Actavo may look at an IPO for big purchase
Undertaking a stock market flotation "isn't a goal in itself" for Irish engineering solutions firm Actavo, as its revenues approach €500m this year, according to chief executive and chairman Sean Corkery.
Actavo, formerly Siteserv, is majority-owned by businessman Denis O'Brien. Yesterday it reported that its 2015 revenue jumped by a third to €431m and profits rose 25pc to €17.9m.
Its activities stretch from support services for cable companies such as Sky and Virgin Media, as well as utilities such as Electric Ireland and Bord Gáis, to the provision of industrial services for clients in sectors such as oil, pharmaceuticals and nuclear power.
Its 2015 performance was strong across all units, Mr Corkey told the Irish Independent.
The company employs over 5,000 people and also works closely with Mr O'Brien's Digicel telecoms firm.
The 2015 revenue figure was ahead of the €400m or so that the company predicted in 2014 that it would generate last year. Actavo is aiming to be a €1bn revenue business by 2020.
"To get to the billion and to be of that scale, you might need that level of financing which would lead to an IPO (initial public offering)," said Mr Corkery.
He conceded that while there's an attraction to doing a flotation, it also has downsides.
"You've got the 13-week treadmill, everything is out there, you've got to hit your numbers and it's hard to be strategic," he said.
"The attraction of it is that the cost of money from a financing point of view is the lowest you can get. It would have to be for absolute need for a quantum of money, probably by a sizeable acquisition, that would trigger something like that."
Mr Corkery - a former Dell executive who also has a minority shareholding in Actavo - also said that the group could pursue other funding avenues, given the cheapness of debt.
Chief financial officer Alan Doherty said that Actavo's debt to EBITDA ratio is currently just 1.5 times, giving it significant headroom to pursue acquisitions.
In 2015, Actavo bought UK firm PDC Utility Services, an industrial painting contractor, for up to €10.2m.
Earlier this year, Actavo also acquired US-based Atlantic Engineering Services (AES), a company that designs the deployment of fibre to the home for clients. It was the Irish company's first foray into the US.
"There's huge growth there and we want to participate in it, so we are ambitious about it," said Mr Corkery. "We don't sit on the assets that we acquire. We're transformative."
Mr Cokery said an on-going probe into the sale of Siteserv by IBRC hasn't deflected management and that Actavo will correspond with the investigator if it's contacted.