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Inflexion Private Equity, the mid-market private equity investor, announces today that it has led the MBO of SMD, the world’s leading privately-owned designer and manufacturer of subsea vehicle systems.
Based in Newcastle upon Tyne, SMD employs 135 staff and is a leading manufacturer of remotely controlled subsea vehicles, used all over the world. These vehicles range from Work Class ROVs (WROVS), the “workhorse” of the offshore oil and gas industry, to specialised subsea trenchers and mining machines. The vehicles are used whenever activities are carried out subsea, but primarily in the oil and gas industry, submarine telecoms and oceanographic research.
Established in the 1970s by the Reece family, the company entered the WROV market in 2003 and has since seen significant revenue and earnings growth, driven by the surge in oil and gas exploration, offshore construction and by the excellence of its products. As well as this primary market, SMD has also been pursuing offshore wind farm construction and subsea mining, and was recently awarded a £28 million contract to design and build two sealed mining machines for Nautilus Minerals Inc, the global pioneer in the extraction of seabed metal ore deposits.
SMD holds a strong position in the growth WROV market, where annual capex spend is expected to increase by 50% over the next three years as developers are forced to explore deeper waters and increasingly harsh conditions in order to satisfy the sustained demand for oil and gas.
John Hartz, Managing Partner of Inflexion Private Equity, said: “SMD possesses all the characteristics that Inflexion seeks in a new investment: a leading specialised company in a niche market, with extremely high barriers to entry. We look forward to working with the skilled management team to drive further growth in the company. This is our third oil & gas focused investment in recent years and we continue to have a strong interest in the sector.”
John Reece, MD of SMD said: “Our new partnership with Inflexion marks an exciting point in SMD’s development. It will enable us to continue to develop our technical excellence and innovative products and provide more options for future growth, whilst keeping SMD not only in the UK but in the North East as well.”
John Hartz, Tim Smallbone, Catherine Richards and Malcolm Coffin led the transaction on behalf of Inflexion and Tim and Catherine will join SMD’s Board. Inflexion has taken a majority equity share holding alongside the management team. A package of debt facilities has been committed by Barclays and HSBC.