Acenta

To finance a leading UK steel manufacturer, a private equity house needed a partner with appropriate industry experience and sound financial resources.

Acenta’s Challenge

Headquartered in Willenhall, West Midlands, Acenta Steel Limited (formerly Niagara Lasalle UK) is a fully integrated manufacturer and distributor of hot rolled and bright steel bars. Employing 350+ people in six UK-based locations, Acenta processes and distributes over 90,000 tonnes of engineering-grade steel bars each year, of which more than 50% are exported. Its vast range of niche products are shipped to large original equipment manufacturers and specialist engineering customers, with end applications in key sectors such as automotive, wind power, hydraulics and yellow goods (e.g., JCB and Caterpillar). The company provides solutions to approximately 5,000 customers across the UK, Europe and North America.

Acenta is the UK’s largest independent engineering steel processor and distributor, and has maintained a sizeable market share throughout the economic downturn. As a result, whilst the UK manufacturing sector as a whole was struggling, the UK private equity house Endless LLP recognised the promise inherent in the business, and expressed interest in purchasing the company from its US parent, Niagara Corporation, in January 2011. This acquisition would require a total funding of £27 million, coming from a mixture of debt and equity.

GE Capital’s Strategy

GE Capital’s 5-year relationship as a lender to Acenta’s former parent company meant it had a comprehensive understanding of the steel bar business. Equally important, GE Capital could offer facilities in support of both working capital and acquisition funding.

GE Capital’s Drew Johnson and Paul Edmeades worked alongside the Endless team to commit asset-based lending facilities of £19 million, comprising £14 million of accounts receivables and £5 million of inventory. The acquisition also included a number of freehold properties, providing Acenta with a solid asset base that ensured the company could continue to grow its export business - a key feature of their growth programme.

The Results

GE Capital ensured that Acenta had both working capital to meet its growth aspirations and venture capital to support the management’s strategic vision. The result of this key combination was a flexible and customer-friendly product that provided Acenta the base to grow its business by more than 40% to £90 million during 2011.

The future looks bright for both Acenta and the Midlands region. According to Tarlok Singh, Chief Executive of Acenta Steel Limited, “There continues to be excellent opportunities to grow our business in the UK and via increased exports. I am really excited about our future prospects and delighted to secure the long-term future of our business. We believe key to our success is investing in long-term relationships with our customers and suppliers. Our partnership with GE is a great example of how we have established Acenta as a premium, vertically-integrated supplier of high-grade, niche solutions into our global customer base.”

James Woolley, an investment director at Endless, added “To complete a deal such as this shows that manufacturing continues to be at the core of the UK’s economic recovery, and here in the Midlands we continue to lead the way in the UK’s manufacturing capability.”