H&F offloads Wood Mackenzie in £1.85bn trade sale

The energy and metal industries research company was reported to be preparing an IPO just last week

US-headquartered data analytics provider Verisk Analytics has agreed to acquire energy and metal industries research company Wood Mackenzie from San Francisco-based private equity firm Hellman & Friedman and other shareholders for £1.85 billion (€2.6 billion; $2.8 billion), according to a statement from Verisk.

The deal will be funded with around $2 billion in debt and up to $800 million in equity, Verisk said, with the company intending to de-lever to around 2.5x debt/EBITDA by the end of 2016.

Market sources have indicated that the sale will generate an internal rate of return of around 35 percent for Hellman & Friedman. The firm declined to comment on financial details of the transaction. 

Just last week the Financial Times reported that Wood Mackenzie was preparing an initial public offering that could value the company at up to £2 billion (€2.8 billion; $3 billion), with a minimum expected valuation of £1.8 billion (€2.5 billion; $2.7 billion).

Based in Edinburgh, Wood Mackenzie provides analysis and advice on energy assets, companies and markets to clients in more than 80 countries. Its customer base includes more than 800 international and national energy and metals companies, financial institutions and governments, working with strategy and policy makers, business development executives, market analysts, corporate finance professionals, risk teams and investors.

Wood Mackenzie has around 1,000 employees worldwide with offices in Edinburgh, Dubai, Houston, London, Singapore, and Sydney. The company’s revenues and EBITDA for the year ending 31 December 2014 were £227 million (€318 million; $342 million) and £107 million (€150 million; $161 million) respectively, representing an EBITDA margin of 47.1 percent, Verisk said.

Hellman & Friedman acquired a 63 percent stake in Wood Mackenzie in July 2012 from Charterhouse Capital Partners in a deal valuing the company at £1.1 billion ($1.7 billion; €1.4 billion), Private Equity International reported at the time. Charterhouse, which reaped a return of more than double its initial investment, retained a 12.4 percent stake in the business. The investment came from Hellman & Friedman’s seventh fund, which was raised in 2009.

It is understood that the sale of the remaining stake brings the realised return for Charterhouse on Wood Mackenzie to 3.4x. 

Charterhouse declined to comment on the transaction. 

Following the acquisition, which is due to complete during the second quarter of 2015, Wood Mackenzie CEO Stephen Halliday will continue to lead the business, reporting to Verisk president and CEO Scott Stephenson, Verisk said.

Morgan Stanley and BofA Merrill Lynch are acting as financial advisors to Verisk, with BofA Merrill Lynch and Morgan Stanley acting as joint lead arrangers on a $2.9 billion bridge financing to support the transaction. Davis Polk & Warwell are providing legal advice.

Deutsche Bank and Lazard provided financial advice to Wood Mackenzie, with Dickson Minto W.S. acting as legal advisor. Freshfields Bruckhaus Deringer advised the selling private equity funds affiliated with Hellman & Friedman and Charterhouse Capital Partners.