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ISG’s parent company Cathexis is set to sell the sixth-biggest UK contractor after eight years, amid worries about the London-based firm’s finances.
ISG chair and Cathexis chief operating officer Matt Roche told stakeholders that the buyer, whose identity he did not disclose, would make a significant investment in the business.
He wrote that Cathexis was “very near” to closing the sale, in an email sent to suppliers, clients and employees, and seen by Construction News.
CN understands more details will be provided within the next week or two.
Roche wrote: “I am unable to share details of the buyer until the deal has been signed, which is likely to be within the coming days.
“I know you will have lots of questions, but I would ask that you bear with us as we work to close the deal.
“Thank you for your patience over the past few months. I know there has been a period of uncertainty and am pleased we are now nearing a position where ISG can move forward with confidence for the future.”
Directors at one of the firm’s subcontractors told CN that it had not received any information about the sale.
Many have speculated about the firm’s financial health following delays to some of its biggest jobs, forcing the contractor last November to release a statement denouncing the claims as “unsubstantiated, wholly inaccurate and false”.
Rumours grew in February as the firm’s chief executive and chief financial officers unexpectedly stepped down on the same day. Matt Blowers was replaced as chief executive by Zoe Price, who promised to “fundamentally reset” the business. Days later, Blowers’ predecessor Paul Cossell stepped down as a non-executive director, ending his 26-year career with ISG.
The contractor reported subdued revenue and pre-tax profit figures for the 2022 calendar year. Its pre-tax profit dropped by £7m to £11.5m, while revenue stayed flat at £2.2bn. It also reported £104.7m in net cash, down £13m from the year before.
Mani Singh, senior account manager at surety provider Tryg Garanti, said: “The new owners have a real job to not only improve the financial profile of the UK business but also returning confidence for supply chains and clients alike moving forward.
“This won’t be a quick fix and any new owner will have their own strategy in mind – the immediate concern is the commercial sector if they decide to scale back their fit-out presence.”
News of the sale comes amid a flurry of high-profile contractor failures, including Buckingham Group last summer and Osborne in April.
Singh added: “With Lendlease’s decision to leave UK construction and now this ISG news, the pool of companies available to tender the larger projects, such as the skyscrapers in London’s pipeline, is really shrinking, which only adds to the cost pressures in play.”
