Maven delivers profitable return for investors on sale of XPD8 Solutions 


Maven Capital Partners (“Maven”), one of the UK’s leading private equity houses, has announced the sale of Aberdeen-based energy services business XPD8 Solutions (“XPD8”) to John Crane Group, a division of FTSE 100 listed Smiths Group plc.

The sale has delivered an attractive return on Maven client funds’ original investment and is the 3rd profitable disposal by Maven’s energy services team in the past year;

• In June 2015, Maven achieved a 3.3x return on exit from environmental services and equipment business MSIS.
• In December 2014, Maven sold control systems specialist EFC Group for a return of 3.8x cost.

Formed in 2003, XPD8 is an oil & gas services consultancy offering cost-effective asset management and integrity management solutions to a global customer base, providing bespoke software tools and skilled engineers specialising in asset integrity services.

With bases now in Aberdeen and London, XPD8 has expanded its presence in international markets and now caters to a blue-chip customer base that includes Tullow, Aker, Apache, CNR and Wood Group. Integrity services is an area of increasing focus for the oil & gas sector as energy services businesses seek to control costs and maximise production whilst maintaining safety on ageing infrastructure.

Jock Gardiner, Partner at Maven said: “With Maven’s support, XPD8 management has performed strongly since we invested in the company in 2010 and this exit has achieved a healthy return for our investors. Working in partnership with Maven throughout, Mark Cavanagh and his team have built a reputation for excellence and a business that offers best-in-class service in a sector where the ongoing emphasis on integrity services is key for customers. XPD8 is proof that high calibre management teams can deliver growth, even in a challenging oil & gas market.”

Mark Cavanagh, MD at XPD8, said: “We are excited about the next phase in the expansion of our business on the back of a platform achieved with the constructive support of Maven since 2010, and an encouraging pipeline of opportunities. We’ve worked closely with Maven’s Aberdeen team, whose advice, support and knowledge of the sector has been a key part in our success, as well as allowing us to access industry expert advice from other Maven portfolio companies.”



AIC VCT REPORT CONFIRMS VCT ROLE IN JOB CREATION AND SUPPORT FOR BUSINESS GROWTH

The AIC publishes sixth annual survey: Nurturing success, delivering growth

• Average of 51 jobs created per investee company since VCT investment
• Top sector for VCT investment was Technology and IT
• £2.31m is average size of initial VCT investment per SME
• £12.71m average turnover increase in each SME since VCT investment
• Majority of VCT investment is outside London and the South East

The Association of Investment Companies’ (AIC) sixth annual survey* of VCT investment, ‘Nurturing success, delivering growth: VCT investment 1995-2015’ revealed that a total of 13,508 new jobs have been created at the SMEs surveyed since the beginning of the VCT investment scheme. On average 51 jobs have been created per investee company since VCT investment. At the companies that received funding in 2013, on average 15 new jobs have been created per investee company.

Ian Sayers, Chief Executive of the AIC, said: “VCTs address market failures which prevent smaller UK businesses securing development capital. It’s encouraging to see that, when it comes to both sector and geography, there is a depth and breadth to VCT investment and its impact on SME growth. The role of VCTs is as important today as it was when the scheme was introduced twenty years ago.

“The survey also provides evidence to support changes to the VCT rules to allow greater flexibility in VCT investment in respect of ‘replacement capital’ (i.e. the ability to provide an exit for shareholders in investee companies short of a full buy out). The Government has committed to seeking state aid approval for this change and we look forward to working with it to secure this outcome as soon as possible.”

Sectors

The top sectors for VCT investment last year were Technology and IT, Business Services and Manufacturing and Engineering respectively.  VCTs reported investing almost twice as much into Technology and IT companies in 2014 compared to 2013. The Technology and IT companies that have received VCT investment boast a 212% increase in employment levels. This makes the Technology and IT sector the top job creator in current VCT portfolios.

Investing across the UK

The majority of VCT investment, (55%) was invested outside London and the South East and across the UK. Whilst London continued to attract the largest share of VCT investment in 2014 (26%), it attracted less than the average of the previous years (34%).

Given the Government’s desire to deliver economic growth across the UK it is particularly significant that Scotland received 20% of VCT investment, compared to an average of 8% in previous years. The North of England received 13% of VCT investment (up from an average of 11% in previous years) and the rest of the UK received 22% of VCT investment (down from an average of 27% in previous years).

Addressing finance gap

VCTs address the ‘finance gap’ issue affecting SMEs seeking funding between £250,000 and £5 million. This level of investment is beyond the means of most individual investors, but too small to attract investment from private equity firms. The average size of the initial VCT investment in an SME is £2.31m which rises with follow-on investments to an average £3.01m. In 2014, 80% of reported investments were within the ‘finance gap’, reinforcing the idea that VCTs are crucial business support providers for SMEs requiring an investment amount within this gap.

Impact of investment

The benefits of VCT investment are often immediate and analysis of SMEs that received initial VCT investment in 2013 show that 77% of companies increased their turnover by an average of £1.5m the following year. In Scotland alone, there was an increase in turnover of 34% for investee companies. The average turnover increase in each SME since initial VCT investment is £12.71m, representing growth of 183%.

Research & Development

In 2014, VCT-backed SMEs spent more than £120m on research and development, and approximately a third of investee companies reported making an investment in this area. Results show that the average SME investing in research and development spent £920,000.

Exports

Survey results revealed that, in 2014, 39% of investee companies generated turnover from exports. This figure is higher than results from last year and is also higher than the average for SMEs across the UK. Overseas markets accounted for 30% of the turnover of exporting investee companies.

Supporting future growth

The total fundraising figure for the 2014/15 tax year was £429m. A conservative estimate suggests that VCTs have up to £832m of capital to make further investments in SMEs over the next three years. With an average total investment size of £3.01m in 2014, the current resources available to VCTs could fund a further 276 enterprises. On current trends, these businesses would then have the potential to create over 14,000 new jobs.

The AIC publishes sixth annual survey: Nurturing success, delivering growth