HSS Hire to float

Owner Exponent Private Equity is floating HSS through an initial public offering next month, just three years after taking ownership. However, it will remain the largest shareholders following completion of the offer.

HSS intends to apply its £103m proceeds to reduce debt and provide greater capacity for additional capital expenditure to drive future growth in the business.

It is expected that HSS will have a free float of at least 25% of the issued share capital of the company.

HSS puts itself at number two in the UK tool and equipment hire market, based on revenues. It is the second largest provider of temporary power generation, based on fleet size, and following its June 2013 acquisition of UK Platforms also the second largest provider of powered access equipment. 

HSS has 2,900 employees. It operates through a hub and spoke distribution network comprising a national distribution centre, 10 regional distribution centres, 25 local distribution centres and 230 trading locations.

For the year to 27^th September 2014 it has revenues of £272m, ebitda of £67.0m and operating profit of £24.5m.

HSS said that its strategy is “to build on and leverage its existing leading market position in the UK tool and equipment rental market by:

• Developing and enhancing the HSS hub-and-spoke distribution network to further improve availability to customers and return on assets
• Targeting growth in local markets in both the UK and Ireland through a national roll-out of the successful Local Format Branch model, which was first introduced in 2012
• Cross-selling its "total equipment management" proposition to mature key account relationships
• Continuing to complement and accelerate the Group's growth through selective bolt on acquisitions.”

HSS has been owned by a series of private equity firms. In 2003, 3i backed a management buy-in before selling for £310m in 2007 at the top of the market to US asset management funds Och-Ziff and Perry Capital, in partnership with Archie Norman, the former boss of Asda supermarkets and former Conservative MP. In 2012 HSS was acquired Exponent Private Equity for an undisclosed price.

In connection with the IPO, HSS has also announces the appointment of former Sainsburys director Neil Sachdev as deputy independent non-executive chairman, along with lawyer Amanda Burton and SIG finance director Douglas Robertson as non-executive directors. 

Chief executive officer Chris Davies said: "HSS has outperformed the UK tool and equipment hire market in recent years by offering its customers a powerful combination of safety, value, availability and support, delivered by c. 2,900 well-trained and motivated colleagues with a passion for delivering outstanding service.  By focusing on the more attractive and less cyclical ‘maintain’ and ‘operate’ segments of the market and building a sophisticated distribution network that has enabled a step change in availability and utilisation, we have established a track record of delivering industry leading growth and returns on assets.

"Having built a well-differentiated market position and a scalable business model underpinned by capital efficiency, we have an exciting opportunity ahead of us as we implement our growth plans. A public listing will put the business on the best footing to maximise our potential as the recovery in our markets gains momentum, enabling us to scale our model faster and accelerate our growth."

 

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