The firm’s largest shareholder, venture capital firm CVC, is understood to be keen to sell its 75% stake.
Building & Property chief executive Clive Groom appointed investment bank SG Hambros to advise on a flotation as an exit route for CVC back in 1998. Groom said last year that he was then still planning a float, but last week he told Building: “We realised floating was not a realistic prospect because of the market sentiment against mid-sized companies such as ours.” Now that flotation is off the cards, CVC’s easiest exit route would be to sell the business outright.
CVC has owned 75% of Building & Property since it backed an £85m management buyout from parent Amec in 1996. A number of contractors have approached Building & Property, but none has yet launched a formal bid. The company is rumoured to be worth £60m–100m.
The firm last year derived 75% of its £200m turnover from Ministry of Defence work. But Groom is aggressively pushing the company into private finance initiative health and education markets.
Commercial signature is imminent on the £340m University College London Hospital PFI scheme, for which Building & Property is preferred bidder in a consortium with Amec and Balfour Beatty.
Groom explained that facilities management is in favour with investors because it is a growing market, and because FM contracts tend to be run over long time periods, guaranteeing steady income streams – unlike traditional contracting, which is affected by the economic cycle. However, he also said the FM market was rapidly consolidating and that larger businesses were more attractive to investors.
Former contractor Amey relisted itself as a support services company last year after buying FM firm Comax. Groom said: “All the construction companies would love to have [Amey chief executive] Brian Staples’ stock market rating by realigning their business and getting heavily into FM. There are two ways to do it, and the easy one is to go out and buy someone else.”
