CASE STUDY

ACROW FORMWORK AND SCAFFOLDING

Overview

  • Acrow was acquired by Anchorage Capital Partners Fund I in September 2010
  • Acrow operates a national network of scaffolding and formwork solutions
  • Anchorage, together with management, successfully transitioned the business from a non-core corporate ownership position and achieved significant underlying operational and performance improvements
  • Acrow was successfully sold to publicly listed NMG Corporation Limited (NMG) in March 2018. Prior to commencing trading on the Australian Securities Exchange in April 2018, NMG changed its name to Acrow Formwork and Construction Services Limited (ASX:ACF)

Transaction background

In September 2010, Anchorage, together with management, acquired Boral Formwork & Scaffolding Pty Limited, a wholly owned subsidiary of Boral Limited, formerly part of the Boral Construction Related Division. Anchorage rebranded the business to Acrow following the acquisition. The transaction was a proprietary deal, sourced by direct approach to Boral.

Business overview

Acrow operates a national branch network offering scaffolding and formwork solutions from 7 locations to the residential, commercial and civil construction sectors. Its brands include the industry standard "Acrow" brand in formwork and "Cuplock" in scaffolding. Acrow’s scaffolding operations supplies builders and building contractors with a height access solution. Acrow’s formwork operations ‘dry hire’ formwork equipment that forms the temporary mould to support concrete structures in their construction as well as falsework equipment that is used to support suspended horizontal structures during their construction. 

Turnaround program

Acrow represented a classic orphan investment for Anchorage, where the business was non-core to its former parent and was not performing to its full potential. Following completion of decoupling from the broader Boral group and rebranding to the recognised Acrow brand, the business was materially impacted by extremely difficult trading conditions. Anchorage implemented a second turnaround program in 2013, which included the appointment of a new CEO and CFO and further organisational redesign. Key aspects of the second turnaround program included:
  • Strategically investing capital expenditure, targeting the high margin formwork segment
  • Refocussing the scaffold strategy towards ‘dry hire’ and less labour-intensive work, improving margins and reducing labour management risk
  • Closure of unprofitable branches and restructuring the branch network
  • Building sales and business development capability, targeting attractive segments
  • Generating further efficiencies through improving project management capabilities, enhancing yard operations, regionalising administration processes and improving cash conversion and working capital management

Financial performance

The impact of the refreshed turnaround program was evident in the quality and results of the business. After realising an operating EBITDA loss in FY2013, the second turnaround was implemented, subsequent to which EBITDA and margin grew each year. Acrow generated an operating EBITDA of circa. $9 million in FY2017, the last full year prior to sale. At the time of exit, Acrow is positioned to leverage the underlying improvements made to the business under Anchorage’s ownership and be profitable in all market conditions.

Exit

Anchorage achieved a successful sale to publicly listed NMG Corporation Limited (subsequently renamed Acrow Formwork and Construction Services Limited) in March 2018. The public entity commenced trading on the Australian Securities Exchange in April 2018.

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