03.06.2013

AFI acquires Hi-Reach and Access Rental Gulf

The UK’s second largest powered access rental company AFI has finalised the acquisition of the UK operations of the country’s ninth largest powered access rental company Hi-Reach.

At the same time AFI has acquired the Dubai based associated company Access Rental Gulf. The business which is led by Chris Light, was established at the end of 2007 by AFI directors Nick Selly and David Shipman.

The conclusion of these acquisitions coincides with an £85 million restructuring of its finances, with private equity firm Rutland Partners investing £30 million in the expanded business giving it a 51 percent controlling interest. Other shareholders are largely made up of the company’s managers who have jointly invested a further £13 million in the business. Rutland also owns a major stake in Brandon Hire.

Hi Reach Access, has been acquired from owner and founder Paul Richards, but the deal does not include the Abu Dhabi based Safe Lift business, which Richards will retain. Hi-Reach UK owns the Safe Lift fleet so Richards will purchase the Middle East machines from Hi Reach at around the same time as the merger completes.

Hi-Reach/Hi-Lift Equipment reported revenues in 2012 of £11.6 million with a pre-tax profit of £772,000, a substantial improvement on 2011. According to the AFI release around £10 million of this revenue and 1,500 lifts are attributed to the Hi-Reach UK business. Access Rental Gulf has annual revenues of around £4 million with a rental fleet of around 400 units. The deal will take AFI’s revenues to around £50 million this year with a fleet of 5,500 machines.

The plan is to retain Hi-Reach and Access Rental Gulf as separate businesses, along the same lines as most of AFI’s recent acquisitions. Richards will remain on board at Hi-Reach for at least a six month period, on a consulting basis, in order to help manage the transition.

Group business development director Nick Selley said: “These developments have increased the AFI group’s annual turnover from around £30m to almost £50 million and our fleet from 3,700 machines to over 5,500. Although AFI has acquired several companies during recent years, the Hi-Reach acquisition is by far our largest deal to date and it emphasises how we are well positioned to capitalise on opportunities as they develop in the market place.”

“Hi-Reach’s customers will have the added advantage of having access to AFI’s 20 training centres throughout the UK and our team of 15 full time trainers. In addition, they will also have ready access to one of the most modern and versatile powered access hire fleets in the UK, together with a comprehensive range of new and used machines for sale, and AFI finance packages.”

Talking about the Middle East he added: “AFI has the infrastructure in place to support the continued growth of Access Rental Gulf. At the same time, whilst trading conditions in the UK remain challenging, Access Rental Gulf is experiencing strong demand in its main markets of Dubai, Abu Dhabi and Saudi Arabia.”

Vertikal Comment

There is so much going on with this series of transactions that it is hard to comment in a concise manner. It is a very interesting move for AFI of course, adding almost 2,000 aerial lifts to its fleet, including a good number of large boom lifts. It also gains eight new locations in the UK, although a good number of them overlap with AFI locations, however it will substantially increase its presence in some markets such as South Wales, London and Birmingham, while adding a second location in Scotland.

While the AFI and Hi-Reach operations will remain separate, it is likely that over time some consolidation will occur, at least in terms of depot mergers or location sharing into the larger/better facility or by moving two depots in to a larger new location. Although we understand that at this stage there are no plans to do so.

As for the shareholders of Hi-Reach it gives them a sizeable pay out, following a strong year at a time when the market is still very competitive. It also allows Richards, 55, to focus on the Middle East operation and other ventures.

AFI is no stranger to working with Private Equity firms as investors, since David Shipman and Geoff Gibson bought into the company in 2002 it has worked with Northern Venture Managers and Barclays Private Equity it then used Santander for a major refunding programme in 2010.

The Hi-Reach acquisition negotiations have been on-going for many months, but was only concluded and signed off on Friday afternoon. The move is on balance a good one for both parties, while the incorporation of Access Rental Gulf makes good sense and was possibly overdue.

Interesting times