Nuclear Engineering Services Limited (“NESL”) is a niche engineering solutions group focusing on the nuclear, marine defence and other specialist industrial sectors.
With at least £250million of equity to invest nationally this year, the deal forms part of LDC’s progressive investment strategy for 2009. Following the £6.5 million investment in NESL, LDC has now placed over £50million of funding in three deal transactions valued in excess of £150million.
The investment by LDC sees two leading Midland’s based organisations joining together to drive an ambitious strategy for growth. The business currently benefits from long-term nuclear decommissioning projects, ongoing support to the UK’s operational nuclear power station portfolio and is well positioned to benefit from the renaissance in the nuclear industry on the back of recently announced government plans to build new nuclear power stations.
Management are keen to build further upon the existing market position within the civil nuclear market and naval defence sector through both organic and acquisitive opportunities – a strategy that LDC is very keen to support.
The business has been a key OEM supplier to the nuclear industry since the 1950s, supplying bespoke design, testing, manufacture, assembly, and installation services in relation to electro-mechanical equipment and components operated in environments where radiation shielding is necessary.
NESL currently employs over 200 staff with the core operations based at Wolverhampton with further engineering support at Risley and Cumbria. Having achieved £18million of sales in 2008, NESL is forecast to report sales of £25million in 2009.
The business was founded in 2003 by existing Chief Executive Brett Cooper following the acquisitions of the Rolls Royce Nuclear Engineering Services business and the Special Purpose Equipment Division of the NNC (formerly the National Nuclear Corporation). Mr Cooper will retain his position on the board and commented:
"This transaction underpins NESL's overall growth and development strategy whilst delivering financial backing to realise our full potential within the market place. It brings a diversity of knowledge and experience to the board outside of our traditional arena whilst providing a platform for growth. We are delighted to have secured the backing of LDC and look forward to the financial and strategic support that that their investment will bring to the business"
Chris Hurley, Investment Director at LDC led the transaction, along with colleague Alistair Pendleton and both will join the Board with immediate effect. Chris commented:
“We are delighted to be investing in NESL in order to drive future progression. LDC has a proven track record of investing within the industrial sector and we remain firmly committed to working with innovative engineering companies, especially those that continue to contribute to the Midlands’ manufacturing and industrial base.
“NESL is a high quality business and operates in a highly attractive market place which is forecast for continual growth - this is particularly pleasing, especially given the uncertainties of the current economic environment.
“The business has strong barriers to entry and has positioned itself at the heart of the nuclear decommissioning programme at Sellafield – in our opinion, this solid position, together with an ambitious organic and acquisitive growth strategy, should mean that the business remains well placed to exploit every possible opportunity to ensure future success.”
The transaction was completed by a leading team of Birmingham based professional advisers, with Simon Chapman and Andrew Mills at Baker Tilly, Birmingham acting as lead advisers. Andy Smith and Steve Taylor at Co-operative Bank provided senior debt, and advised by David Doogan at Martineau Johnson. With strong nuclear credentials, Paul Harkin and Ed Stead at Pinsent Masons acted as legal adviser to LDC and Newco. Paul Hayward and Tom Durrant at HBJ Gateley Wareing advised NESL’s management team. Graham Elsworth at BDO Stoy Hayward provided financial due diligence on the deal. Costi Karayannis at PMSI provided commercial due diligence.
LDC’s experience of industrial businesses is widespread and includes the recent Omega Red, Cable Management Group, and Kimberly Access transactions.
LDC notes to Editors:
LDC (Lloyds TSB Development Capital) is part of the Lloyds Banking Group and is authorised and regulated by the Financial Services Authority. LDC has, since 1981, completed over 400 investments, has ongoing interests in over 60 businesses across the UK. LDC back ambitious management teams from UK-based companies seeking between £2m and £100m of equity for management buy-outs, institutional buy-outs or development capital transactions. LDC invests in a broad range of sectors and has particular experience in financial services, healthcare, industrials, IT & software, leisure & media, retail & consumer, and support services.