TECHNOLOGY group Amor has confirmed plans to raise up to £50 million to fund acquisitions after posting its fourth consecutive rise in annual sales and
Glasgow-based Amor is looking for additional capital to support its expansion in the UK and abroad. The aim is to more than quadruple revenues to £250m by 2016.
New investors are being sought in a move that will create an exit for Amor’s majority shareholder, private equity group Growth Capital Partners (GCP).
Speaking as Amor released its latest results – which show a 17 per cent rise in profits to £8.2m – chief executive John Innes said the company is already “actively engaging with acquisition targets”. The first in a series of deals could be announced by the end of this year.
“We know what we want to buy – we know what we value here,” Innes said.
The business has doubled in size since its creation in May 2009, when GCP backed the £28m management buy-out that created Amor. This has been achieved primarily through organic growth, including last year’s 27 per cent rise in revenues to £57.2m.
Amor’s energy division benefited from buoyant activity in that sector, with sales 20 per cent higher at £23.4m. Its transport and public services divisions also clocked up growth.
Although on course to hit turnover of £63.5m in the current year, Innes wants to up the ante by snapping up rivals to complement the business.
One aim is to expand the transport division, which is predominantly driven by sales of Amor’s Chroma airport management system. Innes would like to add equivalent products for the rail and port sectors to open up new markets, particularly in the United States.
Innes would also like to extend the international reach of the energy division, which has small offices in the US and Canada. An obvious starting point would be the Middle East, where Amor could build upon the transport division’s existing relationship with Dubai Airports.
Those operations are the most promising in terms of exports, Innes said, an area he wants to build upon following last year’s 25 per cent rise in international revenues to £7.4m. Closer to home, he sees huge potential in grabbing a larger slice of the UK’s £13 billion public sector IT market.
Innes estimates that Amor could add as many as 2,000 employees over four years, with half of those in Scotland.
Asked how Amor would fund its expansion plans, Innes said the company wants to restructure its current ownership to bring in new financing. This is being done in conjunction with GCP, which is considering selling its stake on to a larger private equity house.
Another option would be a market listing: “Scottish technology business Smart Metering floated a couple of years ago, and that’s gone pretty well for them, so that is something we could consider,” he said.
Innes did not rule out the possibility of a trade sale, but as the architect of the deal that created Amor – and a minority shareholder in the business – he is clearly reluctant to see the company he carved out subsumed by a larger rival.
“Conceptually I find it difficult to imagine trade coming in with a knock-out offer to force the end of the Amor story,” he said.