The UK hard facilities market has plenty of strong local brands, but it is still early in its consolidation with relatively few scaled platforms, Jack Armstrong, principal at Alpine Investors, told PE Hub.
To seize the opportunity that backdrop provides, the San Francisco-based firm made its first platform investment in the UK in September, with the launch of Eight Group Service Partners, a hard facilities management platform.
Hard facilities are the physical and structural services that keep a building safe, operational and legally compliant.
“We’ve spent a lot of time investing in technical services in the US, and when we looked at the UK, we saw many of the same characteristics we like: a large and highly fragmented market with mission-critical, recurring services,” said Armstrong.
The firm also recognized a familiar dynamic: a shortage of skilled technical talent, which is why talent development is a “key pillar” of Alpine’s plan for Eight Group.
“Through our experience building Orion Services Group in the US, we’ve also learned a lot about what works and what doesn’t in scaling technical services businesses,” said Armstrong. This gave the firm conviction that it could bring that learning to the UK.
Alongside the launch, Eight Group brings together MV Lifts, Enertech, KCE FM, DPP, Irwin M&E and four other businesses to form the platform. The combined group repairs, maintains and installs the HVAC, electrical, mechanical, lift and fire safety systems that keep commercial buildings operational.
There’s plenty of runway for further add-ons. The market is “large and growing, roughly £24 billion ($32 billion; €28 billion), and expanding more than 5 percent annually as safety and environmental regulation increases and the UK’s building stock ages,” said Armstrong.
Alpine is looking for businesses across core mechanical and electrical services and select technical specialties. In terms of size, the investor generally looks for £8 million or more in revenue and £1 million or more in EBITDA for core M&E businesses.
“The ambition isn’t simply to aggregate businesses,” said Armstrong. “We want to build a leading technical services group that combines the responsiveness and entrepreneurship of great local businesses with the technology, talent, capabilities and resources of a larger group.”
Alpine is excited about UK dealmaking in a broader sense too, as the firm sees strong founder-led businesses and attractive service markets in the country, according to Armstrong.
“We’ll continue to look for opportunities where we believe we have a genuine right to win, while staying disciplined about where we invest,” he added.