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Doughty makes first oil and gas services investment

by Paul Whitfield | Published November 28, 2011 at 8:15 AM

Phoenix Equity Partners has agreed to sell Scottish oil and gas services provider Asco Group to London-based buyout shop Doughty Hanson & Co. in a deal that values the target at about £250 million ($389 million).

The deal marks the first acquisition in the oil and gas services sector for Doughty and comes amidst a spate of transactions for mid-sized oil services companies, many of which are experiencing a boom in revenue fueled by a host of new oil and gas projects.

"The sales process has been going on for a few months and was very competitive," said a source with knowledge of the sale. "Doughty paid a little less than £250 million."

Doughty beat other PE firms including New York-based AEA Investors LP and Cinven Ltd., of London, in the Asco auction. The acquisition values Asco at about 8.5 times Ebitda of £29.2 million. Asco's management, which holds about 20%, will remain at the company and will reinvest alongside Doughty.

Phoenix Equity, of London, bought Asco in 2006 for £124 million and has since concluded ten bolt-on acquisitions, most recently in November last year when Asco paid an undisclosed sum for Australian gas and oil logistics support company ShoreBase Pty. Ltd. Phoenix also backed Asco acquisitions in Canada, Trinidad and Tobago and Azebaijan, growing sales at the enlarged business from £240 million in 2005 to about £516 million.

Doughty will seek to continue to build the operation through acquisitions that will focus on expanding Aberdeen-based Asco's operations beyond its traditional North Sea market.

"With growing demand for energy, the company is well positioned to benefit from the trend towards specialist outsourced logistics, particularly in the emerging high growth O&G [oil and gas] markets," Doughty Hanson principal John Gemmell said in a statement.

Asco provides logistics support, ranging from hazardous-waste transportation and the delivery of food supplies to oil rigs. It employs about 1,600 people.

The deal for Asco comes less than a week after San Francisco-based Industrial Growth Partners agreed to sell its oil services operation, Seaboard Holdings Inc., to Weir Group plc for $675 million. A day earlier Oceaneering International Inc. said it would acquire AGR Field Operations, an inspection and maintenance provider to oil and gas producers.

Doughty took financial advice from HSBC Holdings plc. Phoenix turned to Evercore Group LLC.

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