Private equity investor Palatine has sold its stake in construction lab specialist CTS Group.
Leicestershire-headquartered CTS has been acquired by Oakley Capital, a pan-European private equity investor.
Palatine said it had exited the business as CTS had become “the fast-growing provider of testing, inspection and geoengineering consulting services to the construction and infrastructure sectors”.
Palatine said it made a partial exit from the business in 2021, with the sale of its insurance claims management division to HomeServe plc for £53m.
It said the combined deals represented a return of almost six times the original investment.
CPS provides on-site and laboratory testing services to UK construction, quarry products and the civil engineering industries. It has 10 laboratories, 12 field-based teams and six geotechnical and geoenvironmental consulting offices provides coverage across the UK.
It has expanded rapidly in the last three years with the acquisition of companies including GT Certification, Mason Evans Partnership, Silkstone Environmental, Nicholls Colton Group, Card Geotechnics Limited.
Latest accounts to March 2021 show revenues of £21.4 million (up 40 per cent) and underlying EBITDA (earnings before the impact of things such as debts, taxes and other costs) of £3 million.
Palatine said: “Since its initial investment in 2018, Palatine has grown CTS into a leading business in the UK.
“Revenues have more than doubled over the last three years, through Palatine’s investment in digital transformation, talent acquisition and a highly successful buy and build strategy.
“With Palatine’s backing, CTS has made nine acquisitions adding complementary services and geographic scale to its offering.
“CTS has also benefited from Palatine’s industry-leading approach to ESG strategy, which has seen the business create an in-house ESG coordinator position and realise significant reductions in its carbon footprint through fleet electrification and digitisation initiatives.”
Palatine partner Tony Dickin said: “We have enjoyed a highly collaborative, productive and successful partnership with Phil and his team, based on a shared early belief in CTS’ potential to become a nationally-leading force in its market.
“This excellent outcome is a major milestone in what we are sure will continue to be a remarkable growth story for CTS and its new partners.”
In parallel with the acquisition of CTS, Oakley Capital has invested in Phenna Group, a global testing, inspection, certification and compliance sector business.
CTS will become part of Phenna Group upon completion of both deals and CTS management will continue to lead the business within the wider group.
CTS Group chief executive Phil Coles said: “Over the last four years of partnership, Palatine has proven itself to be an outstanding and highly supportive investor.
"Together we have achieved remarkable growth, scaled the business significantly and enhanced our proposition to customers.
"All of this has paved the way for further long term success as we become part of a larger, ambitious, international group with the backing of Oakley Capital.”
Palatine was advised by Clearwater, Browne Jacobson and Deloitte.
