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Magma receives £8.76m funding from BGF

Investment news
17.01.2013.

BGF today announced it has participated in a co-investment of growth capital into Magma Global Limited, a manufacturer of high performance carbon fibre pipe for the oil and gas sector. The investment will support Magma in building a manufacturing facility with deepwater access in Southampton capable of producing up to 250km of pipe per year.

BGF has invested £8.76m, with the remainder of the funds provided by the existing investors, Kern Energy Partners, a Canadian specialist energy investor; and NES, a Danish venture capital investor which is focused on New Energy Solutions. The overall investment amount is undisclosed.

Magma designs and manufactures a unique range of high performance carbon fibre pipe for subsea oil and gas applications. As oil and gas production goes into deeper water and harsher environments, existing technologies are reaching the limit of their capability. This has created a need for a composite alternative, which provides significant benefits in weight, pressure capacity, ease of installation and resistance to corrosion.

The subsea market is one of the fastest growing areas of the oil and gas industry, and it is an area where UK expertise and technology leads the World. Pipelines are estimated to account for more than half of the $139 billion projected spend on subsea hardware over the next five years.

Magma also has two subsidiaries which have each developed the company’s leading edge composites capability for very different commercial uses.  Magma Structures manufactures high performance carbon fibre structures, whilst M-Flow Meters’ technology allows the flow of fluid in pipelines to be measured and monitored. Magma Structures is currently delivering a contract to design and build the World’s largest unsupported yacht masts.

Magma will use the new investment to install a new, high-tech manufacturing facility on a brownfield site in Southampton. The plant will have the capacity to produce up to 250km of pipe, and will allow it to manufacture pipes up to 4km long which can be stored on a spool and taken away by installation vessels from the deep water quay. This will allow Magma to export pipe to international markets, and provide a platform for further international expansion. Magma currently employs 90 people, and the new plant should create an additional 100 jobs.

The company was founded in 2009 by Martin Jones (CEO), Damon Roberts (CTO) and Mike Boyd (CFO), who previously developed Insensys, a fibre optic sensing business with divisions in the Oil and Gas industry and Wind Energy backed by 3i and later sold to Schlumberger and Moog in 2007 and 2009 respectively.  They have been joined by Charles Tavner IP Director, formerly with CCL and IP Group and Commercial Director Steve Hatton, an industry authority on subsea risers and flowlines and a founder of 2H Offshore, a subsidiary of Acteon.

The deal was jointly led by BGF’s Scottish and South West regional teams, including Mike Sibson, Paul Oldham, Richard Pugh and Alex Garfitt. BGF investment director Mike Sibson will join the board of Magma. Mike will sit alongside current Magma Non-Executive Directors Jim Buckee and Philippe Hoffman, and Jeff Van Steenbergen from Kern, and Jens Mathiesen from NES. Jim is the former CEO of Canadian oil company Talisman and also is currently on the board of several oil and gas operators, including Enquest and Cairn Energy. Philippe is Technology and IP Director for Subsea7, one of the major subsea construction and installation contractors.

This is the fifth manufacturing led business and the second oil and gas services provider that BGF has backed this year. Recent manufacturing-led investments include £7.8m in STATS, an Aberdeen based oilfield service sector business; £3.85m in M Squared Lasers, a Glasgow based technology business; £3m in Cennox an ATM parts and refurbishment company and £4.8m in Wow! Stuff, a leading UK toy development company.

Martin Jones, founder and CEO of Magma Global, commented: “Our ambition is to build Magma into a large export led manufacturing business founded on leading edge technology and the best engineering talent. In the last 2 years we have grown from a team of 5 to a total workforce of 90 and an order book of in excess of $70m.

“Kern and NES backed us from the beginning and have been a great support, as we take on more capital to accelerate our growth it’s great to have a UK investor come on board.

“BGF has taken a flexible and accommodating approach to this investment round which has smoothed the process of integrating with the needs of our current investors and the management team, this has been very important to us. We are delighted to welcome Mike Sibson from BGF to our Board, he brings both relevant sector experience and a pragmatic approach. We look forward to working with BGF to build a significant UK manufacturing business.”

Mike Sibson, BGF’s investment director who joins the board of Magma Global, commented: “We are very pleased to be co-investing with Kern and NES to support Magma in the next stage of its development. The team has a great track record, and in particular some very special expertise in design and manufacture of composite structures. I have worked with the team before and I am delighted to have the opportunity to work with them again on Magma.

“Magma is a great fit for BGF. We are backing an experienced and ambitious team to build manufacturing capacity in a high technology business which will export to the international oil and gas market.”

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