Environmental consultancy Ricardo secures £50 million credit from HSBC

01 August 2018 Consultancy.uk

As the firm looks to boost expansion efforts, global professional services firm Ricardo has secured a £50 million injection of credit from HSBC. The fund will be invested by the consultancy as it bids to become an FTSE 250 business.

As members of an increasingly crowded consulting industry bid to supplement their growth with merger and acquisition activity, as well as arriving in new markets, a number of UK-headquartered firms have looked to gain financial backing from creditors or private equity in recent years. In 2015, this saw PA sign with private equity firm Carlyle, before a spate of acquisitions soon after broke a seven year acquisition drought.

More recently, L.E.K. Consulting attracted a financing package from Lloyds Bank, to drive the firm’s expansion plans. Leveraging the capital, L.E.K. Consulting announced that it aimed to invest the funds in high growth consultancy segments, such as digital and innovation, and in growing its geographical footprint. Now, as environmental and engineering consultancy Ricardo attempts to set itself apart from a competitive market, including the recently combined Navigant and Ecofys, the firm has also sought the backing of a major creditor.

Ricardo’s headquarters in Shoreham-by-Sea, West Sussex

Ricardo was founded over a century ago, and has a headcount approaching 3,000 consultants, engineers, scientists and support staff worldwide. Globally, the firm enjoyed a turnover of £351 million in the 2017/18 financial year, from the business’ two areas of expertise; Technical Consultancy, which accounts for 80% of its revenue; and Performance Product, which makes up the remaining 20%.

Ricardo has secured £50 million of funding from global financial giant HSBC UK, which it will use to expand overseas and make further acquisitions as the consulting firm seeks to become an FTSE 250 business in the coming five years. The deal between the banking corporation and the West Sussex-based engineering and environmental consultancy has also seen the securing of a £150 million revolving credit facility, as Ricardo looks to make strategic acquisitions while expanding globally. Initially Ricardo is understood to be exploring new opportunities in the US and European markets, while boosting its investment in research and development to keep pace with new technologies and changing regulations.

Commenting on the news, Dave Shemmans, Chief Executive Officer of Ricardo, said, “HSBC has been instrumental in our growth and acquisition trail over the last decade. This new credit facility will enable us to proactively pursue opportunities which align with our expertise and will help us reach our ambitious growth target.”

Jon Stradling, HSBC UK Head of Large Corporates for the South Region, added, “We have been working with Ricardo for 13 years. I am delighted that we’ve been able to continue our support with this increased funding facility, paving the way for Ricardo’s substantial progression over the coming years.”

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PA Consulting results reveal record 14% revenue growth

17 April 2019 Consultancy.uk

Global professional services firm PA Consulting has reported another year of strong growth, outpacing the global consulting market significantly over the duration of 2018. PA’s revenue boomed by 14%, passing £455.8 million over the course of the year.

Founded in 1943, by Englishmen Ernest Butten, Tom Kirkham and David Seymour, the firm once known as Personnel Administration has since gone on to become one of the largest consulting firms in the world. PA Consulting Group, as it is now known, has over 2,600 professionals and a global presence spanning 18 countries. While turnover took a decade to recover from a rocky spell after the global financial crisis, PA Consulting is now firmly on the upward incline.

PA has booked strong growth in recent years, following its securing of private equity investment from the Carlyle Group in 2015. While the first full year of results following that move were slightly muted, due in part to the altering of how PA measured its results, the decision has clearly paid dividends since. Revenues jumped by 6% in 2017, hitting an all-time high of £400 million in the process.

Annual consulting revenues of PA Consulting versus UK market

Now, in the latest chapter of the firm’s rapid turnaround, the innovation and transformation consultancy has revealed things only got better in 2018. A set of record results released in April have confirmed that fee income rocketed up by 14% over the course of the prior 12 months, hitting £455.8 million. Considering the UK’s consulting market saw growth slow for the second year running (just 5.6%), PA’s performance is even more pronounced, especially in its first year of full results since influential Chair Marcus Agius stood down. 

The firm is also outpacing the global consulting market. Analytics firm Statista estimates that the consulting market expanded by 4.08% in 2018. As a result of such bullish demand, PA Consulting has also bolstered its staffing, boosting its consulting team’s headcount by 10% in the space of 12 months. 

PA’s team was further strengthened with its continued acquisition campaign, which brought three new firms into the fold during 2018. Boston-based innovation company Essential Design, specialist digital service design firm We Are Friday and London-based digital insight and strategy consultancy Sparkler all became part of PA over the course of the year. PA has also announced plans to recruit 400 professionals for its new digital centre in Belfast. 

‘Not traditional’

In terms of client work, in the UK PA supported Skipping Rocks Lab to create an edible alternative to single use plastic drink packaging, and worked on a notable restructuring project at disability charity Scope. Further afield, PA helped Norwegian authorities deliver their citizen-facing digital services, while in the US and India, PA partnered with Virgin Hyperloop One to build the first new mode of transport in a century, one that hopes to revolutionise travel. It even worked with United Nations to identify the technologies most likely to contribute to the achievement of the organization's Sustainable Development Goals.

Commenting on the year’s performance, Alan Middleton, PA Consulting CEO, said, “We’re not a traditional consulting firm and we think this is key to our ongoing success and why 98% of our clients recommend us… Our people are strategists, technologists, digital experts, consultants, designers, scientists and engineers – all of whom bring real-world experience, and apply it at pace. We offer the innovation, design, digital and transformation skills that our clients need to change, fast. There’s a sense of optimism behind our purpose. And it’s a feeling that inspires our people as well as our clients.”

The existing staff of PA also enjoyed a bumper year, as it was revealed that a refinancing manoeuver at the firm was expected to land over 1,000 employee shareholders a significant pay-out. The firm’s debt, which includes vendor loan notes put in place when Carlyle purchased the firm, is set to be refinanced in a deal worth £350 million.