FFL Partners finds deals in relatively untapped industrial tech segment

FFL Partners is eyeing more deals in the industrial internet of things after it acquired Servelec Technologies, a data-connectivity platform for water processing.

The PE firm is looking particularly in telemetry — automated data measurement and data transmission — for water and wastewater applications, gas-tank data connectivity, and oil-and-gas monitoring and automation, Greg Long, partner at FFL, told Buyouts.

“One of the major trends in the industrial-technology space is to collect data from industrial equipment to increase efficiencies,” Long said. “Industrial connectivity devices enable data communications back to a platform allowing users to monitor and run analytics on the data.”

The San Francisco firm wants to make three or four platform investments and some follow-on investments out of Fund IV, which closed on $2 billion in August 2015. FFL has deployed two-thirds of the fund, Long said.

Last week, the firm added on Servelec Technologies, a carveout from UK-based Servelec Group. The company was taken private by Montagu Private Equity in January 2018.

Servelec Technologies reported revenue of 8.3 million pounds ($11 million) for first-half 2017. For all of 2016, the company reported gross profit of 8.5 million pounds on revenue of 17.1 million pounds.

The carveout will add to Laurel Solutions, a platform FFL structured as a holding company and created by acquiring Data Online, Wikon, Wesroc, iTank, Bacharach and Neutronics.

Each brand company focuses on remote monitoring in different sectors, from water metering to automotive.

Servelec will bring new capabilities with its control systems, where the company has many decades of experience, as well as with new market exposure in the industrial space, Long said.

Raymond James Investment Bankers Dominic Emery and Brendan Tierney presented Servelec as an investment opportunity to FFL and later assisted on the transaction.

FFL, founded in 1997, focuses on the lower-middle market and invests in companies across healthcare, financial services and industrial technologies.

Industrial tech is a less explored and understood subsector within the technology universe, Long said.

“While other areas of tech investing have attracted a ton of interest, we are focused on industrial connectivity and the remote asset monitoring space,” he said.

“We have been able to find high quality businesses and capture some very attractive growth. These types of technology opportunities may not attract as much private equity interest as other technology areas.”

Action Item: Contact FFL at +1 415-402-2100.