A company that provides temporary labour for the rail, utilities and civil engineering industries is set to build a new headquarters and training centre in Birmingham after the city council acquired a £400,000 stake.
The deal with Tyesley-based Auctus Management Group – which could lead to around 150 full time and contract jobs – is the council’s second major equity project using a £25 million fund managed by its Finance Birmingham arm. The company has also secured a seven-figure invoice discounting facility with Close Brothers.
Actus, which recently acquired Rail Safety Solutions (RSS), was founded earlier this year by a former management team from Carillion subsidiary SkyBlue, which supplies rail gangs for track renewals and rail projects, and temporary, contract and permanent staff for the civil and utilities sectors.
Richard Toy, chief executive officer at Auctus, was formerly operations director at SkyBlue. He is joined by directors Peter Thompson and Sean Harrison, both ex-SkyBlue. John Ellison also joins the management team, continuing in his role as managing director of RSS.
RSS supplies of automated track warning systems, lighting, fencing and safety solutions for the rail industry, with clients including Network Rail and contractors Amey Colas Rail, Balfour Beatty Rail and Babcock Rail. The Derby-based firm has a turnover of £1.4million and employs seven permanent staff and 20 contractors. It was acquired for £350,000 from parent Acorn plc, the recruitment and training company.
Mr Toy, who left SkyBlue with the intention of setting up his own business, said the acquisition of RSS has enabled him to fast-track his ambitions.
He said: “RSS was not a core activity for Acorn, and our previous experience meant the opportunity to buy the company and develop a clear safety differentiator, as well as the labour provision for the rail sector, met all of our aspirations.
“Investment in rail and utilities has been ring fenced from the public sector spending cuts. £220 billion has been earmarked for maintenance spend on the utilities sector up to 2020, while in the rail sector the increase in freight traffic mean growth prospects for Auctus are bright.”
In addition to retaining RSS’s existing workforce, Auctus has created eight new jobs in Tyseley. The business is also in the process of acquiring space on Wharfdale Road for a new headquarters, depot and training centre with its own track, which will create a further 15-20 jobs in the next year. Around 140 contract positions are anticipated.
According to Mr Toy, his team entered into discussions with three potential backers, but opted for Finance Birmingham.
He added: “Finance Birmingham provided a greater level of support and unlike traditional venture capital houses, who primarily focus on commercial returns, their investment is not just in the business but in the local economy, which means they can add a different dimension. They have already signposted us to a number of grant opportunities. We were also won over by the personalities.”
Sue Summers, chief executive officer of Finance Birmingham, said: “The Auctus management team are highly regarded in their market and bring strong commercial and strategic experience to a business with real opportunity for growth. Sam Miller, the investment executive for this deal, will sit on the board as a non executive director, to provide further support.”
Birmingham City Council leader, Sir Albert Bore, pledged to make jobs and enterprise the focal points of his administration when he took office on 22 May.
He said: “From a standing start Auctus has created eight jobs in the city. The RSS brand, plus the addition of a workforce solutions and training services business will generate more than 100 additional jobs, with many recruits expected to come from initiatives such as Job Centre Plus.
“These will be skilled jobs, with training provided, along with a career path for those with ambition.”
The Auctus deal was introduced to Finance Birmingham by Tony Dunn and Faisal Arif of DNA Corporate Finance, acting on behalf of the management team.
Marketing Birmingham helped to identify suitable premises in Tyseley for Auctus.
Adrian Cutler and Mark Canning of Cobbetts provided legal advice to Finance Birmingham; Roy Farmer of Dains undertook the financial due diligence.