A commitment of £8.76 million is being made by BGF, with additional undisclosed contributions coming from Canadian specialist energy investor Kern and Danish venture capital backer NES.
Portsmouth-based Magma manufactures ‘high performance’ carbon fibre pipe for the oil and gas sector and will use the investment to build a manufacturing facility with deepwater access in Southampton. The business says that the new site will allow it to produce up to 250km of pipe a year.
The deal is the second made by BGF in the oil and gas sector following its March backing of Scottish pipeline services business STATS Group.
Magma was founded in 2009 by Martin Jones, Damon Roberts and Mike Boyd, all of who had previously developed the 3i-backed Insensys business. The fibre optic sensing business, which has division in the oil and gas industry and wind energy, was supported by private equity firm 3i and was then sold to Schlumberger and Moog in 2007 and 2009 respectively.
Jones, founder and CEO of Magma Global, comments, ‘Our ambition is to build Magma into a large export-led manufacturing business founded on leading edge technology and the best engineering talent.’
In the last two years, Jones adds, the business has grown from a team of five to a workforce of 90 and an order book in excess of $70 million.
‘BGF has taken a flexible and accommodating approach to this investment round which has smoothed the process of integrating with the needs of our current investors and the management team, this has been very important to us,’ Jones says.
‘We are delighted to welcome Mike Sibson from BGF to our board, he brings both relevant sector experience and a pragmatic approach.’
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As well as being the second oil and gas services transaction for BGF, it is the fifth manufacturing deal it has made during its 18-month lifespan. Other manufacturing deals have included a £3.25 million investment in M Squared Lasers, £4.8 million commitment in toy development business Wow! Stuff and the £3 million backing of ATM parts and refurbishment company Cennox.
Sibson, investment director at BGF and new board member at Magma, says, ‘The team has a great track record, and in particular some very special expertise in design and manufacture of composite structures.
‘Magma is a great fit for BGF. We are backing and experienced and ambitious team to build manufacturing capacity in a high technology business which will export to the international oil and gas market.’