By Kristy Dorsey
An independent Aberdeen engineering firm is heaving “a big sigh of relief” after completing more than six months of negotiations to become the North Sea foothold of an international energy services group.
Serba Dinamik Group Holdings Bhd (SDGB) has made what is described as a “multi-million pound investment” to take over an unspecified stake in Wellahead Engineering based in Dyce. The deal will provide SDGB with a platform to explore new markets in the region, while Wellahead gets the opportunity for further growth through access to its new parent company’s existing client base.
SDGB is a wholly-owned subsidiary of Serba Dinamik Holdings Berhad, which is listed on the Malaysian stock exchange. It has operations in 26 countries around the world, including an engineering facility in Falmouth and an office in London, employing more than 2,000 people providing integrated solutions to the energy, oil and gas, water and utilities industries.
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The deal with Wellahead gives SDGB its first physical presence in Scotland. Founded in 1998 by Mike Coutts, Wellahead generated sales of approximately £2 million in the year to May 2019 providing subcontracted machinery services to a range of local business as well as multinational oil, gas and renewables operators.
A former sales engineer with Oiltools Europe, Mr Coutts set up Wellahead after taking out a personal loan of £5,000 to acquire a small local precision machine shop. He started with three employees and now has 15 staff, and will be staying on “indefinitely” as managing director of the operation.
Mr Coutts said Wellahead will collaborate with SDGB to create a bigger footprint in its markets. This could include geographic expansion, though it is “early days yet”.
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“That might be the case on the service side of things,” he said. “Serba is world-wide, so it just depends on what they are doing.”
Mr Coutts added: “Wellahead has always been a successful business, thanks to our loyal and hard-working team, however this partnership with SDGB will open up new and exciting growth opportunities. It will allow us to invest in our equipment, our premises and our people and take the business to a new level.”
Though the company has continued to trade through lockdown, the deal follows an extended period of difficulties for North Sea operators triggered by the prolonged slump in oil prices. Mr Coutts conceded that the timing was fortuitous.
“It was a big sigh of relief for us all,” he said. “Obviously we have no idea right now what is going to be happening from one day to the next.”
READ MORE: North Sea firm eyes acquisitions as slump creates opportunities
Independent advisory business Dow Schofield Watts provided Wellahead with corporate financial guidance on the transaction, which the firm’s Tom Faichnie welcomed as a mark of confidence in the sector.
“It’s great to see a business the size and scale of SDGB coming into the North Sea market and investing in Aberdeen,” he said.
The coronavirus pandemic has triggered the steepest fall in global demand for oil of the past 25 years, which has exacerbated the prolonged slump in oil prices that began in 2014 and has led producers to slash spending on upstream operations.
Despite these difficulties, a spokesperson for SDGB said the group was “very pleased” to establish a strategic presence in Aberdeen: “We look forward to developing our relationship with Wellahead Engineering and hope that this will be a first step towards expansion of our business interests in the region,” the spokesperson said.
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