Gresham sells Alstec for £44.9m

Gresham, the UK mid-market private equity firm, today announces that it has made a successful exit from Alstec Group Limited (“Alstec”), a nuclear and airport services operator. Gresham made a return of approaching 4 times its investment.

The sale to Babcock International Group PLC (“Babcock”) was for a total net cash consideration of £44.9m. Gresham’s Birmingham office backed the management buy-out, led by Group Chief Executive Martin Melling in May 2000.

Alstec operates in three distinct support services markets that are already familiar to Babcock; nuclear, airports and defence systems. Within each of these markets Alstec provides a range of services and engineered solutions for its customers’ operationally critical activities, including the design, management and operational support of complex control systems for specialised handling system applications.

Alstec’s blue chip customer base includes BAA, BNG, UKAEA, British Energy and the Atomic Weapons Establishment.

Alstec’s airports services business provides operations and maintenance services for BAA PLC’s automated baggage sortation system at Heathrow airport. The business also operates and maintains the inter-terminal transfer facilities between all Heathrow Terminals. Opportunities to expand the provision of these services at Heathrow into the proposed central terminal area redevelopment and the new T5 facilities offer excellent growth prospects for the future, as does the possibility of similar service provision at other UK airports.

Alstec also operates a small defence business designing, supplying, maintaining and upgrading equipment for the Ministry of Defence and its equipment suppliers for submarines, surface ships and aircraft.

The combination of Alstec’s skills and track record with those of Babcock positions the Group to benefit from new opportunities in two major growth markets: nuclear decommissioning and airport management as well augmenting the Group’s existing strong position in the maintenance and upkeep of submarines, surface ships and the new carrier programme.

Ken Lawrence, Managing Director at Gresham commented: ''We are very pleased that Alstec have been acquired by Babcock, we believe the 2 businesses to be an excellent strategic fit. We have worked closely with Alstec since our investment and have been impressed by the management team who have transformed the operational focus and culture of the business."

Martin Melling, Alstec’s Chairman and Chief Executive, commented: “We are delighted to be joining Babcock. Gresham has been a very supportive investor and they were 100% committed in helping us to develop the business. We have very much enjoyed working with them.”

Peter Rogers, Chief Executive of Babcock, commented: “Alstec is an excellent strategic fit with Babcock’s existing support services activities and brings to us an important new set of customers. We are now well placed to bid for a range of opportunities in the expanding market for nuclear utility support services and decommissioning. Alstec is poised to deliver excellent levels of profitability and we expect the business to be earnings enhancing for Babcock in its first year of ownership.”

The sale of Alstec is the latest in a series of successful exits for Gresham including the sale of Altair Filters to GE Energy, the sale of Ansa to Mavinwood Plc and the sale of MSS to Invacare Inc.