£4.5m funding from IGF supporting expansion, acquisition following industry downturn
Pryme Group, a provider of integrated manufacturing solutions for the oil and gas, aerospace and defence industries, has grown at pace over the last ten years. Looking at the company’s achievements today it’s hard to believe that just three years ago the sector underwent a period of significant downturn across the oil and gas industry. Pryme Group had a term loan in place to navigate the downturn, however in 2017 forecasts indicated an uplift in sales was expected the following year. To take advantage of this opportunity Pryme Group would need to significantly increase its working capital. The Group turned to Independent Growth Finance (IGF) for financial support.
While many lenders would view a sector in decline as a potential funding risk, invoice discounting and asset based lending are more secure forms of finance due to the collateral they are based upon. This enables funders like IGF to see the glass half full and make more flexible funding decisions. The type of decision which has resulted in year-on-year growth for Pryme Group.
40 years of advanced and diverse services
With a history stretching back 40 years, Pryme Group offers turnkey services for contract manufacturing solutions. With a staff base of around 230 it integrates high quality machining with advanced design, engineering, hydraulic services and fabrication skills across seven operational divisions. Pryme Group works with global clients, including Siemens, WL Gore & Associates and Halliburton.
The Group was formed in 2014 with the three GA Engineering companies (GA Scotland, GA Sliding Head, GA North West). The following year Newcastle based firms MKW Engineering, Stargate Precision Engineering and Total Maintenance Engineering joined the Group while testing and subsea specialist SengS joined in 2016. Under this new identity, the six operational facilities work autonomously, yet, with a shared focus on the customers’ needs they also work together seamlessly to provide one of the broadest integrated contract manufacturing service available.
However, in 2015/2016, the oil and gas industry took a downward turn which had a significant impact on this newly formed Group.
Funding through an industry downturn
Despite an unsettled period across the sector, Pryme Group’s senior management looked to the future where forecasts indicated 20 percent sales growth in 2018. To leverage this opportunity, it needed a funding partner who would join the company on its journey, provide working capital and make preparations before the welcome industry uplift.
Securing a £2.75m invoice discounting facility in June 2017 allowed Pryme Group to focus firmly on the future and quickly react to the changing oil and gas landscape. Within six months of securing the funding, Pryme Group’s growth and capability aspirations were being realised and, in 2018, Hydratron, a global leader in the manufacture of high-pressure air driven liquid pumps, gas boosters and associated systems joined the Group.The hydraulic engineering specialist brought with it a comprehensive partner network in North America, the Middle East, Southeast Asia and Australia.
Engineering increased confidence and growth
The second half of 2018 saw Pryme Group’s work ramp up significantly securing a £3.5m contract in oil and gas works. This win was quickly followed by the opening of a brand new ‘Centre of Excellence’ in North Shields. An investment that reflected the confidence in the industry following a period of uncertainty. The 58,000 sq ft location cost Pryme Group £9.5m and required an investment of £4.2m for machinery. In the next five years, 150 employees will be on site as Pryme Group’s growth trajectory continues.
Financing future lift off
In December 2018, IGF increased Pryme Group’s funding facility to £4.5m to further support its expansion into the defence and aerospace industries. The company has recently acquired AS9100 accreditation, a widely adopted and standardised quality management system for the aerospace industry. Pryme Group is now forecasting a further 20 percent growth in 2019.
Kerrie Murray, Pryme Group CFO, said,‘Just two short years after a shaky period for the gas and oil industry we are now in a position of strength, with more people, capabilities and capacity to our name than ever before.
“We had never approached a funding partner before, so you can imagine it was a big decision for us, and critical that we found the right people that understood us and our vision. IGF got to know the company and the management team which has helped us achieve a great working relationship in a short space of time. We are a much bigger business today than when we approached IGF back in 2017, but they have grown with us along the way. They took the time to get to know the company’s challenges and aspirations and as a result we see this partnership continuing for many more years.”
Jon Hughes, commercial director ABL, IGF added,“There’s nothing I enjoy more about my job than supporting a partner through a period of downturn and watching them come out the other side stronger than ever. From time to time industry leading innovators like Pryme Group need support from funding partners to ensure they don’t suffer in the long-term because of short-term factors outside their control. Alternative finance is on the rise because we have the flexibility to make decisions that more traditional lenders can be hesitant towards. IGF is proud to support British SMEs, ensuring they remain independent and focused on what they do best.’