KBC Advanced Technologies plc

Software and consulting to the oil & gas sector

Visit the KBC Advanced Technologies website
Status Realised
Period Feb 10 – April 16
Headquarters London, UK
Sources: Takeover price LSE, company financials FY15
Company

At the time of our first investment in 2010, KBC Advanced Technologies was a well-established and highly regarded niche provider of consulting services and software tools to the downstream oil & gas industry enabling oil refiners to improve operational efficiency and profitability.

Investment rationale
  • Highly-regarded consultancy firm to the downstream oil and gas sector with underexploited software offering
  • High levels of repeat business and software license contract renewals of over 90%
  • Opportunity to significantly increase software revenues in order to drive margins and valuation
  • Equity valuation ignored inherent value of the software business
Realisation

We accepted a 210p per share, £180m recommended cash offer for KBC Advanced Technologies in April 2016 from Yokogawa following a competitive process. The offer was priced at a 69% premium to the undisturbed price and represented a valuation multiple of 11.7x historic EBITDA.

Kestrel involvement, actions and impact

After a small initial investment in 2010, we gradually built our stake through open market purchases and by supporting company fundraisings to reach 16%.

Following concerns about the Company’s strategic direction, Oliver Scott joined the Board as a non-executive director in November 2010.  Over the course of the next year, the Company defined a new strategy to lead with its previously under-exploited software offerings in order to build stronger recurring revenues and improve margins whilst also widening its reach into the more lucrative up-stream oil & gas markets. Over the following years, several changes changes were made to strengthen the Company’s executive and non-executive leadership and two strategic software acquisitions were completed, funded by shareholders and supported by Kestrel. A generous new equity and bonus incentivisation scheme was also implemented for all senior staff, which established strong shareholder alignment and crystallised when the Board recommended the Yokogawa cash offer.

“Always questioning, not afraid to challenge and very easy to approach. A joy to work with Kestrel.”

Andy Howell, Chief Executive, KBC Advanced Technologies plc