Business Growth Fund (BGF), established to help the UK’s fast-growing smaller and medium sized businesses, has made its first oil and gas industry investment in STATS, an oilfield service sector business. This is BGF’s first investment in Scotland and its fourth investment since the start of 2012.
BGF is investing GBP7.8m to back STATS’ CEO, Peter Duguid, who together with his sister, Lorraine Porter, founded the company in 1998. Based in Kintore, near Aberdeen, STATS is an engineering-led business that provides isolation services for onshore and offshore oil and gas pipelines. Its proprietary tools, manufactured in-house, are used to plug and isolate ‘live’ sections of pipelines to enable safe pump and valve replacement and general repair and maintenance work. The ability to repair a pipeline without a shutdown and without evacuation can save tens of millions of pounds of lost production.
In addition to its base in Aberdeen, STATS operates across the world through a network of branch offices and agencies in Canada, the Middle East and the Far East. The company employs 130 people and has grown organically and through acquisition. Its 2011 revenues of GBP14m are set to grow by over 75% in 2012 to approximately GBP25m, with much of that growth forecast in the Middle East.
BGF’s GBP7.8m equity investment will fund continued investment in people, build out the fleet of proprietary isolation devices, and allow the business to expand its international footprint. In addition, Lloyds Bank Wholesale Banking and Markets has increased its working capital funding to STATS through its team in Aberdeen.
With its niche product offering, STATS serves a large and growing international marketplace valued at c. GBP500m. Demand for its services is being driven by growth in pipeline infrastructure, increased maintenance spend on ageing pipeline and process infrastructure, efforts to extend the life of producing assets and a tightening regulatory environment.
Simon Munro, BGF’s Regional Director for Scotland, says: “Our investment in STATS is a milestone for BGF, as our first deal in Scotland, our first in a business which manufactures its own products, and our first in the vibrant oil and gas sector. Considerations around asset integrity and safety are at the absolute top of oil company Board agendas and are likely to remain so. STATS’ highly engineered approach to pipeline isolation and in-depth understanding of the technical issues involved results in safe operations and significant savings for its clients.
“I am hugely impressed by what Peter Duguid and his management team have achieved to date, and have no doubt that there is much more to come. As a technically differentiated business offering unique products to a large and growing international market, STATS is a great example of the type of business in which BGF wants to invest.
“We are seeing a strong pipeline of investment opportunities across all sectors in Scotland, a clear indication that businesses here are recognising the value that a supportive equity investor can bring to the table. Our approach as a non-threatening partner to management teams, and our willingness to invest for a longer term than most seems to be striking a chord with the market.”
Peter Duguid, CEO and founder of STATS, says: “We have reached a critical juncture in the development of the business. Since start-up fourteen years ago, we have built a leading position in our niche market, which in turn has enabled us to establish a foothold outside our home North Sea market. After weathering some tough economic conditions we have come out the other end in great shape and with more growth opportunities than we could afford to pursue.
“To take the business to the next level and capitalise on these opportunities, we realised that we needed an extra boost. That boost has come in the form of an equity investment and the active support of BGF, whose experience and contacts will help us to make the transition from a successful UK firm to an international business of scale operating across multiple regions.”
STATS was introduced to BGF by Lloyds Banking Group, one of BGF’s shareholders. This is indicative of how BGF can work in partnership with banks to unlock more credit for SMEs whilst also ensuring a well capitalised and properly funded long term balance sheet.
Stuart Brown, Director – Complex Deal Team, Lloyds Bank Wholesale Banking and Markets, says: "Lloyds Bank is delighted to continue its support of STATS including an increase in working capital funding to help meet the strong demand evident for its services. The quality of the business, its services and future opportunities is clear from the investment being made by BGF, who we see as the ideal partner for the company.
“We remain committed to helping Scotland out of recession and supporting strong Scottish companies like STATS with their growth and expansion. Together with BGF we can help stimulate recovery in the Scottish business community."
