Franchise Brands raises £92m to acquire Pirtek Europe, expanding its B2B service division
The international multi-brand franchisor, Franchise Brands, has announced that it has raised £92m through a Placing to enable it to acquire the owner of Pirtek Europe, Hydraulic Authority I Limited (HAI) for £200m (and £12.2m for cash, debt and working capital adjustments).
HAI operates Pirtek across eight European countries providing an on-site hydraulic hose replacement service and associated services, in addition to offering an emergency response service 365 days-a-year, operated largely by its 70 franchisees.
Franchise Brands says the bookbuild represents one of the largest public fundraisers this year in the UK in what has been an unusually muted period for UK equity funding markets.
The acquisition and working capital requirements of Pirtek will be funded by new bank debt facilities of £110m, and £114.3m in equity issued by the company, which includes the £92m raised through the Placing, alongside a subscription by Pirtek management and employees, and the issue of Consideration Shares.
Commenting on the acquisition, Stephen Hemsley, executive chairman of Franchise Brands, said: “We are pleased to have successfully completed the bookbuild for the fundraise with the support of both new and existing institutional investors. This will enable us to proceed with the transformational acquisition of Pirtek Europe.
“The acquisition brings an established business of scale with an attractive financial profile and growth prospects and will significantly expand the group’s range of B2B services, customer base and end markets.
“Building on the strong performance of the group’s acquisition of Filta in March 2022, which brought an international footprint in North America and Europe, Pirtek Europe will extend the group’s European presence across a number of key countries, providing a platform from which to launch the group’s existing brands.
“By expanding the group’s operations to 10 countries, the acquisition will significantly advance the Board’s aim to create a market leading international B2B multi-brand franchisor that generates its income equally from the UK, North America and continental Europe.
“We would like to thank our investors for their support and we look forward to driving shareholder value by working with Pirtek Europe’s strong management team to accelerate growth and drive operational leverage across the combined business.”
Franchise Brands highlights Pirtek’s strong history of growth, with a five-year adjusted EBITDA (earnings before interest, tax, depreciation and amortization) compound annual growth rate of 18.8 per cent to 31 December 2022 with systems sales of £164.1m and adjusted EBITDA of £14.7m.
Pirtek undertakes more than 500,000 jobs per year from 838 mobile service vehicles and 213 service centres. It serves a diverse portfolio of clients including Amey, Balfour Beatty, Biffa, CAT, Tarmac and Veolia.