Amec cashes in FM Venture

Contractor and partner Pell Frischmann make £60m on sale of former PSA business

 

Consultant Pell Frischmann and Amec have sold Building and Property Management Services, the facilities management joint venture they created from part of the government’s Property Services Agency, for a profit of about £60million.

 

BPMS, valued at £84.6m, has been bought by venture capitalist CVC Capital Partners, Mark Broughton CVC’s investment Director, will join the facilities manager’s board.

 

The deal was struck at 4am on Saturday. It is a key part of Amec chief executive Peter Mason’s re-organisation of the company after last year’s failed takeover by Norwegian contractor Kvaener.

 

At next week’s interim figures announcement, Mason is expected to say that Amec will be focusing more on technical engineering and that it will be more selective in bidding for building projects. However, it is still keen on partnering and private finance initiative contracts.

 

BPMS was formed in 1993 as a joint venture between Pell Frischmann and Amec. It bought two of the PSA’s building management divisions for £11.4m, payable over five years. CVC now becomes responsible for meeting the outstanding payments to the government.

 

In the year to September 1995, BPMS made a £15.5m pre-tax profit on turnover of £363.6m. BPMS chief executive Clive Groom said senior managers had taken a “nominal stake” in the company as part of the deal.

 

The sale was driven by Amec to avoid a possible clash between BPMS and its M&E arm, Matthew Hall, in targeting the same clients.

 

Amec finance director Simon Batey said “It became apparent that we were running the risk of getting both names on a bid list”. Batey also said the margins on government contracts that have been rebid since the PSA’s sale have come down by up to two-thirds. He said BPMS will not be able to continue making the same level of profit on government contracts as it was making when the company was first set up.

 

Amec is using part of its £31.6m profit from the sale to pay for the British Rail infrastructure maintenance company it bought in April The rest will be invested in Matthew Hall and Amec’s other facilities management interests in the oil and gas sectors and in privately financed roads.

 

Pell Frischmann, which said it was reluctant to sell BPMS, will gain £37.2m from the sale. Director Richard Frischmann said the money will be reinvested in PFI projects, infrastructure and property. Frischmann said, “Building and Property is the first thins we’ve really sold. Our aim is to build up long-term investments”.

 

Keywords: Richard Frischmann