A post-exit perspective—with Leigh Howarth, CEO of STATS Group

In August, we announced the successful exit of our investment in STATS Group, an Aberdeen-based pipeline technology specialist for the global energy industry. The deal was important in more ways than one. Not only was STATS our first investment in Scotland back in 2012, but it also marked the 200th exit completed by BGF.

During our 11-year investment partnership, STATS grew rapidly with significant international expansion, before being acquired by Mitsui & Co., a global trading and investment company, headquartered in Japan.

Here, we speak to Leigh Howarth, CEO of STATS, about the company’s growth journey, partnership with BGF, and plans for the future.

What was your route to becoming CEO of STATS?

I was introduced to STATS in early 2012 by BGF. They were in the final stages of negotiating what would become BGF’s first investment in Scotland and were looking to strengthen the management team.

After meeting Peter Duguid, founding shareholder of STATS, and discussing the opportunity further with the BGF team, I personally invested in the company. I initially joined as Chief Financial Officer, before taking on the role of CEO in 2016.

How has STATS evolved since you joined the team?

The company has grown and changed considerably since BGF’s initial investment in 2012. Over the last decade, we’ve seen revenues increasing from £18 million in 2012 to a projected revenue of over £70 million in 2023. Staff numbers have also increased from 140 in 2012 to over 380 today.

Most significantly, STATS has evolved from a UK-centric company, executing international projects, into a true international business, with a full presence in the countries in which it operates. Today, we have bases in the US, Canada, Saudi Arabia, Qatar, UAE, Oman, Malaysia and Australia.

BGF’s investment acted as the financial catalyst, enabling STATS to execute its key strategic objective, which was to internationalise.

What have you been able to achieve through working with BGF?

BGF’s backing provided us with the opportunity to pursue our strategy of ‘localisation’ with international teams working in close proximity to the local customer base. This focus, supported by our investment in people, assets and operational bases across the globe, has proven to be hugely successful.

BGF also provided the right level of support along the way, for example introducing an experienced chair in Graeme Coutts, who played a key role in guiding our leadership team. If we needed advice, BGF introduced us to other companies in their portfolio who had been through similar experiences. They also challenged us by asking questions that prompted us to have the right discussions at the right times.

How did working with BGF match up to your expectations?

As BGF were minority investors in STATS, I think our expectations and the reality aligned very well.

Perhaps the one aspect we weren’t expecting was the length of time it would take to achieve our primary goals ahead of an exit event – which, of course, wasn’t helped by a deep industry downturn, closely followed by a global pandemic. That said, BGF’s patient capital approach meant that, ultimately, we were able to identify the right buyer and are now well positioned for our next chapter.

What would you say is the most important quality to seek in an investor?

I’d look for an investor with a deep and genuine understanding of your company’s strategic direction, including the time and issues to be managed in pursuit of your long-term goals.

What did the exit process look like for STATS?

In an all-cash deal, the entire equity capital of STATS was sold to Mitsui & Co., Ltd in August 2023. As part of the transaction, all of BGF’s outstanding loan notes, including accrued interest, were repaid in full.

How did you make the exit such a success?

As a management team, we worked hard to establish a strong relationship with Mitsui. We ensured there was a deep understanding of both the business and the benefits that STATS would bring to Mitsui as part of their broader strategy of “creating sustainable futures”.

An exit event had been planned for a number of years. It was important, however, to make sure we found the right long-term industry partner for the next stage of our development.

What advice would you give to entrepreneurs considering an exit event?

Start your work early! If you’re planning an exit, make sure you have the basics covered to minimise any potential issues during the due diligence process.

Work hard to identify a suitor (or preferably suitors) that truly understand and support your vision for the business. Post-transaction, your management team and staff will be grateful!

Don’t underestimate how long it’ll take to complete a transaction, and make sure you have the bandwidth in your business to cope with what will undoubtedly be a very intrusive process. Delivering at or beyond your forecasts during an exit process will always be helpful!

What’s next for STATS post-exit?

Continued execution of our strategy. In conjunction with Mitsui, we’re progressing with our growth plans, underpinned by our commitment to localisation, while also opening up new opportunities in the low carbon energy sectors.

Mitsui fully understand and support the long-term strategy for STATS and are already helping to identify opportunities through their energy teams and industry partners. Furthermore, STATS technologies are already proven in relation to emerging energy solutions, including carbon capture and hydrogen.