15th June 2015
RSK Group Plc, the UK’s largest privately owned environmental consultancy, has secured a £33m long-term investment loan provided by a fund advised by Permira Debt Managers (“PDM”), the debt management and advisory arm of Permira and one of Europe’s leading specialist debt investors.
PDM’s direct lending fund Permira Credit Solutions II (PCS2) will act as sole lender to RSK to support its continued international expansion. The loan – which was arranged by Dow Schofield Watts Corporate Finance Ltd – will be used to convert existing amortising debt into a flexible bullet repayment loan and provide additional funding to enable the business to continue its growth into new markets across the UK and EMEA.
Debt fund financing is growing in popularity across small to medium sized businesses because, compared to traditional bank lenders, they offer a flexible approach to structuring facilities which allows companies to continue to grow without the normal banking constraints on cash flow.
RSK advises clients across all sectors, both public and private, helping businesses comply with environmental, health and safety regulations. Its scientists and engineers work on projects all over the world, investigating land and buildings and solving environmental problems.
RSK CEO Alan Ryder – who spearheaded the refinancing project – founded the company 25 years ago when he was a student at Aberdeen University. The company’s headquarters are in Helsby, near Chester, and it has over 1,000 employees with offices in over 20 countries. Its annual turnover is now almost £100m.
Over the last two years, sales and profits have grown by almost 50% as the company has invested substantially in Europe and the Middle East, with a new fully equipped and internationally accredited laboratory set-up near Basra, Iraq, and business acquisitions in Germany and Hungary. RSK’s operations have also expanded in response to growing market demand in the construction, power and infrastructure sectors.
“We’re delighted to have secured this financing and to have expanded our operations. The financing will allow us to grow further, for example we plan to recruit geology and engineering graduates into our training programmes to specialise in growth areas such as nuclear decommissioning and geomatics, creating more jobs across the UK. I am really pleased that we have created 200 new jobs in the last 2 years, and that much of our success comes from export. Our UK sales have grown by almost 30% over two years, and our international sales have grown by 100%.
“The financing will also allow us to continue our support for UK projects such as the nuclear power station in Anglesey and for global projects such as the Trans-Adriatic pipeline, making sure that major infrastructure and energy developments are carried out to the very highest environmental standards.
“Iraq, East Africa, CIS and Western Europe remain key areas for the global expansion of our business”.
Alan Ryder, founder and CEO of RSK
“We are very impressed by what RSK have been able to achieve over the past 25 years from their own resources. The company has reached a position of strength in the European environmental and engineering consultancy market and we are delighted to be partnering with them to support their next phase of growth.”
Dan Hatcher, Investment Director at Permira Debt Managers
“We are delighted to have provided an investment solution to RSK Group. It represents the seventh investment made by our new fund, Permira Credit Solutions II. The fund has provided almost €200m of capital to mid-sized but high quality European businesses in the past 12 months.”
Thomas Kyriakoudis, Chief Investment Officer of Permira Debt Managers
Mark Watts, a partner at Dow Schofield Watts Corporate Finance Limited, said:
“RSK is an outstanding professional services business growing rapidly both in the UK and internationally. The bespoke funding structure will assist RSK in continuing its rapid development.
“The funding options for UK mid-market corporates is changing significantly. Non-bank lenders are now very active in the market, providing a real alternative. These funds have established a market position through being responsive and flexible in their structuring, particularly in facilitating the reinvestment of cash flow in further expansion.
“The growth which RSK has experienced, and the extent of the opportunities which it currently faces, meant this funding structure suited its circumstances. Originally, many of the non-bank lenders targeted sponsor led transactions, but now they are actively seeking to partner with quality private businesses such as RSK where there is no other institutional investor.
“This source of funding is quickly becoming mainstream in the mid-market and it is providing flexibility that was traditionally only available to very large corporates. Historically it has been the UK clearing banks that have provided the majority of funding to this sector of the market but the flexible structures and competitive terms from the non-bank lenders is changing this mix, as in the right circumstances they can provide a compelling proposition.
“Alongside this market shift the traditional banks are trying to innovate and there is now a real choice for growing mid-market businesses that wasn’t previously available.”