Actavo, the Denis O'Brien-owned engineering services company previously known as Siteserv, says it is on course to break €500 million in sales this year, as it sets its sights on an expansion into the US to help fuel growth.
Actavo is entering the US market for the first time with a buyout of Atlantic Engineering Services (AES), which specialises in designing high-speed fibre broadband networks.
AES operates in Georgia, Texas, Missouri and Colorado and employs about 120 design engineers. Sean Corkery, Actavo's chief executive and minority shareholder, says it gives it a "beach head" to launch its US foray.
Mr O’Brien bought Siteserv in 2012 for about €45 million from State-owned bank IBRC, following a write-off of more than €100 million.
The company is now growing strongly, with sales last year up by almost a third to more than €400 million, while profits are growing at more than 20 per cent.
Mr Corkery declined to reveal the consideration paid for AES, but he said it had earnings last year of “about $5 million” and was bought at a valuation using “normal” industry multiples.
This suggests Actavo probably paid between $30 million and $40 million, with six-to-eight times earnings being the industry average.
Actavo, whose Sierra subsidiary is involved in a joint venture to instal water meters in this country, also operates in UK, the Carribean and Kazakhstan.
As well as its networks division and “in-home” unit that specialises in outsourced metering and network services from utilities, it is also involved in industrial services, stage provision for events and building services.
Fibre networks
It is heavily involved in rolling out high-speed fibre networks for Mr O’Brien’s Digicel mobile company in the Carribean, although it lacks the ability to design networks.
Mr Corkery said the AES acquisition fills that gap. He also described the US as Actavo’s “biggest bet” at the moment.
He said Actavo has already started talking to AES’s customer base about pitching for contracts to build out networks that it has designed. Mr Corkery said the group may also look at future US opportunities, such as for its industrial unit.
“We are very ambitious regarding the opportunity for us in the US. We can’t take on everything - we will have to choose our spots. But we are prepared to go wherever our customers are,” he said.
Actavo said it is estimated that the number of US homes linked up to high-speed fibre-to-the-home broadband services will double to more than 52 million in the next three years.
AES, which is rebranded as Actavo, will operates as part of the company’s in-home and networks divisions.
The acquisition is being funded with debt from AIB and Bank of Ireland. Mr Corkery said the company will raise more debt as required for acquisitions. A flotation is not on the agenda currently, he said.
Actavo was at the centre of political controversy in Ireland last year, after Dail questioning by Independent TD Catherine Murphy revealed government officials had concerns about the process that led to its sale to Mr O'Brien's Millington company.
Mr Corkery. who has repeatedly rejected speculation surrounding the buyout, said the company is currently more focused on pursuing growth outside of Ireland than within this country.
“We have a new leader of our Irish unit and there is more business to be done here with our customers,” he said. “But the significant spend going on by telecoms companies in the UK and US outweighs anything that we could do here.”
