West Midlands corporate deals review in association with Clearwater International
By Gareth Iley, partner, Clearwater International
THE total number of deals recorded in February was relatively low compared to the higher figures in previous months. There were 30 deals recorded, a fall from January’s figure of 37.
Even the Midlands does technology!
The Midlands is not necessarily known as a thriving base for technology companies but February saw a number of deals in this market.
Blackberry looked to capitalise on an increasingly hot sector, when it acquired Worcester-based Encription , which provides IT security testing and training services. The spotlight has been shone on technology and data protection, especially since major corporations such as Talk Talk, Barclays and Vodafone have all admitted damaging customer data leaks.
There was also significant activity in pureplay software companies, one of TMT’s most desirable market segments. Sutton Coldfield-based Castleton Technologies has looked to enhance its market offering with the acquisition of Kypera Holdings which also provides management software in the social housing market. This is Castleton’s sixth acquisition in two years, as it has looked to capitalise on its £2m recent funding from BGF.
Two Midlands software firms also saw external investment. Finance Birmingham backed automotive customer retention software firm Chrysalis while a team of investors, led by Midven, backed Ludlow startup Audux . Audux enables the production of broadcast-quality video content without needing a full outside broadcast unit.
As business IT has become increasingly more critical and complex, M&A activity amongst technology managed services and connectivity providers has also intensified. Solihull-based Convergence Group acquired Redditch IT service delivery firm Networks First. Furthermore Aston-based ICT solutions business Taalus Technical Solution was acquired by Complete Office Solutions , a larger player in the market.
These deal demonstrate that the Midlands has been investing in moving its economy from being largely reliant on manufacturing to embracing other high growth sectors.
Private equity flexes its muscles
LDC Birmingham completed the biggest deal in the Midlands in February when it invested £175m in CitySprint , which is the market leader in the last mile retail and healthcare delivery sector.
The new money will be used to continue scaling its UK presence and modernising its IT platform.
Sterling Square Partners also acquired seventy-five year old Redditch-based aerospace supplier Mettis Aerospace. Mettis manufactures flight critical, precision forged and machined components and will use the money to pursue organic and acquisition growth opportunities.
BGF also made its largest investment in the automotive industry to date when it invested £20m in Sertec Group. Sertec manufactures stampings and welded assemblies and is a key supplier for Jaguar Land Rover. The deal involves a major leadership restructure for the business with the founding family retiring and the executive management team taking the reins. The £20m funding adds to its previous investment by Lloyds Bank in August and it is hoped it will aid the continuation of significant turnover growth which stood at £40m in 2008 to an impressive £200m today.
These deals continue to show the important role of private equity in investing in Midlands’ businesses, creating jobs and investing in the local economy.
