Soho Square has taken a minority stake in facilities management service Arcus FM.
The deal used a triple newco structure, which saw Soho take a significant minority equity stake in the business, as well as provide senior loan note instruments to the company.
The acquisition involved no external debt. The existing Arcus management team will remain majority equity shareholders, led by CEO Chris Green.
David Steel, director at Soho, said the firm expects to hold the company for three to five years.
Arcus FM
- DEAL: Buyout
- LOCATION: Upminster
- SECTOR: Business support services
- FOUNDED: 2009
- TURNOVER: £150m
This is the second transaction completed from Soho's seventh institutional special opportunities fund, which is yet to hold a final close. The fund's first investment was in marine transportation provider Oslo Tankers in 2019.
Steel told Unquote that Soho and Arcus's management are exploring a development strategy that could involve bolt-on acquisitions and expansion into new service lines. "We don't plan to expand internationally because the UK facilities management market is huge and highly fragmented," said Steel. "There are 10 companies out there that have more than £500m in revenue and they haven't been performing that well. This provides great opportunities for mid-tier firms like Arcus."
Steel said: "Arcus has national coverage, which allows it to take national contracts and it provides more efficient, tech-enabled services than its competitors."
Steel will join the company's board; the firm has the right to appoint another member in the future.
Company
Arcus was formed in 2009 as part of a joint venture with Sainsbury's. Based in Upminster, it is a facilities management company providing bespoke services to clients in the retail, logistics and public sector.
While the company reported revenues of £120.2m for the year ending on 31 March 2019, the company now generates revenues of £150m, according to a statement. Arcus generated an operating profit of £4.1m for the year to 31 March 2019.
People
Soho Square – David Steel (director); Stuart Hamilton (associate).
Arcus FM – Chris Green (CEO).
Advisers
Equity – K&L Gates, James Cross (legal); Grant Thornton, Usman Malik, Carl Parker, Ven Balakrishnan, Lucy Orhnial (corporate finance, financial due diligence, commercial due diligence, tax).
Management – BDO Corporate Finance, Satvir Bungar (corporate finance).
For further information
About Soho:
Soho is an investment manager focused on asset-backed opportunities throughout Europe. It supports strong management teams that have specialist assets with both debt and equity capital.
Soho team incorporates extensive investment capabilities that leverage Soho’s experienced finance, asset management and business development teams.