THE investment firm founded by generator tycoons John and James Pirrie is backing a Glasgow-based tank cleaning business dating from Victorian times in a push for growth and has underlined its appetite for more deals.
The Pirrie brothers’ Nevis Capital provided expansion funding for Merkland Tank in exchange for a significant stake in the business, in what is thought to have been a seven figure deal.
The deal is the 15th completed by Nevis Capital which celebrates its tenth anniversary this year.
The Pirries founded Nevis using proceeds of the £62 million sale of the LCH Generators business they developed to Speedy Hire. Former PwC deal-maker Brian Aitken became a founding partner in Nevis.
Mr Aitken said the investment in Merkland reflects Nevis’s continued faith in the potential of the industrial services sector it has focused on. Nevis’s portfolio includes the Clyde Space satellite firm and Dieselec Thistle generators.
It sees scope for Merkland to achieve significant growth. Mr Aitken described Merkland as a lovely business that has been well run with a strong customer base.
Merkland has evolved from supporting shipbuilders to working in industries such as oil and gas and distilling. It has a multi-million pound turnover and 20 employees.
The investment will help Merkland broaden its geographic reach and service offering. Nevis partners will provide support drawing on the experience gained at LCH generators and through backing other industrial services firms.
“There was a perception of private equity being people in suits sitting in an office and working on numbers but we are about active ownership,” said Mr Aitken.
Nevis has recruited industrial services veteran Robert Gibson to be managing director of Merkland.
Robbie Horne, who has run Merkland for 30 years, has moved into the chairman’s position and retains a shareholding.
The partners hope the Merkland investment will allow Nevis to maintain its strong track record.
Jamies Pirrie said: “John and I are delighted with how Nevis has developed ... We’ve gone from a new start bringing something different to the private equity landscape in Scotland into one of the leading investors in the sub £10 million deals market.”
He added: “It has been rewarding to use our experience to help other businesses to achieve their potential”.
The firms backed by Nevis have trebled their employee numbers on average. Nevis has achieved an average return of eight times its money on investments it has exited.
Asked about the uncertainty caused by the Brexit vote and the Bank of England deciding on Thursday to raise interest rates, Mr Aitken said: “Our business plan is more of the same. We think there’s a lot of other really good businesses out there.”
The Brexit vote may be followed by a slowdown in UK deal activity at some point without derailing the market. It could make some people more likely to sell businesses. Interest rates remain very low.
Nevis will continue to invest in the industrial services sector. It has broadened its focus to include firms in other sectors that are based in the Central Belt.
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