Electra Fleming Acquires Inchcape Shipping Services

Electra Fleming, whose future is still uncertain following an unsolicited offer from 3i Group (story, page 3), in February paid GBP47.5 million (euro 69 million) to acquire the shipping services business of Inchcape plc. Since the start of its current financial year in November, Electra Fleming has completed nine acquisitions with an aggregate value of nearly GBP600 million.

Inchcape Shipping Services (ISS), the largest independent shipping agency network in the world, provides ship support services for customers in the oil, defence, cruise and commodity sectors throughout the US, Asia and the Middle East. Operating from 254 offices across 46 countries, ISS provides ship services for more than 30,000 vessels and handles in excess of 1.5 million containers each year. The company has a 2,800-strong staff and in 1997 generated GBP150 million in turnover.

As well as arranging services for vessels during their port calls and providing outsourcing services to container cargo operators, ISS runs a Japan-based agency selling marine and non-marine parts; a freight forwarding operation based in the Middle East; and an insurance service that acts as an agent for Lloyds of London and the International Underwriting Association.

ISS’s current management team, which over the last five years has transformed ISS from a miscellany of local operations into a globally branded and managed business, remains with the company. Simon Morse said the “strong financial backing of Electra Fleming … allows us to continue with ISS’s development using information technology to leverage the skills of our global organisation to become shipping’s leading outsourcing company of the millennium”.

Electra Fleming underwrote GBP14 million of working capital for the deal as well as the entire GBP47.5 million acquisition consideration. The debt component of the funding structure will later be refinanced.

ISS is the first deal for which Electra Fleming has acted as sole underwriter. Although a relatively small transaction in financial terms, it involved a complex and geographically diverse business that would have required extensive due diligence on the part of debt providers. “Our capacity to underwrite the entire financing requirement was important in giving the vendor confidence in our ability to deliver without having to rely on third-party financiers”, explained Electra Fleming director Nigel McConnell.

The private equity house was already familiar with ISS, having tabled a losing bid for the company early last year in an auction that was later scuppered by debt market turbulence.