Phoenix joins oil and gas boom

Phoenix Equity Partners is the latest buyout firm to turn to the oil and gas services sector as source of deal flow as activity slows in mature markets. As early as April this year, deal volume in the oil and gas sector had hit almost $10 billion (€6.4 billion) across 16 transactions.

Phoenix Equity Partners is buying Ashtead Technology Rentals, a provider of rental equipment to the offshore oil and gas sector as well as the environmental monitoring and testing industry, in a £95.6 million transaction. 

The investment in Ashtead Technology Rentals is the eighth investment from Phoenix’s £375 million fund raised in April 2006.

Ashtead Technology Rentals is a leader in the rental of electronic equipment to the offshore oil and gas sector and the environmental monitoring and testing industry and operates from 14 locations in the UK, North America and Singapore.

The buyout has been led by Ashstead’s managing director Andy Doggett and Andy Holroyd, president of North America. Their team has a long history with the business.

As part of the transaction, Brian Long has joined as chairman.  Long previously chaired private equity-backed businesses, including Moody International and Alex Stewart Group. 

Chris Hanna, partner at Phoenix, said: “The management team have done an outstanding job in building a truly impressive business and we are delighted to have the opportunity to work in partnership with them over the coming years to develop the business further.”

Oil and gas services deals have so far proved to be one of the most resilient sectors as the private equity market, especially in the UK, slows.

As early as April this year, deal volume in the oil and gas sector had hit almost $10 billion (€6.4 billion) across 16 transactions, compared to $11.7 billion across 40 deals in the whole of 2007, according to data provider Dealogic. 

Investment by buyout firms in oil and gas has developed significantly in recent years. In 2005 there was $4.8 billion of investment across 24 deals, while 2006 was a record year with $26.9 billion of investment in 44 deals. However, the data for 2006 was skewed by the $21.7 billion take-private of Kinder Morgan, the US energy transportation, storage and distribution company – the largest private equity deal ever in the oil and gas sector.  

In April, oil and gas buyouts have represented 25 percent of activity by financial sponsors, while, in the first quarter, the sector accounted for 9.8 percent of private equity deals by value. This compares to around 1.5 percent in the full year 2007 and around 4 percent in 2006, despite that being a record year.