A waste management firm operating across Devon, Cornwall and Somerset has received a £2m investment from BGF (Business Growth Fund) alongside an additional £1.75m of funding from HSBC to pursue growth. The capital will be used to support the continued geographical expansion of Drainology across the South West.
Drainology, which carries out expert drain repair and surveys, is owned by Wales Environmental. Wales Environmental was founded in 1980 and provides liquid waste removal and drainage services to commercial and domestic customers. The business generates revenues close to £7m and employs more than 80 people across the Group.
In the past two years and under the leadership of Chief Executive Llyr Williams and Chairman Owen Sennitt, the business has expanded its footprint with the acquisition of Cardiff Drain Cleaning Company, Drains Direct in Deeside as well as Devon-headquartered Drainology.
To date, the management team’s acquisition strategy has been supported by funding from Finance Wales, which first backed the business in 2011, and HSBC which has been working with the company for 15 years. Wales Environmental and Drainology will now benefit from BGF’s financial firepower as well as the continued support from Finance Wales and HSBC as it pursues further organic and acquisitive growth.
The investment was completed by Ned Dorbin and Dan Tapson from BGF’s South West & South Wales team, while Simon Williams led the deal for HSBC. BGF’s Paul Oldham joins the board of the company as part of the investment and Owen Sennitt will continue as Chairman. Set up in 2011 with £2.5bn to invest, BGF has provided long-term business funding to close to 150 companies.
Llyr Williams, Chief Executive of Wales Environmental said: “Having successfully completed three acquisitions with the support of Finance Wales and HSBC, we are now ready to scale-up the business even further. Bringing BGF on board as a minority equity partner allows us to further accelerate our organic growth and provides us with additional cash for future acquisitions – all the while retaining control of the business.”
Paul Oldham, Regional Director for BGF said: “Drainology and Wales Environmental have a strong management team and a clear growth plan, and we are delighted to be providing funding to help them pursue their ambitions. We are also pleased to be working alongside Finance Wales to support the continued expansion of the business.
“For BGF nationally, the past month has been the busiest period since we were established, having completed 19 investments since the Referendum vote. We firmly believe that now is not the time for investors or businesses to start putting the brakes on. Now is the time to keep investing, keep partnering and keep innovating – and that is something we are wholeheartedly committed to doing.”
Warren Lewis, HSBC’s Head of Corporate Banking in Wales said: “We are delighted to be continuing our 15 year relationship with Wales Environmental and Drainology, with our support previously including the management buyout in 2015. The business has strengthened its management team and infrastructure in order that it can focus on continued growth, and the funding from HSBC will help to achieve this.
“Earlier this year, HSBC launched a £700 million lending fund to support small and medium-sized enterprises (SMEs) in the South West, as part of a broader commitment to make banking cheaper and simpler for customers. Drainology is just one example of a business that has and can benefit from this fund.”
Advisors to the transaction were:
For Wales Environmental:
Legal - Christian Farrow (Acuity Legal)
Tax - Phil Williams (Gerald Thomas)
Financial - Curia Corporate Finance
For BGF:
Andrew Morris and Geraint Tilsley (Geldards)