UK growth fund fires up fifth oil and gas deal

The £2.5bn growth investor, established less than two years ago to support promising British SMEs, has now backed Scotland-based Petrotechnics.

The UK’s Business Growth Fund has invested £6 million (€7 million, $9.1 million) in Petrotechnics, a Scottish provider of software for the oil and gas industry. 

Founded in 1990, the company sells risk management solutions to businesses operating in hazardous industries. The software it designs, used to reduce plant shutdowns, streamline processes and increase safety within client organisations, has been adopted by around 80 percent of assets based in the North Sea and 40 percent of those operating in the Gulf of Mexico. 

BGF’s capital injection will be used to fund its geographic expansion, hire new staff and finance product development. 

“Petrotechnics has demonstrated its ability to deliver complex software solutions to major oil and gas companies throughout the world. There is an increased priority on the management of operational risk and safety in hazardous industries, with several major incidents over the last decade demonstrating the potential consequences of poor control of work,” said Mike Sibson, BGF investment director, in a statement. 

It is good to see that our offering is gaining such traction. I would expect further oil and gas related investments during 2013

Simon Munro

Over the past five years Petrotechnics has generated revenues in the £10 million to 15 million range and employed more than 100 staff. Phil Murray, the company’s CEO, has a 10-year long experience at BP, where he has held a number of technical, operational and managerial positions. 

It is the fifth investment of the fund in the oil and gas industry, and comes as private equity interest in businesses operating in the energy services space seems on the rise. A number of industry insiders, asked on the outlook for buyouts in the sector, agreed that a number of deals would likely materialise in the near future. 

As resources in the North Sea started to plateau, they said, mid-sized companies needed fresh capital to expand overseas; meanwhile, domestic managers were keen to diversify away from businesses tied to the domestic economy. The oil and gas services sector, propped up by new discoveries in emerging markets, were thus seen as a useful hedge against flagging growth prospects at home. 

“This is our fifth oil and gas investment in just over a year and it is good to see that our offering is gaining such traction. I would expect further oil and gas related investments during 2013,” commented Simon Munro, BGF’s regional director for Scotland. 

BGF was set up in July 2010 to provide financing to growing UK SMEs. It invests between £2 million and £10 million in the businesses its supports, in exchange for a minority stake and a seat on the board. 

Equipped with £2.5 billion in capital, it is backed by Barclays, HSBC, Lloyds, RBS and Standard Chartered, the country’s five largest banking groups.