KBC Advanced Technologies plc

Software and consulting to the oil & gas sector

Visit the KBC Advanced Technologies website
Status Realised
Period Feb 10 – April 16
Headquarters London, UK
Sources: Takeover price LSE, company financials FY15

At the time of our first investment in 2010, KBC Advanced Technologies was a well-established and highly regarded niche provider of consulting services and software tools to the downstream oil & gas industry enabling oil refiners to improve operational efficiency and profitability.

Investment rationale
  • Highly-regarded consultancy firm to the downstream oil and gas sector with underexploited software offering
  • High levels of repeat business and software license contract renewals of over 90%
  • Opportunity to significantly increase software revenues in order to drive margins and valuation
  • Equity valuation ignored inherent value of the software business

We accepted a 210p per share, £180m recommended cash offer for KBC Advanced Technologies in April 2016 from Yokogawa following a competitive process. The offer was priced at a 69% premium to the undisturbed price and represented a valuation multiple of 11.7x historic EBITDA.

Kestrel involvement, actions and impact

After a small initial investment in 2010, we gradually built our stake through open market purchases and by supporting company fundraisings to reach 16%.

Following concerns about the Company’s strategic direction, Oliver Scott joined the Board as a non-executive director in November 2010.  Over the course of the next year, the Company defined a new strategy to lead with its previously under-exploited software offerings in order to build stronger recurring revenues and improve margins whilst also widening its reach into the more lucrative up-stream oil & gas markets. Over the following years, several changes changes were made to strengthen the Company’s executive and non-executive leadership and two strategic software acquisitions were completed, funded by shareholders and supported by Kestrel. A generous new equity and bonus incentivisation scheme was also implemented for all senior staff, which established strong shareholder alignment and crystallised when the Board recommended the Yokogawa cash offer.