H.I.G. Europe makes UK Investment in Facilities Management Sector

LONDON – February 26, 2008 – H.I.G. Europe, (“H.I.G.”) the European affiliate of H.I.G. Capital, a leading global private equity firm specialising in providing capital to small and medium-sized companies, today announced that it has backed Europa Facility Holdings (Europa), a fast growing facilities management company, as it makes its first acquisition – the first step in an active buy and build programme. In addition to taking an ownership stake in Europa, H.I.G. has made a significant capital commitment to support Europa’s acquisition programme.

The overall value of the transaction was £25m.

This marks H.I.G.’s first investment in the UK market since it closed its dedicated European fund, H.I.G. European Partners, at €600 Million (£400 Million) in July 2007.

As part of this transaction, Europa has acquired United Utilities FM, the facilities management division of United Utilities plc (“UU”). This acquisition will create one of the UK’s leading independent facilities management businesses. Operating under the Europa brand, the company will be able to offer clients a fully integrated range of management and delivery services on a national basis. With the capability to tender for a larger range of clients with a higher contract value, the business is expected to generate revenues of more than £60 million in 2008.

Growing strongly by some 4.2% since 2003 (MBD 2007), the UK facilities management market is currently worth £110 billion per year and is expected to reach £128 billion by 2011. This growth is driven by the corporate trend to outsource non-core activities, as well as increased regulatory and compliance requirement. Total Facilities Management – the provision of managerial and technical services and the control of the supply chain – is the fastest growing segment of this market due to increasing demand by clients requiring a higher and broader level of service.

The facilities management market is highly fragmented with none of the leading providers having more than 1% of total spend. It comprises both large national businesses and small local / specialist providers, creating consolidation opportunities.

Established in 1971, Europa is based in Welwyn Garden City and operates on a national basis. It currently employs 2,000 people. In September 2006, an investor group led by Billy Allan acquired a significant stake in the company. Allan formerly led the MBO of EJ Steill, a mechanical and electrical maintenance company based in Scotland in 1995, developing it to become the UK’s leading privately held Facilities Management company with a turnover of £120 million. The business was acquired by McAlpine plc in 2002. Since the management buy-in in 2006, Europa has made the transition from single service provision to the delivery of a range of services and the management of sub contractors on behalf of its clients.

Billy Allan will continue to work with the combined business as Non-Executive Chairman. Martin Jones continues as Managing Director of Europa.

Paul Canning, Managing Director at H.I.G., commented:

“We are delighted to be backing this highly experienced management team at such a critical moment in Europa’s development. The merger of these two businesses will create a market leader which is strongly positioned to grow both organically and through further acquisitions.”

“This deal is also significant for H.I.G. in that it marks our first UK investment. Partnering with a high growth company such as Europa with excellent management in a dynamic sector to execute an industry consolidation is a good illustration of our value-added investment approach.”

Martin Jones, Managing Director of Europa Group, commented:

“This is a major strategic step forward for Europa. Following two years of significant organic growth, this deal accelerates our expansion plans and allows us to better serve our current customers as well as win new blue chip clients. It is great to be working alongside our investment partners at H.I.G. as well as the United Utilities team as we enter the next stage of our development.”

The H.I.G. deal team consisted of Paul Canning, Andrew Busby, Elliott Nicholson and Bhairvee Shavdia.

Mark Hull and Bill Blacoe of Clydesdale bank in Glasgow provided the debt package. Europa was advised by Paul Pignatelli and Alasdair Wood of DLA Glasgow. Financial diligence was provided by Rebecca Guerin and Chris Rees of Vantis. Robin Illingworth of Armstrong provided commercial diligence. David Raff and Malcolm MacDougall of DLA London acted for H.I.G.