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Tuesday, February 18, 2020

Corporate finance expert tells investors that Aberdeen should be on their radar

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Tom Faichnie is managing director of Hall Morrice Corporate Finance and in a career spanning over 20 years has built up a reputation as one of the ‘go to’ men for private equity houses looking to invest in oilfield services companies in Aberdeen. He’ll be at OTC in Houston, and he explains here why he’ll be telling investors gathered Stateside that they should be looking at the Granite City as the land of opportunity.

The eyes of the oil and gas world will be firmly fixed on the Offshore Technology Conference in Houston next week and I’ll be going there with a simple message: if you want to invest, it’s time to put Aberdeen on your radar.

The very notion may have those corporate entities and private equity houses without a foothold in the industry recoiling in horror but, contrary to what many of the doom-merchants are touting, the city is starting to claw its way out of the downturn’s depression.

It’s a phrase that has been bandied around more than once over the past three years: oil and gas is cyclical in its nature. A cliché perhaps, but one that ultimately rings true and the evidence is now emerging to back it up.

So, when I meet with the experts and potential investors at the world’s biggest energy trade event next week I won’t be one of those talking down the North Sea recovery. I’ll be telling delegates that the time is now if they want to invest in Aberdeen – and they will need to be quick off their mark if they want to get ahead of the game.

We’re predicting a significant uplift in deals activity over the next three to six months. That’s not an aspirational timescale: it’s a statement based on the fact that real and genuine green shoots of recovery have been sprouting since last year.

I’m seeing evidence which shows that 2016 financials have stabilised and growth is coming through in 2017. And, what’s more, with growing order books and increasing opportunities, they are predicting growth that will catapult them towards even higher levels of turnover in the next financial year.

Most of the cost cutting that can be done, has been done. Discretionary spending has been stripped back and businesses are incredibly lean. I’ve also seen that many firms are recruiting again and there has been a marked increase in the number of business development posts that need to be filled.

Trading results have stabilised along with the oil price, there is continued upstream investment and orders are coming in once more. Indeed, there are few energy-focused companies in Aberdeen that have not seen their order books tipping in the right direction.

Together, it means that now could be the best time to trigger an exit strategy and prepare businesses for sale. And if companies are standing on the precipice and getting ready to jump, investors need to get on board.

Besides the companies – many of which I believe will be at the smaller end of the scale – that will be looking to exit, those that want to continue and build back up will need to look at how they fund any plans to upscale.

They are going to need working capital to deliver orders that have already been placed and they will need a source of funding in to help them grow order books even more. Aberdeen offers incredible potential for those looking to invest in oilfield services companies – it’s the right time to buy and the right time to sell, which means there will be a real spike in the level of interest from both the UK and overseas.

The question I will be asking potential investors is whether, after Houston, the next stop for them will be Aberdeen. I’ll be inviting them to come and see for themselves why they should have their sights firmly set on the Granite City – or risk losing out on what could potentially be some of the best investment opportunities around.

Hall Morrice Corporate Finance is a new division launched by Hall Morrice, on of Scotland’s leading independent firms of chartered accountants. Based in Aberdeen, the division specialises in corporate finance and diligence services in the energy sector. Hall Morrice can be contacted on 01224 647394 or at accounts@hallmorrice.co.uk

Tom Faichnie is managing director of Hall Morrice Corporate Finance and in a career spanning over 20 years has built up a reputation as the ‘go to’ man for private equity houses looking to invest in oilfield services companies in Aberdeen.

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