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Case Study: Flow Group Ltd

Published: January 2007

Large Picture

Controlling the financial flow are (from the left) Mark Ansell, Chief Excecutive of Flow Group Ltd, John Wall, Managing Director of Flow Group and Tony Goulbourn, Chief Executive of SYIF.

The Company

Flow Group Limited, based in Sheffield's Carlisle Street, has more than 50 years experience in supplying valves to the global energy industry.

The company consists of five divisions - Shipham, Conflow, Bestobell, John Mills and Bestobell LNG, all creating valves for specialist markets.

Flow Group exports its products to the oil and gas industry, the coal industry, and for cryogenic markets in the industrial gas and liquid natural gas (LNG) industries.

The Challenge

The company has recently undergone an institutional buy out funded through increased levels of bank debt and full utilisation of its existing working capital facilities. However, in order to capitalise on the strong market conditions the company needed additional working capital finance to take advantage of the increasing opportunities presented to it. Consequently the company felt that the time was ripe to seek avenues of funding to invest further in equipment and materials, and to present at foreign exhibitions to secure additional and valuable overseas contracts.

The Solution

During this period, South Yorkshire Investment Fund (‘SYIF') delivered a mailshot, highlighting the organisation's range of investment services to South Yorkshire businesses. Mark Ansell, Chief Executive Officer at Flow Group, said: "SYIF's timing was perfect - we received a mail-shot from them just when we were considering financing options, held a meeting with SYIF the following day and within a matter of weeks, we had the basic terms and conditions of the loan agreed."

The loan was duly processed and SYIF provided a £500,000 expansion capital loan for Flow Group Limited, through a mezzanine finance package. SYIF structured a mezzanine loan built around the flow Group's business plan that allowed early repayment without penalties if the company hit their targets but would allow longer repayment if their targets were not met.

Mark said: "South Yorkshire Investment Fund has been incredibly helpful and we are very happy that they have supported our expansion."

Tony Goulbourn, Chief Executive of South Yorkshire Investment Fund, said: "The fact that the Flow Group mezzanine package came about through one of our direct mailshots is great as it shows that we are reaching our intended market."

Flow Group failed to meet their targets; they surpassed them! and the company was able to repay the mezzanine finance in full after only five months. SYIF was quickly able to offer a flexible form of finance that enabled the company to win and fund significant export business to the benefit of the company and region.

Progress to Date

Flow Group currently exports more than 75 percent of its products and has a turnover of more than £20 million.

Bestobell LNG has secured a multi million dollar order book for the supply of valves to the gas shipping industries in Korea and Japan.

Shipham Valves has recently gained approval by a leading global chemical company for their use in its chemical processing plants in 70 countries across the globe. Tony added: "Our organisation exists to help companies like Flow Group and we are delighted that we could provide investment funding to help the company's dynamic expansion into a wider global market."

The Fund has now exited from the company.

Editor's Notes

About South Yorkshire Investment Fund

South Yorkshire Investment Fund  provided seedcorn, loan and equity linked investments, ranging from £15k to £2.5m, specifically to help small and medium businesses meet the gaps in funding they need for growth and development.

Created as part of the Objective 1 programme, the Fund is a private and public sector business finance provider. The European Regional Development Fund and Yorkshire Forward are investors in the Fund.

South Yorkshire Investment Fund also provided access to Business Angel investments from the Yorkshire Association of Business Angels and Microloans through BiG Business Loan Fund and Donbac Microloan Fund.

Finance Yorkshire has now taken on responsibility for providing gap finance in Yorkshire and the Humber.

For further details please contact Suzanne Tinkler,  on 0845 649 0000.

South Yorkshire Investment Fund Ltd is a company limited by guarantee (Registered No 3936065). South Yorkshire Investment Fund comprises three sub funds, the South Yorkshire Investment Capital Fund, the South Yorkshire Investment Development Fund, which are each managed by YFM Venture Finance Limited, and the South Yorkshire Investment Small Business Fund, which is managed by Finance South Yorkshire Ltd. YFM Venture Finance Limited (Tel 0113 294 5000) and Finance South Yorkshire Ltd (Tel 01709 386 377) are each authorised and regulated by the Financial Services Authority. South Yorkshire Investment Fund also provides a number of services, which are not regulated by The Financial Services Authority. These include the pilot Seedcorn Fund, BiG Business Loan Fund, Mentorbank and access to the Donbac Microloan Fund. BiG Business Loan Fund is managed by Donbac Ltd (company registration No. 01925556) and Key Fund Yorkshire Ltd (Tel 0114 242 8900).