OMERS Private Equity ("OPE"), the private equity investment arm of the OMERS pension plan, has signed a definitive agreement to acquire Environmental Resources Management ("ERM") in an off market bi-lateral process, from Charterhouse Capital Partners ("Charterhouse") for an enterprise value of US$1.7 billion. The Alberta Investment Management Corporation ("AIMCo") will co-invest in the transaction.
Created in 1977, ERM is a leading global provider of environmental, health, safety, risk, social consulting and sustainability related services. ERM works with both private and public sector clients to deliver sustainable outcomes to complex environmental issues, from Board level down through the organisation.
ERM has more than 4,800 employees including 600 partners and operates from 163 offices in 42 countries. It advises global and local clients spanning the oil & gas, mining, power, manufacturing, chemicals, infrastructure and pharmaceuticals sectors. ERM's client base includes 60% of the Global Fortune 500. In recent years it has advised on the environmental and social issues of some of the largest and most complex development projects in the world.
ERM has a long track record of consistent growth, achieved organically and by acquisition. In 2014, ERM reported revenues of US$940 million making it the world's largest pure play environmental and sustainability consultancy.
OPE's acquisition of ERM is perfectly in line with its investment strategy: ERM is a market leading business in a sector with strong natural growth characteristics driven by both regulatory and societal change. With a focus on consulting rather than the direct provision of engineering services it has an independence that is highly valued by its clients. Most importantly, in John Alexander and his senior team, it benefits from an outstanding management group with a proven track record of delivering sustainable growth.
OPE and AIMCo will support management to develop the business, both organically by further increasing market share through offering innovative new services in expanding international markets, and also by strategic acquisitions in what remains a large, but still fragmented sector.
The transaction will see 600 partners in ERM including senior management make a substantial re-investment into the business alongside OPE and AIMCo.
Mark Redman, OPE Senior Managing Director & Head of Europe said:
"I am delighted we have agreed to acquire ERM alongside management and AIMCo. This is our sixth investment since launching OPE's European operation in 2009 and brings our capital deployed in Europe on behalf of our members to over CAD$2 billion. Most pleasingly, this is our second consecutive bi-lateral off market transaction which again shows our ability to deliver for discerning vendors. There is no better endorsement of the OMERS model which provides the environment for management teams to thrive, while building great businesses."
Jonathan Mussellwhite, OPE Managing Director said:
"We have tracked ERM since 2010 and have developed a very good relationship with John and his team over the past five years. ERM is the stand out performer in a market with very strong growth characteristics, establishing itself in recent years as the pre-eminent global sustainability consulting firm. We look forward to supporting the partners and the company as they continue to build on this market leading position."
John Alexander, CEO of ERM said:
"We are pleased that OMERS Private Equity and AIMCo share our vision for the future growth of our company and I am very confident that we have found the right partners to support us as we continue to build the business globally. We have achieved outstanding performance in the last few years, firmly establishing our presence in key emerging markets, while increasing our market share in the US and Europe. It is the right time to build on this market leading position with the strong commitment of the ERM partners together with our new financial partners."
Peter Teti, AIMCo Head of Private Equity said:
"AIMCo is very excited to partner alongside OPE and ERM management to invest in the leading sustainability consulting business in the world. We consider our investment in ERM to be an important portfolio addition for our clients, and further evidence of the Private Equity Group's ability to execute on its strategy of direct investing. ERM possesses a unique combination of qualities that we seek in potential investments, including a world class management team, leading position within its market, and an ability to continue to achieve above-market growth both organically and via acquisition."