SCOTTISH engineering entrepreneur Jim McColl is close to acquiring an Italian business for about €150 million (£125m), after raising £420m for his third Clyde Blowers Capital fund.
Mr McColl revealed yesterday he had to turn away some investors and scale back the stakes of others as he closed the fundraising for his Clyde Blowers Capital Fund III at £420m, well ahead of an initial target of £350m.
The entrepreneur, who has built his East Kilbride-based Clyde Blowers firm into a global engineering business empire with nearly 5500 employees, is planning to acquire seven or eight "platform" businesses in deals with an average equity value of about £50m to £55m using the proceeds of the new fund.
Mr McColl flagged the potential to do deals with a total value of more than twice the £420m raised, with those putting up money having the opportunity to act as co-investors in acquisitions in addition to their subscription to, and involvement through, the fund.
He declined to say how much he himself had put into Fund III, beyond confirming the sum ran into tens of millions of pounds.
Mr McColl used his £250m Clyde Blowers Capital Fund II, raised in 2008, to add US-based Union Pump to the Glasgow-headquartered former Weir Pumps business which he acquired in a deal in 2007 which saved hundreds of jobs.
The entrepreneur revealed to The Herald yesterday he was on the verge of a major acquisition in Italy. He declined to identify the target, but signalled a deal could be announced as early as next week.
He said: "I am off this afternoon to Italy to look at another acquisition we are at a very advanced stage of diligence on. That one could be announced next week."
Clyde Blowers Capital said the fundraising process for its third investment vehicle had "helped to broaden the core investor group across a wide range of institutional investors, including university endowments, pension funds and fund-of-funds". It said 62% of the vehicle was being funded out of the US and 38% was coming from Europe.
Mr McColl said Clyde Blowers Capital Fund III would be used to finance the acquisition of Finnish company Moventas Group, a big global player in the manufacture of wind turbine gearboxes.
This €100m (£83m) buy, which is being undertaken with co-investors in an all-equity deal, was announced in November and is on track to be completed next week.
Mr McColl has highlighted his ambitions to play a big role in the development of a manufacturing base in Scotland to support the renewable energy industry, and the Moventas deal ties in with this vision.
When Samsung announced this week it would base its first European offshore wind project at Methil in Fife, it also emerged the South Korean giant had signed a multi-million-pound deal with David Brown Gear Systems, part of Clyde Blowers. David Brown will supply gearbox systems for Samsung's next-generation offshore wind turbine.
Mr McColl hammered home the operational expertise of the Clyde Blowers team in the engineering sector, highlighting a strategy and track record of acquiring companies and building them into global businesses before selling them on.
He noted the former Weir Pumps business, which he used as the platform to build ClydeUnion Pumps, had only a single factory at Cathcart on the south side of Glasgow when he acquired it. Mr McColl said ClydeUnion Pumps had eight manufacturing plants around the globe by the time he sold it.
Mr McColl announced last August he was selling ClydeUnion Pumps to US-based SPX for £750m. ClydeUnion now employs about 900 people at a Cathcart site which was threatened with closure before Mr McColl stepped in to buy the former Weir Pumps business from Glasgow-based Weir Group.
Citing differences between his team and financial engineers with no operational experience, Mr McColl said: "Investment funds can take up to three years to reach target size. Our Fund III has done this in only nine months. Past private equity models had high reliance on financial engineering, but outside investors are now looking for added value from an operational team. The skill and knowledge we have appeals to these other investors."
He added: "We have massive operational experience across the engineering sector of the power industry including nuclear, oil and gas and metals and minerals. We understand the economic agenda and how the competition operates. With the major changes that are taking place in the global economy, it is doubtful that the old model of funders supplying money without operating expertise will ever come back. This is the new world."
Clyde Blowers Capital yesterday announced the purchase, with its second fund, of Montreal-based industrial gear manufacturer Unigear Industries for C$24.5m (£15.5m).
Continued on Page 27
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article