Blue Sky Alternative Investment’s equity division has taken an undisclosed stake in Oil Industry Catering and Services for $3 million.
Oil Industry Catering provides catering and support services to the mining industry with around 20 to 30 active sites primarily for clients operating in the oil and gas industry.
The company currently has 145 staff Australia-wide supported by offices in Adelaide, Brisbane and regional Queensland.
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Oil Industry Catering’s owners Chris Hayes and Roy Eagle told SmartCompany they will use the capital to expand into building and renting out their own mobile camps, with plans to roll out at least 10 camps over the next three years.
“Roy and I have had the business for about six years and this gives us the potential to grow the business significantly from when we started,” says Hayes.
“We will take most of the capital and use it to buy into transportable camps. The business up to now has been based on catering only with very few assets and this capital investment allows us to purchase infrastructure so we can offer turnkey solutions to clients.”
Hayes says Oil Industry Catering secured the deal with Blue Sky after a client was looking at half a dozen mobile camps about a year ago.
“We approached Blue Sky, we could see where things were going and we were looking for opportunities to buy transportable buildings,” he says.
“We thought we would just go to a bank and get a mortgage to finance it but after we got knocked back by a few banks we went to some equity firms, but we didn’t feel comfortable with them.”
However, when Oil Industry Catering was doing the rounds of the equity firms it came across Blue Sky, which offered a different approach to the others.
“The money they were talking about investing was not as large as some of the others but they were prepared to invest with us on a shared risk scenario rather than taking their pie and eating it as well,” says Hayes.
Tim Wilson, head of private equity at Blue Sky, told SmartCompany for him the deal was sealed on the basis of two things, “one micro and one macro”.
“Micro being these guys are leaders in their field, they are one of the biggest outsourced providers to their target market, which is oil and gas camps,” says Wilson.
“Macro there is a very well underpinned future position in oil and gas in Australia as a result of all the oil and gas plants being built in Gladstone.”
The fund manager looks for specific characteristics in investee companies, including a track record of growth, the ability to expand rapidly and outstanding people.
Wilson says there are four plants going ahead in Gladstone and oil and gas is subject to 20-year forward contracts in Asia, which offers a “different dynamic” to spot prices for coal.
“We think over the next few years Oil Catering Services will grow several fold. We have budgeted multiples of the profit it achieves now,” he says.
Hayes and Eagle bought the company from its founder, Warwick Pope, in 2005 and now serve 1.5 million meals annually.
Oil Catering Services is the last investment made through Blue Sky’s expansion capital fund, which opened in 2010 and raised $30 million.
Blue Sky’s portfolio now includes five companies, Viking Rentals, Lenard’s Chicken, Alcidion, Qenergy and Oil Catering Services, covering the construction services, food, health, energy, and mining services sectors.