Private equity boost for technology firm

Aug 28 2008 by Graeme King, The Journal

PRIVATE equity backers are ploughing hundreds of thousands of pounds into a pipeline inspection company to support its global expansion plans.

Durham Pipeline Technology (DPT), based on Neilson Road in Gateshead, has generated a further £500,000 to support development of its unique tools to inspect and clean pipelines in the oil and gas industry, and potentially in the water, nuclear and petrochemical industries.

Despite noises of gloom emanating from other sectors of the economy oil and gas are proving to be increasingly attractive – driven by global demand for energy – with the DPT investment being fourth major deal in this sector in the last year (see panel).

The new investment is made up of £300,000 from the Co-Investment Fund of NorthStar Equity Investors (NSEI) and £200,000 from a combination of existing DPT investors Enterprise Ventures (EV) and senior management in the company.

Managing director Nick Searby, appointed earlier this year, has his sights set firmly on global expansion.

He said: “We’re already operating in many countries across the globe including the Middle East, North America and Australia, as well as the UK. Our focus now is to grow our existing network of distributors and agents worldwide and really capitalise on the opportunities the global market has to offer. To realise this ambition, we’re investing heavily in a new fleet of tools that we’ll be able to use across the oil and gas and water industries and we’re also adding extra resource to the business by recruiting several new design engineers and project managers.”

Chris Rigg, director of corporate finance at Deloitte in Newcastle, said: “Whilst the oil and gas sector is made up of many different sub sectors, as a general theme, investors, be they private equity or trade, will continue to seek investments in companies like this. The potential for local businesses to exploit the market opportunities that exist will continue to make them increasingly attractive to outside investors.” The subsea sector is now worth up to £1bn per year to the North East economy, employing 5,000 workers, having grown by a massive 30% during 2007.

DPT currently has a team of 12 at its Gateshead headquarters, but will be hiring more team members as the business develops. Nick Pearson, finance director of DPT, said: “Once we establish a track record of being able to deliver, and build on it, things will snowball. Really the defining factor for customers is whether they need to inspect and maintain pipes – they tend to be in industries with a high value product, and those that are regulated.”

DPT was founded in 2003 as a spinout from Durham University, with its groundbreaking “bristle tractor” technology invented by former Durham University Professor Ernie Appleton, who has recently retired as DPT’s technical director. Ian Richards, portfolio manager at NSEI, said: “The pipeline technology is groundbreaking and with continued support, we’re confident that DPT’s long term strategy of creating a multi million pound global business will prove a success.” Paul Taberner, investment director at EV, said: “This further investment will allow DPT to grow its sales and revenues in their target sectors and to offer some unique technologies to the market."