Engineering group splashes out on £30m acquisition

Renew Holdings, a Leeds-based engineering services business supporting UK infrastructure, has agreed to acquire  J Browne Group Holdings Ltd for a cash consideration of £29.5m.

J Browne, a water focused engineering services business based in Enfield, North London, operates throughout the South of England for Thames Water, Southern Water, Affinity Water and South East Water.

It delivers infrastructure and non-infrastructure services through a number of longstanding framework agreements, across all disciplines in the water sector, alongside providing utility connections and infrastructure services to the developer market in London & the Home Counties.

In the year ended 31 March 2020, J Browne reported pre-tax profits of £5.5m on turnover of £79.2m (including share of joint ventures).

In its current financial year to 31 March 2021, the business has seen a reduction in activity due to the transition to the latest Asset Management Plan Period and is expected to report turnover of £63.3m.

Renew says the deal adds material scale to its water business and brings new water clients into the group.

It notes the water sector is an attractive market with £51bn committed by Ofwat to deliver service improvements as part of the current five-year investment period which runs to 2025.

The acquisition is expected to be immediately earnings enhancing and to deliver high single digit earnings accretion on a full year basis.

The consideration of £29.5m on a cash-free/debt-free basis will be funded by a combination of cash and the group’s existing revolving credit facility provided by HSBC and Natwest. There is no deferred consideration payable.

Paul Scott, chief executive of Renew, said: “This acquisition broadens Renew’s exposure to the UK water market and is consistent with our strategic objectives.

“This market offers attractive long-term growth opportunities underpinned by committed regulatory spend and is a sector we understand well from our established relationships in other water regions.

“We have known Jeremy and his team for many years and have tracked how they have successfully grown a business with an excellent reputation for directly delivering reliable engineering services to a number of water companies across the south of England, including Thames Water, the largest in the UK.”

Jeremy Browne, chairman of J Browne, added: “Under Renew’s ownership, J Browne enters an exciting new stage for the business.

“It was critical for us to have an owner who shares the values that have contributed to our success and one which has demonstrated the necessary expertise to support our growth ambitions.

“The Renew business model and strategy fits perfectly with these aspirations and I believe the J Browne brand will continue to flourish alongside the many other highly respected Renew subsidiary businesses.”

Renew has also issued a trading update in advance of its interim results for the half year ending 31 March 2021.

Group trading for the first half of the year is expected to be ahead of the previous financial year and in-line with management’s expectations.

The business says the latest national lockdown has not had any material impact on trading and it continues to experience continuity in demand for its services across all markets.

As a result, the Board remains confident in delivering consensus expectations for the full year.