Baring Asia exits SAI Global's assurance business

SAI Global Assurance will be acquired 100% in cash, with Intertek financing the transaction using new debt facilities, according to a statement. The business is projected to generate A$240 million in revenue for the 12 months ending June 2021.

Baring will retain SAI Global’s risk education and compliance assets. The private equity firm bought SAI Global in 2016 via its sixth fund – which closed at $3.98 billion – for an enterprise valuation of A$1.24 billion. The deal was supported by $532 million in term loan B financing, comprising US dollar and Australian dollar tranches, and A$160 million in second lien debt, according to Debtwire.

Operational challenges and a rising debt-to-EBITDA ratio prompted Baring to make a $58 million equity injection in 2018, of which $51 million was used to reduce debt. However, Moody’s warned several months later that the company’s capital structure was unsustainable due to a combination of earnings erosion, high interest costs, and capital spending.

SAI Global was spun out from Standards Australia via an IPO in 2003. The company audits, certifies and registers products, systems and supply chains through independent assessment to help companies reduce risk and improve product and service quality. In the 2016 financial year, revenue and net profit came to A$570.2 million and A$53.2 million, respectively.

It has three business units: information services, which provides information required to comply with regulatory standards; assurance, which covers risk management, certification, and related services; and education and compliance, which offers enterprise software for staff training.

SAI Global Assurance provides assurance services to more than 60,000 customers across 130 countries, enjoying a market leadership position in Australia and a significant presence in the US, Canada, and the UK. It also has a fast-growing China business. On the standards side, the company supplies information on more than 1.5 million technical standards to 10,000 customers globally.

Intertek expects the acquisition to strengthen its existing footprint in assurance. The company delivers assurance, testing, inspection and certification (ATIC) solutions in more than 100 countries, with 43,800 employees across 1,000 locations. Revenue came to GBP2.7 billion ($3.8 billion) in 2020.

“As we emerge from the global COVID-19 pandemic, we expect our customers to increase their focus on risk-based quality assurance to provide the highest quality safety and sustainability products and services to their customers. The growth of the ATIC industry is expected to accelerate and assurance, a capital-light and high margin service will be critical to addressing the increased corporate focus on total quality assurance,” said Andre Lacroix, CEO of Intertek.

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• Topics
• Australasia
• Support services
• Technology
• Trade sale
• Australia
• Baring Private Equity Asia
• professional services