3i leads £200m ERM management buy-out

Senior debt and working capital was provided by Bank of Scotland, Intermediate Capital Group provided mezzanine finance and the remaining investment came from existing shareholders.

Venture capital group 3i has invested £55m (E88.5m) in the £200m (E321m) management buy out of Environmental Resources Management Group (ERM), a global supplier of environmental management consulting services.

Bank of Scotland Structured Finance, London, acted as the senior debt arranger and underwriter, providing £85m of senior debt and working capital facilities. Intermediate Capital Group (ICG) provided £17.5m of mezzanine funding. Existing shareholders invested the rest of the capital.

ERM is an environmental consultancy for companies across a broad range of sectors. It provides environmental services for the business community, including site clean up, environmental impact assessments to risk management and strategic planning advice. The group has 2,500 specialists operating from more than 120 offices in 34 countries.

The company expects environmental consulting services to grow by about 15 per cent per year globally and projects that the market will be worth more than $80bn in 2003. Gary Addison at 3i said: “3i’s investment in ERM demonstrates our significant commitment to the support services sector. With such growth year-on-year a future IPO is envisaged by both the investors and the management team. With this investment, 3i can fully support ERM and help it achieve its goals of offering a global service.”

Dr Robin Bidwell, who will be executive chairman of the board, is leading ERM’s global management team. Peter Regan will become the company’s global chief executive, having previously been CEO of North America since 1999. Under the deal, the employees retain a significant stake in the business.

Close Brothers, who also advised ERM on the deal structure, initiated the deal.