NorthEdge backs £16.1m MBO at Bglobal subsidiary
SMART meter technology firm Bglobal wants to sell its software arm – the only trading business it has left – to a management team in a £16.1m deal backed by Manchester-based private equity firm NorthEdge Capital.
The sale, which is subject to shareholder approval, will follow the £2.3m disposal in April of its metering division to Scottish firm Energy Assets Group and the closure of BSmart Energy Solutions and Nutech Training after failing to find buyers.
Management at the Blackburn firm now plan to return 11p a share to shareholders and delist the company from the Alternative Investment Market.
The sell-off follows a review of the business carried out by KPMG after founder and executive chairman Peter Kennedy was ousted last year by investors, led by London-based Hawkwood Capital, amid concerns over the firm’s strategy.
At the time Mr Kennedy said the move would lead to a fire sale of the company’s assets but as a major Bglobal shareholder with around 23% he is expected to gain around £2.7m from the return of cash.
Bglobal justified the sale by saying NorthEdge would be able to deliver the investment required for Utiligroup to prosper, and pointed out that the deal represented a strong return. Bglobal bought the business in 2010 for £10.7m and has already sold the Australian arm for £2.2m.
Bglobal’s chief executive Tim Jackson Smith said: “This deal is part of our ongoing programme to return value to our shareholders and the price we have achieved, which represents a significant premium to the current share price, fairly reflects the value of Utiligroup.”
In the year to March 2013 Utiligroup made a pre-tax profit of £500,000 on sales of £7.1m. In the six months to September 30 it made £400,000 on revenues of £3m. The business is based in Chorley and employs 88 staff. The buy-out has been led by chief executive Matthew Hirst and chief operating officer Andrew Green.
Mr Hirst said: “Changing customer behaviour and new regulations are driving evolution of the energy market, and Utiligroup is uniquely placed to support customers through these changes with the provision of advanced solutions and services.”
He said NorthEdge’s investment will fund new software development and allow the business to capitalise on new opportunities in the market. The deal was led by NorthEdge partner Ray Stenton, director Jon Pickering and investment executive, George Potts. Mr Pickering will join the board as a non-executive director, while Mr Potts will join as an observer.
Jon Pickering said: “We expect tosecure shareholder approval by June 18 and look forward to working alongside the management team to support their growth plans.”
Seneca Partners advised NorthEdge Capital while KPMG advised Bglobal. DWF provided NorthEdge with legal advice while management was advised by Fieldfisher. Financial due diligence was completed by BDO and commercial due diligence by Credo.
