Advanced buoyancy products and engineering solutions for the oil and gas industry
The £70 million (€112 million) Institutional Buyout of CRP Group illustrates how Montagu can work with a family company to secure its future growth whilst also unlocking for the founder managers some of the value tied up in their shareholdings. Montagu underwrote the entire equity funding requirement for the deal and the existing shareholders retained a significant investment in the business.
CRP was founded in 1974 as a manufacturer of ships life-buoys. The company expanded its product range into marine buoys and fenders and related buoyancy equipment. It made a major breakthrough in the early 1990's when it started to supply the oil and gas industry with advanced buoyancy products for use on floating production units. CRP made the transition from the manufacture of standard marine products to an engineering solutions business undertaking large contracts for the multinational oil and gas contractors.
CRP had gained an excellent reputation in this industry by providing a first class design team, manufacturing to a high standard and delivering on time. In an industry where product integrity in hostile conditions and avoidance of down time and contractual delays is essential, CRP has established an impressive track record.
Montagu beat several competitors to secure the mandate to fund the business. We were successful because we designed a tailor-made funding package that put an attractive valuation on the business, provided the vendors with a significant retained stake and offered the opportunity for wider equity ownership for CRP's managers. At the same time we ensured the level of gearing in the transaction was moderate so that it would cope with the volatility in cash flow that is often experienced by rapidly growing businesses. The vendors were also attracted by our ability to underwrite the entire equity requirement and to complete the deal in six weeks.
Our belief in CRP was rewarded when, in October 2000, Montagu realised its investment in the business via a secondary buyout. The business had performed well through the period of low oil prices and was resuming its strong growth path, ensuring a very good return on our investment.