LDC backs expansion of oil & gas industry supplier in Midlands advised deal

PRIVATE equity house LDC has backed the MBO of a manufacturing company supplying the subsea oil and gas industry in a deal advised out of the Midlands.

The undisclosed deal, which involves Hampshire-based Rimor Ltd, is the 11th transaction completed by LDC Midlands’ team using capital from its £200m manufacturing and specialist engineering fund.

The deal was transacted by LDC’s regional managing director Martin Draper, together with investment directors Andy Lyndon, Steve Aston and Matt Newbold. Steve Aston and Matt Newbold will join the board of the newco with immediate effect.

A number of Midlands-based advisors acted on the deal, including lead adviser Clearwater Corporate Finance, Freeth Cartwright, which acted as legal adviser to LDC and the Newco, Baker Tilly provided Financial Due Diligence and Gateley, which advised the management. Bank funding was provided by Yorkshire Bank, advised by Browne Jacobson.

The deal sees Rimor managing director, Paul Mason and finance director, Scott Bushby take on the new company. They will be supported by the appointment of Alan Wilson as non-executive chairman, a veteran of the oil and gas industry who has previously held positions with Trelleborg Offshore, Weir Group and Aker Kvaerner amongst others, and Dr Michael Lloyd, previously at Rolls-Royce.

Rimor, which employs 123 people, provides complex and highly engineered manufacturing solutions to global high-technology subsea equipment manufacturers. The subsea oil and gas industry has undergone a period of strong growth in recent years, largely driven by technological advancements in drilling and extraction techniques, and long-term increasing demand for hydrocarbons. This has resulted in Rimor’s strong trading record over recent years and a record order book.

Mr Mason said: “LDC’s investment and support brings additional strategic input and financial backing to our business and will help us to deliver our ambitious growth plans. As well as increasing the pace of organic growth in our core oil & gas engineering services operations, we are keen to broaden our service offering and position the business with new customers both here in the UK and overseas.”

Mr Draper said Rimor was an impressive business led by a high calibre management team, which had made it an attractive investment opportunity.

“With robust growth forecast for oil and gas market, the prospects for Rimor’s future are extremely positive and we look forward to supporting the team as they continue to build on the recent successes, whilst helping to execute the next phase of the business’ development,” he said.

The deal is the third transaction completed by the Midlands team in the past week, following an investment to support the MBO of Derby-headquartered Node4, the leading regional data centre, managed IT and communications specialist, and the re-investment in international aerospace engineering group MB Aerospace. Last year LDC invested over £300m across 18 investments.

Clearwater Corporate Finance partner Jon Hustler and assistant director Mark Day from the Birmingham office of Clearwater advised the shareholders of Rimor.

Mr Hustler said: “Rimor’s unique capabilities, highly-skilled workforce and strong track record of capital investment has resulted in the company becoming a pre-eminent supplier in its field.

“Manufacturers of major equipment used in the oil and gas industry are increasingly pursuing a strategy of outsourcing non-core production. Rimor is already benefitting from this strategy and is enjoying an increase in orders from existing customers driven by growth in global spend.

“With growing worldwide demand for energy and the need to extract oil and gas from deeper water and more extreme environments, prospects for the sector as a whole look very positive. Under the stewardship of a first-rate management team, this puts the business in an excellent position to deliver significant growth in the future.”