support further growth by investing in operations, expanding the Servelec’s domestic and international footprint and pursuing acquisition opportunities.

Edward Shuckburgh, director of Scarlet Bidco, said: “Servelec has two high quality divisions with significant growth opportunities, both organically and through potential acquisitions.

“We are excited to work with management and employees to support the Servelec Group’s growth by investing in and expanding its strong market positions domestically and internationally, leveraging Montagu’s experience, network and resources to strengthen the business.”