KIRKBI Invest A/S, the owners of LEGO, and the Ontario Teachers’ Pension Plan have agreed to invest approximately £400 million in ISS, a leading global provider of facility services. The current owners, funds advised by EQT Partners and GS Capital Partners funds, are not selling any shares as part of the transaction, and will remain majority owners of the business. ISS made a failed attempt at an initial public offering (IPO) last year after which it agreed to a cash and share offer from G4S. The deal with the global security services group was scrapped after G4S shareholder rejection of the proposed deal.
“The board of directors of ISS is very pleased to welcome such respected and successful long term investors to ISS. This is a testament to the strength and attractiveness of ISS as an investment opportunity. Together with our two majority owners, the board will work closely with the new investors on ISS’ value creation. ISS is on track to significantly deleverage ahead of an IPO within a few years,” said Ole Andersen, Chairman of ISS A/S.
“We have come a long way in our transformation over the last years, and this new investment, is a step further on the journey of making ISS the world’s leading service company for our customers and for our more than 530,000 employees. We believe that ISS is the only company which has the platform from which we can integrate and self-deliver a complete set of facility services across the globe – recently proven by two of the largest contract wins in the history of our Company. This new investment will further strengthen our Company’s commercial and financial position,” said Jeff Gravenhorst, Group CEO of ISS, who were founded in 1901 as a night security firm named Kjøbenhavn-Frederiksberg Nattevagt.
“ISS is a global leader in the worldwide facility services industry. We see excellent opportunities to continue growing revenues as ISS is well placed to capture new customers and to provide integrated solutions to them,” said Jo Taylor, Teachers’ Private Capital Vice-President and head of Teachers’ London office. “Management is experienced, with deep industry knowledge and has put the company on the right strategic path. We look forward to helping ISS expand successfully in both developed and emerging markets, and to introduce the executive team to the Teachers’ international network.”
“We have been following the performance of ISS for several years. ISS is a well-run company with strong values and leadership principles. We believe ISS is well positioned for further growth, particularly in emerging markets,” said Søren Thorup Sørensen, CEO of KIRKBI A/S.
Coinciding with the announcement of this major investment, ISS also released a trading update with preliminary results for the first six months of 2012. ISS experienced a good start to 2012 by demonstrating healthy organic growth, strong cash conversion, and operating profit in line with last year, although operating margin was 4.9% for the first six months of 2012 compared with 5.1% for the same period of 2011.
“In spite of the challenging macro-economic conditions, particularly in the Mediterranean countries, ISS is well on track to deliver a solid 2012 result in line with our expectations. We recently won major new contracts with Barclays Bank and Novartis and we have a strong pipeline of international and national customers, which gives us confidence that the organic growth and margin development in the second half of the year will put us within our outlook guidance,” said Jeff Gravenhorst, Group CEO for ISS A/S.