Motherwell Bridge sold to Bahrain bank

Published on Saturday 21 June 2008 15:19

MOTHERWELL Bridge, the engineering contractor, has been sold to a Bahrain financial institution and the existing management in a deal that will increase the Lanarkshire firm's exposure to key Middle Eastern markets.

The secondary buy-out, due to be announced this week, will see the Kuwait Finance House (Bahrain) take a majority stake in the business alongside nine managers who will roll over their shares into a new holding company.

KFH (Bahrain) has $1bn (506m) of assets and is part of the Kuwait Finance House group that has $30bn (15.2m) invested mainly in property.

JOHCM Private Equity, a part of JO Hambro Capital Management, that backed the management buyout in September 2006, has sold its entire stake, believed to represent around 75% of the company. It is expected that details of the deal will not be disclosed.

Hugh Hayes, chairman of Motherwell Bridge, said that the company would remain headquartered in Lanarkshire and its operations will be unaltered by the change of ownership apart from raising its profile and activities in the Middle East.

Interest from the region has been growing steadily following the launch last year of Motherwell Bridge International, he said.

"We increased our emphasis on the international business two years ago, and took the decision last year to split our engineering contracting business into two separate companies, one concentrating on the UK and one overseas.

"Although it is early days, we can see the momentum building in the region, and I won't be surprised if within three years from now we are earning as much from outside the UK as we are from within. That is certainly our intention, and having a Middle Eastern-based majority shareholder can only help."

Abdulhakeem Al Khayyat, chief executive and managing director of KFH (Bahrain), said the firm was backing a "proven management team which we believe is capable of delivering significant growth by acting as specialist engineering sub-contractors in the oil, gas and petrochemicals sector".

He said opportunities in the Middle East are significant and the new shareholder will work with management to generate business leads.

Hayes said the tie-up with JOHCM Private Equity in 2006 gave the firm the means to offload its aerospace and inspection operations and allow the company to concentrate on its engineering contracting activities.

"The sale of these operations, to management and to a trade buyer respectively, enabled us to push ahead with our plans and restructure the group earlier than anticipated."

Hayes and his board have been negotiating with KFH (Bahrain) since January and said the deal would build on Motherwell Bridge's recovery from its near collapse in 2003. It is now cash generative after being 51m in debt at the time of its rescue by a syndicate of banks.

After restructuring, the firm retains four plants in Motherwell, Immingham, Warrington and Wakefield, though many of its 800 staff work on clients' sites.