CVC to Buy UK Infra Contractor M Group in £1 Billion Deal

(Bloomberg) -- CVC Capital Partners Plc has agreed to buy UK-based infrastructure contractor M Group Services, marking another deal for the private equity giant.

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The transaction is expected to complete in the third quarter, it said in a Thursday statement, which didn’t disclose any financial terms. It values M Group at slightly over £1 billion ($1.3 billion), according to people familiar with the matter.

CVC is buying the business from fellow buyout firm PAI Partners. It’s investing in M Group out of Fund IX, which closed at €26 billion ($28 billion) last year.

M Group provides services including design, installation and maintenance to the water, energy, transport and telecommunications sectors in the UK and Ireland. It has worked for clients including Severn Trent Plc, United Utilities Group Plc, Virgin Media and National Grid Plc, according to its website.

“This is a real-economy business, the kind we like at PAI, that we have improved over the last six years and set up for future growth,”said Colm O’Sullivan, partner and head of UK team at PAI Partners. “In situations where we feel that we can achieve competitive valuations, we will look to return capital to our investors.”

PAI Partners, which has more than €26 billion in assets under management, started exploring a sale of M Group in 2022, with the business initially valued at $2 billion, Bloomberg News reported at the time. CVC was among the final bidders for the UK company alongside Apollo Global Management Inc. and Searchlight Capital Partners, people familiar with the matter said in April.

Investors in PAI funds have received about €2.3 billion over a twelve-month period, including proceeds from the sale of in-vitro diagnostics manufacturer ELITech to Bruker Corp., a person with knowledge of the matter said.

Deutsche Bank AG and Citigroup Inc. were financial advisers to PAI Partners, while Evercore Inc. acted as financial adviser to CVC.

(Adds comment from PAI in fifth paragraph.)

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