Renew agrees Forefront Group acquisition
RENEW Holdings announced this morning it has agreed to acquire Forefront Group, an engineering services business focused in the gas infrastructure market, in a deal worth £14.8m.
The AIM listed West Yorkshire-based engineering services group’s acquisition of Forefront has been funded from the group’s cash resources and a four year term loan of £12m from HSBC.
Forefront operates in the South East of England with its head office in Leigh-on-Sea and was founded in 1995. The business focuses on the replacement of gas mains and other critical services for National Grid and Southern Gas Networks in London and the South East. Forefront provides its services through framework agreements and employs around 350 people.
The gas infrastructure market is highly regulated and Forefront’s revenues are derived from the 30 year gas mains replacement programme which involves the replacement of iron gas mains pipes with polyurethane mains. The business also deals with emergency gas leaks and has a specialised under pressure drilling capability.
In the year to March 2013, Forefront’s audited accounts reported turnover of £26.9m and an operating profit of £1.7m.
Its financial performance in the same period this year showed a reduction in revenue to £23.3m and a breakeven operating result as workflow was reduced prior to the start of a new framework for National Grid.
“Revenue and margins have now returned to previous levels and established framework positions provide the Renew board with confidence that Forefront will deliver both growth and earnings which are accretive to Renew’s Engineering Services current operating margin,” said Renew.
Forefront was principally owned by Harwood Capital and associated entities and the company’s founder and chief executive Bradley Beard.
Mr Beard has entered into a new 12 month service contract, which cannot be terminated by either party within the first two years and the whole Forefront management team will remain with the business.
Mr Beard will report to Renew’s chief executive Brian May.
Chairman Roy Harrison said: “The acquisition of Forefront takes the group into a new sector within the energy market and is in line with our strategy of broadening our range of engineering services supporting critical UK infrastructure.
“As part of the Renew Group, Forefront, which has a leading industry reputation, will continue to develop its strong, independent brand. The gas mains network replacement programme provides Forefront with long term visibility and excellent growth opportunities.”
Neil Abbott led the team at HSBC.
Renew was advised by Sean Wyndham–Quin from SPARK Advisory Partners and Debbie Jackson and Graham Mackenzie from Walker Morris.
Forefront was advised by Paul Hardy from Hardy Transaction Management and Nick McCarthy and John Turnbull from Bircham Dyson Bell.
