好色先生TV

For a 拢120m-turnover firm with bags of private equity cash, Kinetics鈥� office is a surprisingly modest three-storey, grey stack, somewhat reminiscent of a seventies job centre, writes Andrew Hankinson.

Chris Cheshire, Kinetics鈥� chief executive, explains the thinking behind that. 鈥淚n my formative days of company rescue somebody told me, 鈥楧on鈥檛 have personalised number plates, don鈥檛 have flagpoles and don鈥檛 have big shiny office blocks鈥�. They signal you don鈥檛 have control of costs.鈥�

Perhaps it is appropriate, then, that it is the non-sexy end of the market where the South London-based firm makes its money. Kinetics was formed through the acquisition of 19 social housing repair and maintenance and facilities management businesses over four years, and its clients include the large housing associations, local authorities and the Ministry of Defence. The whole thing was rebranded Kinetics last January 鈥淲e do everything from tap washers to tower block refurbishments,鈥� says Cheshire.

Formed in 2006, the firm has backing from private equity firm Sovereign, which means it has been able to take advantage of the recession.

It has 22 UK bases, but its big priority is expansion 鈥� 20% per year organically (achieved twice so far) and the rest by means of more rapid acquisitions, which is where Sovereign comes in.

"We had a year of kissing frogs because we wanted to meet some more potential backers"

Chris Cheshire

鈥淚t gave me a war chest of 拢50m,鈥� says Cheshire. 鈥淎 team of 鈥榩rospectors鈥� then rang round to find targets. If there was interest to sell and it stacked up, I engaged the target. It鈥檚 a sausage machine when you get it right, and we did the first six in 18 months.鈥�

Essex-born Cheshire, 48, made his reputation fixing struggling companies, which is how he got involved with Kinetics. Having taken a firm called Hudson Engineering through administration on behalf of a bank and put his own money into it, he was approached by Sovereign in 2005.

鈥淚 had a chat in their offices in Victoria [London],鈥� he says. 鈥淚t was semi-daunting. They鈥檙e all Harvard this and Enfield that 鈥� some fairly bright boys. A lot might not be able to run the business they own, but they know the nuts and bolts, so you鈥檝e got to be certain of what you鈥檙e talking about.

鈥淎fter that we had a year of kissing frogs, because we wanted to meet some more potential backers, so I used contacts and schoolfriends who went to work in the City. But Sovereign was different. It had experience of the sector and understood the problems in it, so we danced around for a year and shook hands in 2006.鈥�

Hudson was merged with the gas and construction operations of another firm and renamed Kinetics; Sovereign took an 80% holding and Cheshire and 10 others kept the remaining 20%. Now Cheshire plans to expand to a turnover of 拢150m (鈥溌�200m if the right contracts come along鈥�), and predicts that there will be an imminent 鈥渨ave of insolvencies鈥� that will provide acquisition opportunities.

鈥淎s soon as you hit recession everyone looks for the safe market of social housing,鈥� he says, 鈥渁nd they head for maintenance. They don鈥檛 do it very well, but clients run towards them because they鈥檙e offering very low, unrealistic prices because they don鈥檛 understand the market.

鈥淲e all get squeezed, hence some of the big boys have taken a bashing, but I don鈥檛 chase the market. We stayed just above that layer of scrapping and as contracts failed because firms went in too low, the clients came back and said they need a better service. It is difficult to win big capital projects, but one thing you can鈥檛 cut is maintenance.鈥�

Cheshire expects Sovereign to sell up in 2012, unless a big offer comes in earlier. After that he may stay or not, taking with him treble the 鈥渟ubstantial six-figure鈥� sum he invested at the start.

鈥淚t鈥檚 hard but if you get the right venture capitalist it is worth talking to them. I鈥檝e met some since who say their typical deal size is 鈧�200m (拢174m). But you鈥檝e got to pay that back and convince your clients you鈥檙e not bankrupt because of all the money you owe. The knack is not being lured by the glittery cash and glass towers.鈥�