Aberdeen oil entrepreneur says longer term outlook remains bright
Published: 07 Aug 2015
What is your business called?
Oteac Ltd, although we have just acquired HVAC+R Ltd in a £10.25 million deal.
Where is it based?
We have our headquarters in Aberdeen with a marine office in Leith, Edinburgh and operate in oil and gas regions throughout the world including the Caspian Region and Africa.
What services does it offer?
Oteac is a fire protection engineering services company offering design, installation and commissioning services for everything from a helideck firefighting system through to a kitchen (galley) fire suppression system or a breathing apparatus set, supported by service and spares for the aftermarket.
HVAC+R offer a similar scope, including manufacturing, with regard to heating, ventilation, air conditioning and refrigeration.
Whom does it sell to?
Both businesses target the oil and gas, drilling and marine markets. Oteac also supports industry, commerce, the public service sector and whisky distilling.
What is its turnover?
The combined turnover of the two businesses is just over £23.5m.
How many employees?
When was it formed?
Oteac has been established for over 30 years and HVAC+R for just over 15.
Why did you take the plunge?
I had spent all of my life in fire safety engineering and the opportunity came along to work with my friend and work colleague Sandy Brown who was then managing director and later became chairman.
I had known Sandy as a friend and work colleague for around 30 years and he was keen to develop the business from him leading it as an entrepreneur to putting a new strategy and business model in place.
In the six years I have been with Oteac we have grown fourfold in terms of our underlying earnings and the first four of these were with Sandy as majority and myself as minority shareholder.
What were you doing before you took the plunge?
Working for large corporate entities within fire safety engineering, many of whom we still deal with.
How did you raise the start-up funding?
We are backed by Lonsdale Capital Partners, which deals with a suite of private equity investors supported by bank funding from Royal Bank of Scotland.
Lonsdale Capital Partners acquired a controlling interest in October 2013 utilising private equity finding and a bank loan via RBS. I transferred from the role of managing director to chief executive as part of this process and Sandy operated as a consultant to the company and sits on the board. Both Sandy and I ‘rolled over’ a significant investment in the new entity from the proceeds of that sale.
When the investment was made the oil price was $110 for the benchmark Brent Crude. Just now it is less than $60. However, we view the oil and gas business as being cyclical and in my 37 years in the industry I have been through four recessionary periods where the oil price has dropped significantly.
Whilst the analysts say that we have to get used to this for the next 18 months or so, we have confidence in the market longer term, demonstrated by our acquisition of HVAC+R, which operates almost exclusively in the oil and gas sector. There are great opportunities for us to present our client with a collective offering on international markets, offering added value by, for example, sending out one multi-disciplined team or receiving one purchase order for all our services.
Source: Herald Scotland