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Sale of domestic customer gas connection assets

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Smith Square Partners advises AIM-listed Fulcrum Utility Services Limited in relation to the sale of its domestic customer gas connection assets

Smith Square Partners is pleased to announce that it has acted as financial adviser to Fulcrum Utility Services Limited (“Fulcrum”) in relation to the sale of its domestic customer gas connection assets, including the order book and associated meters, to E.S. Pipelines Limited (“ESP”).

The total gross consideration for the transaction is approximately £46 million; the expected net consideration of approximately £33 million is stated after deducting future costs in relation to the build out of the external order book assets of £13 million.

The sale is conditional on Ofgem approval and the Competition and Markets Authority (“CMA”) indicating that it does not intend to launch a merger investigation in respect of the sale (or if it does launch such an investigation, the CMA clearing the sale without an in-depth (phase 2) review).

Philip Holder, Chairman, said: “This transaction realises substantial value for the company’s existing and contracted domestic gas assets. It significantly strengthens our balance sheet and will provide a basis for a return of capital to shareholders. Fulcrum’s core growth strategy will focus on its design and build activities, as well as on continuing to adopt assets in its traditional I&C market where appropriate. Our new relationship with ESP will enhance the company’s capabilities in the future in all segments of the market.”

The company will continue to grow its design and build activities in the industrial and commercial (“I&C”) segment of the market, both working with ESP as an asset adopter under an arrangement entered into at the same time as the sale and, where appropriate, continuing to independently design, build and add I&C assets to its own portfolio of assets.

Background on Fulcrum
Fulcrum is a multi-utility infrastructure and services provider based in Sheffield, UK. The company’s primary business is the provision of utility infrastructure services to the domestic, commercial and industrial markets throughout the mainland UK. These range from the design, installation or alteration of utility services for single site properties to large complex multi-site projects.

Through its subsidiaries, Fulcrum Pipelines Limited and Fulcrum Electricity Assets Limited, Fulcrum is also licensed as an Independent Gas Transporter and Independent Distribution Network Operator, owning and operating gas and electrical assets that connect properties to the main UK gas and electricity networks. Fulcrum is also a meter asset manager, owning and operating meter assets across mainland UK. In 2018 Fulcrum acquired the Dunamis Group, an electrical infrastructure services company, creating one of the UK’s leading gas and electrical infrastructure services groups.

Smith Square acted as sole financial adviser to Fulcrum. This is Smith Square’s third transaction for Fulcrum.

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