Arcapita Ltd., the European private equity arm of Bahrain-based Arcapita Bank, has acquired Roxar from its previous owners, Lisme AS, a Smedvig and Lime Rock Partners investment vehicle. The transaction is valued at around $200 million and is Arcapita’s first investment in the oil and gas sector and its largest investment in Europe to date. Royal Bank of Scotland and Barclays Bank provided senior and mezzanine financing of US$91 million for the acquisition, together with a US$25 million working capital facility. Roxar senior management, led by CEO Sandy Esslemont are to retain a 1.2% shareholding in the company.
Nasr
Arcapita Executive Director Mounzer Nasr said, ‘We see substantial growth opportunities as operators embrace new ways of maximizing production and implement reservoir management techniques earlier in the production cycle. We believe Roxar is well positioned to take advantage of this trend.’
Madden
Arcapita’s John Madden told Oil IT Journal, ‘We have been looking at the oil and gas vertical for a few years and were particularly interested in the offshore and technology sectors. So when Roxar was put up for sale, we jumped on it.’
Time frame
Arcapita typically holds its investments for three to five 5 years. But Madden explained, ‘We are not a fund and are not constrained by fund life. We can take a longer view. We also see this as a growth sector and will be looking for smaller companies to fit into the Roxar group which could add to either the equipment or software portfolios or boost the services offering. We are enthused with our first oil services technology investment and we want more!’
Esslemont
Esslemont added ‘The fundamentals for our markets, particularly sub-sea multiphase metering and 3D reservoir modeling, have never been stronger and continue to improve. Arcapita gives us the financial support that will help us develop our competitive position in these markets and increase our ability to research and invest in the oil and gas technologies of the future.’
Two LOBs
Roxar has two distinct lines of business (LOB), software and real-time flow measurement. Roxar’s flagship software package is its Irap RMS reservoir modeler. Its flow measurement offering includes high tech hardware for subsea multi-phase flow metering and data acquisition. Roxar’s 2005 turnover was around $130 million, with almost 70% from its metering division.
What’s next?
The big question for Roxar’s new owners is whether to split the two LOBs or to try to bridge the gap between metering and modeling. For more on Roxar’s business, read our2004 interview with Sandy Esslemont (OITJ Vol. 9 N° 4) and the update to appear in next month’s issue.
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