SRJ Technologies Acquires Air Control Entech and Announces Capital Raising

Acquisition Details

SRJ Technologies Group Plc (SRJ) has executed a Share Purchase Agreement (SPA) to acquire 100% of the issued capital of Air Control Entech Limited (ACE). ACE is a UK-based company that provides remote inspection services to the Oil & Gas industry using advanced robotics and custom UAV technology. The acquisition aims to create a world-class asset integrity company with cutting-edge repair and maintenance solutions.

ACE has redefined inspection protocols in the Oil & Gas market with advanced robotic solutions for land, sea, and air, minimizing human risk and maximizing precision and safety. The company has successfully established services in the UK and is expanding internationally with SRJ's support. ACE's inspection services are certified by all five main class societies. In FY23, ACE achieved 64% revenue growth, with a projected 174% growth for FY24, maintaining strong gross margins of 75% and EBITDA margins of 41%.

Capital Raising

To fund the acquisition and provide working capital, SRJ has raised approximately $13.5 million under a conditional placement. The capital raising was well supported by existing shareholders along with new and existing institutional investors. SRJ is also undertaking a Share Purchase Plan (SPP) to raise up to $500k. The funds raised will be used to pay the cash component of the purchase price for ACE and for the working capital requirements of the combined group.

Business Combination

The business combination brings together two key offerings in the asset integrity market: inspection and repair & maintenance. By leveraging their strong existing relationships, ACE and SRJ aim to cross-sell their respective offerings, effectively expanding market penetration and creating substantial opportunities to introduce complementary services across existing client bases and expand services across existing and new geographies.

Acquisition and Offer Overview

The acquisition is subject to customary conditions including SRJ obtaining the required shareholder approvals for the capital raising and issue of the scrip consideration and approval of the acquisition under the National Security and Investments Act 2021 (UK). The consideration payable by SRJ to ACE shareholders will comprise a combination of ordinary shares in SRJ and cash, with ACE shareholders holding approximately 28% of the issued share capital in SRJ on completion of the acquisition.

The acquisition of ACE is for a consideration amount of approximately GBP£4.5 million (approximately A$8.6 million) in cash and the balance by the issue of 175,249,279 new CDIs (Consideration CDIs) with an implied value of approximately A$9.6 million at the offer price. Completion of the acquisition is expected to take place on or around 21 August 2024, subject to the conditions precedent having been satisfied or waived.