Express Engineering secure capital investment for expansion

Express Engineering has secured a fresh capital injection from mid-market private equity investor LDC to accelerate its expansion strategy.

The deal will allow the management team of Express, led by founder and Chairman Chris Thompson and managing director Nigel Davison, to continue to grow the business and to capitalise on highly positive growth dynamics in the international oil and gas sector. LDC has taken a minority equity stake in the business as part of the transaction.

Since its launch, 40 years ago, Express has grown to become a globally recognised contract manufacturing company. From its 16,000 square metre manufacturing facilities on the Team Valley at Gateshead and 5,500 square metre factory in Sao Paulo, Brazil, the 375 strong workforce supplies precision engineering services to the aerospace, sub sea oil and gas exploration and production and power generation sectors.

It also recently acquired the trade and assets of the Stokesley-based engineering business Burdon Limited and investment in this site is planned.

The global customer base includes FMC Technologies, Aker Solutions, GE (Vetco), Cameron, Schlumberger, National Oilwell Varco and Weatherford.

For the financial year ending March 2013, the combined group recorded revenues of around £30 million represented an almost three-fold increase in business since 2010.

John Garner, director and head of LDC in Yorkshire and the North East, who was supported on the transaction by Investment Director Dale Alderson, said: “We are absolutely delighted to be investing alongside Chris, Nigel and the team in what is a first class business with compelling growth aspirations. Our investment will allow Express to further broaden its proposition and bring much needed capacity into the market.

“In recent years, the team at Express has done an exceptional job of growing the business. The outlook for the oil and gas market is compelling and there are very few businesses in the sector with Express’ quality of service, breadth of capability or global footprint.”

Chris Thompson commented: “Over the past five years we have invested significantly in our premises, our equipment and our people, putting us in an excellent position to take advantage of improving markets.

“We are very pleased to have secured the support of an investment partner, with whom we feel we can work extremely positively, to continue this plan. This will enable us to further expand operations within the North East region and in doing so, win new business around the world.”

Nigel Davison, managing director at Express Engineering, said “With its deep-rooted sector expertise, track record and international credentials, LDC is the perfect partner to help deliver our long term growth objectives.

“Our business has grown rapidly in recent years to become one of the leading players in the precision engineering market. The investment, alongside the operational support from LDC, will strengthen our ability to service a flourishing domestic oil and gas sector, further develop our manufacturing operations in Brazil and explore other foreign market opportunities for growth.”

The transaction further demonstrates LDC’s commitment to the manufacturing and specialist engineering sector and follows investments in Aberdeen-based Ramco Oil Services (March 2013) and its reinvestment in global aerospace business MB Aerospace (June 2013). The mid-market investor recently pledged to invest a further £100 million into the sector on top of its original £200 million target, which was set in 2011.

In 2013, LDC’s Yorkshire and North East team has the buyout of NRS, the former healthcare division of listed multi-channel retailer Findel plc. The team has also exited its investments in temporary access systems provider EVE, which was acquired by Ashtead Group plc, and technology services provider Trustmarque through a £43 million secondary MBO backed by Dunedin.

Express and its management team were advised by Newcastle-based PwC Partner Paul Mankin and Martin Hulls of Ward Hadaway.

LDC was advised on the acquisition by Dan Renton from Deloitte’s corporate finance advisory team, while legal advice was provided by Jonathan Jones of Squire Sanders.

A package of senior debt facilities to support the transaction was provided by Express’ long term banking partner Lloyds Bank. The deal was led by Director Jimmy Williamson from Lloyds Bank’s Acquisition Finance team and Commercial Banking’s Head of Mid Markets for the North East and North Cumbria, Mike Mullaney.