ESG holding company Inspicio sells Inspectorate to Bureau Veritas

Tuesday 22 June 2010

ESG holding company, Inspicio announced today that it has agreed to sell Inspectorate, its global commodity testing and inspection division, to Bureau Veritas for an enterprise value of £450 million. The transaction is subject to formal approval by the relevant competition authorities.
The combination of Bureau Veritas, a global leader in conformity assessment and certification services in the areas of quality, health and safety, environment and social responsibility, and Inspectorate will further strengthen the global market leading positions of both businesses and will allow the combined group to continue to serve its customers with the highest possible quality, assurance and integrity; underpinned by a truly global infrastructure and support network.

3i and funds managed by 3i acquired a majority stake in Inspicio, following a £345 million public to private transaction in February 2008. Inspectorate is the global commodity testing and inspection division within the Inspicio group and accounts for approx. 70% of the group‘s turnover.

Over the past two and a half years Inspectorate has grown strongly following significant investment from 3i to support the completion of a number of bolt-on acquisitions and capital expenditure to both upgrade existing and establish new laboratories; resulting in the number of employees and turnover increasing by c. 2,000 and 75% respectively, since 3i’s investment. Today, the business is a market leader in global commodity testing and inspection, with a network of over 7,000 people and operations in 150 laboratories in 60 countries. For the year ending December 2009, Inspectorate generated revenues of £246m.

The Inspicio Group will be rebranded as ESG. ESG will comprise Environmental Scientifics Group (a UK market leader in geotechnical, laboratory and analytical and compliance testing, inspection and certification (“TIC”) services) and Eclipse Scientific Group (a UK and Irish market leading food testing business). This group will be led by the current management team of the Environmental Scientifics Group; with Alex Sleeth as Group CEO and Nick Louden as Group CFO. 3i and funds managed by 3i will remain the majority shareholder in ESG, supporting further growth and consolidation of the business. Following completion of the transaction, Robert Walvis (Inspicio Chairman), Mark Silver (Inspicio CEO) and Richard McBride (Inspicio CFO) will step down from the Board of Inspicio.

Mark Silver, CEO of Inspicio, commented:
“Inspicio has come a long way since its founding in 2005. Going forward, this is a great transaction for Inspectorate and I’m sure Bureau Veritas will be a fantastic partner to support the next stage of the business’ development. Moreover, the future of Inspicio’s Environmental and Food business is in very safe hands under Alex’s leadership and I am sure ESG will continue to be a success story in the TIC sector.”

Alan Giddins, 3i Partner, commented:
“3i has worked closely with Inspicio’s management team over the past couple of years to help build Inspectorate into a market leading business. Our experience in the testing and inspection sector has enabled us to support Inspectorate in its consolidation and international growth strategy, making it an ideal partner for further growth with Bureau Veritas. This marks an exciting new chapter for ESG as it continues to build on its market leading positions in the Environmental and Food sectors. We are looking forward to working together with Alex, Nick and the rest of the management team to continue to grow the business and play a key role in the ongoing consolidation of what are highly fragmented markets.”

Alex Sleeth, CEO of ESG, commented:
“For us at ESG, it is business as usual. Our number one focus remains on continuing to serve all our customers to the highest standards. The combination of the unique range of services we are able to offer, the experience of the management team together with the breadth of talent throughout the Environmental and Food businesses ensures we are well placed to deliver on our vision to be the service provider of choice in each of our markets.”

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