Leeds engineering services group Renew acquires Scottish railway contractor in £80m deal

Renew Holdings plc, the Leeds-based engineering services group, has agreed to acquire QTS Group Limited in an £80m deal.

To part-fund the acquisition of the the specialist independent rail contractor, Renew has announced a placing to raise £45m.

Headquartered in Drumclog, Scotland, QTS was founded in 1992 and currently has eight operational bases across the UK.

The firm,has a directly employed workforce of over 300, which is supplemented through the use of contractors as demand dictates.

Services provided by QTS include civil asset management, geotechnical and earthworks, fencing, devegetation, drainage, specialist plant hire and training.

Renew said that the acquisition will add complementary services to its existing rail offering and increase its market share, footprint and positioning in the rail market.

The deal is expected to be completed on 10th May 2018, following completion of the placing.

Numis, on behalf of Renew, has placed 12,676,056 new ordinary shares of 10 pence each at a price of 355 pence per share with new and existing investors, raising £45m and representing approximately 20% of the company’s existing issued share capital.

The net proceeds of the Placing will be used to fund part of the deal, along with a £35m four year term loan, £20m revolving capital facility and £10m overdraft facility provided by Renew’s existing lending bank HSBC.

Paul Scott, CEO of Renew, commented: “We are delighted to welcome the management and staff of QTS to the Renew group. This is a very complementary and earnings enhancing acquisition that aligns with our established and proven strategy, strengthening our position in the UK infrastructure market.

“QTS has grown to become a leading and well respected brand in the Rail sector and we very much look forward to supporting its ambition for continued growth including opportunities via collaboration across our expanded range of services in this sector.”

Alan McLeish, managing director of QTS, added: “QTS is delighted to be joining the Renew Group and we very much look forward to the future as part of a larger group. The transaction will provide opportunities to expand our market share and benefit from the synergies with their existing successful brands working in highly regulated sectors.

“It was important to attract an owner with relevant expertise to support our growth ambitions without compromise to customer service or staff loyalty, the Renew business model fits perfectly with these aspirations.”

Walker Morris advised Renew on the proposed acquisition of QTS and the placing. The law firm’s team of multidisciplinary specialist lawyers included Debbie Jackson, Richard Naish, Laura Cavell and Sonia Lonsdale (Corporate), Peter Considine and Laura Lister (Banking & Finance), Andrew Rayment and Charlotte Smith (Employment) and Sarah Bruce (Tax).

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