Baxi launches second swoop with £4.5m Camco deal

BAXI Partnership, the Fife-based investment firm spun out from the eponymous boiler maker, yesterday pushed into the renewable energy market by buying an Aim-quoted advisory business for £4.5 million.

The Scottish firm will pay alternative power developer Camco International £3.25m up-front for its advisory services subsidiary and a further £1.25m over the next two years if it meets performance targets.

The deal is the second in as many weeks for employee-owned Baxi and takes its headcount from 20 to 90.

Last week it bought New Malden-based RM2, which advises businesses on how to run employee share schemes.

News of the latest takeover came as Deputy Prime Minister Nick Clegg told an event in the City that he wanted to create a “John Lewis economy” by reforming tax laws to make it easier for employees to buy stakes in their employer’s companies.

Department store chain John Lewis – and its Waitrose supermarket subsidiary – is often held up as an example of a successful employee-owned company, in which its staff share in the business’ profits. Under the two Baxi deals, the new staff will become partners in the Dunfermline-based firm and will each own a stake in the business.

Peter Stocks, Baxi’s chief executive, told The Scotsman: “We’ve been looking for other advisory services into which we can expand. We have a strong reputation when it comes to advising companies on employee buy-outs and so we were looking for complementary sectors.”

Stocks said the firm will turn over about £8m this year and has a five-year target to grow to £50m of revenues.

The Baxendale family set up their Baxi boiler-making firm in 1866 and sold it in 1983 to a trust set up by its employees. The boiler business – which is now run by BDR Thermea – was sold in 2000 by the trust, which has gone on to offer advice and financial support to other firms being bought by their staff.

Baxi has funded 30 employee buy-outs since 2000 – including the Loch Fyne Oyster Bar in Argyll – and has advised on a further 100 deals.

Buying Camco Advisory Services (CAS) will add offices in Edinburgh, Bath, Sheffield and Wigan to Baxi’s existing bases in Dunfermline and London. But Stocks said the firm had no plans to leave its base in Fife.

CAS advises companies and governments on policies and projects to reduce their carbon dioxide emissions and its centre in Edinburgh was at the forefront of developing ways to measure companies’ carbon emissions.

Camco said it had turned round the loss-making advisory business since buying it in 2007 and that the unit had returned a profit of £500,000 last year.