3i has provided a GBP55 million investment in the management buyout of Environmental Resources Management (ERM), a global supplier of environmental consulting services. Close Brothers, which advised ERM, also initiated the deal, which is valued at GBP200 million.
The transaction was underwritten by Bank of Scotland Structured Finance, which arranged a package of senior debt and working capital facilities worth a total of GBP85 million. Intermediate Capital Group provided GBP17.5 million mezzanine funding.
This investment will allow the company, which has over 120 offices in 34 countries, to continue its expansion and work towards creating a global organisation capable of offering a seamless worldwide service. 3i will draw upon its own global network of offices to support ERM’s management team in all of its markets. An IPO is planned for the next 18 to 36 months.
The catalyst for the buyout was the retirement of a group of ERM’s founding partners who together held a 45% stake in the business. Following the MBO the company’s employees will retain a significant stake in the business. Peter Regan, former CEO of North America, will become global CEO. Dr Robin Bidwell who will be the executive chairman of the Board said: “With spending on environmental consulting services growing at around 15% per year globally and projected to rise to over $80 billion in 2003, ERM is well placed to capture the largest part of this market.”
Created in 1987 by the merger of UK-based Environmental Resources Limited (ERL) and the American business ERM, the company’s net revenues for 2000/2001 were $200 million. Approximately 90% of revenues are derived from private clients in sectors such as manufacturing, infrastructure, chemicals and oil and gas. ERM’s customers have included United Airlines, Pfizer, Shell, BP, BASF, Disney and the Hong Kong Government. ERM provides services that include environmental auditing, site clean up, environmental impact assessments, risk management and strategic planning advice.