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Case Study: Flow Group Ltd

Published: January 2007

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.

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