Times article today30 May 2020 09:41
SIG, a roofing and insulation supplies group, is to be bailed out by a private equity firm.
In the first of what the market says will be a number of “Pipe” rescues — public investment by private equity — Clayton Dubilier & Rice is to stump up half an expected £150 million fundraising to get SIG, formerly Sheffield Insulations, back into shape.
If it had been a rights issue with existing shareholders, the fundraising would have been broadly on a one-for-one basis as the money SIG is raising virtually matches its market valuation.
CD&R, an American firm, will effectively be taking a 25 per cent stake in the enlarged capital of the company with the option in a secondary fundraising to take that holding up to 29.9 per cent, below the 30 per cent level which triggers the need to launch a formal takeover. Its support has come with a demand that it gets two seats on the board.
The deal has the blessing of SIG’s largest shareholder, IKO, the roofing materials manufacturer which owns 15 per cent of the company.
SIG is a key player in the British construction industry’s supply chain, employing 9,000 people in 585 branches in Britain, Ireland and mainland Europe, and with £2 billion of annual revenues.
It supplies building materials such as tiles, slates and battens, as well as insulation, claddings, façades and partition walls. It is the port of call of many a jobbing builder whose order may be too small for the bigger players in the merchanting sector.
It is a company that has been in tumult in recent times. Despite vigorous cost-cutting and the sale of unwanted businesses over the past three years, its shares have fallen from a high of 170p in 2017 to a low of 17½p last month.
The fundraising announcement extended the recent minor rally in the shares, up 1¼p at 29¼p yesterday.
The news was accompanied by comments from the new chief executive which do not need much reading between the lines to decipher his opinion of what has gone on before.
Indicating that SIG should get back to being a local business, “reconnecting” with its own disaffected staff and its customers, Steve Francis said: “After nearly a decade of contraction, which has included disposals, rationalisation, debt and cost reduction, it is now time to focus on how to grow SIG and rebuild our . . . important role in the construction industry.”
Mr Francis, 58, is an outsider to the industry, coming with a reputation as a company doctor whose last job was trying to save Patisserie Valerie, the café group. He was parachuted in to SIG in February when Meinie Oldersma, 60, who had been chief executive, left the company abruptly.
It’s time for good guys with deep pockets to rescue UK plc
It might be appropriate that the first “Pipe” of the corporate crisis is in the building trade (Robert Lea writes).
The £75 million public investment by private equity into SIG is, say some, a first sighting this spring of what will be many.
The argument goes that with City regulators having relaxed pr
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