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Funding Solutions / Case Studies

Taking advantage of an industry downturn to invest in growth

EPI Group

EPI Group secured £3m funding from IGF during oil industry downturn and doubles revenues

Supported by a £3m funding facility from Independent Growth Finance Ltd (IGF), EPI Group (EPI) made the strategic decision to invest in growth and diversification whilst others were adopting a more risk averse strategy during the recent downturn in the oil and gas market. This strategy is now proving highly successful and paying immediate dividends for the business.

EPI is a leading independent and international energy consultancy. Set up in 1987, it provides integrated technical services across the full exploration and production cycle, from new venture appraisal to field development.  Operating with a blend of in-house and field-based technical experts and supplemented by a suite of proprietary and licensed technologies, EPI reduces risk, adds value, and brings greater operational success to its clients.

In the financial year ending in December 2018, EPI achieved its most successful year in terms of number of consultant days charged to clients.  This led to revenues of £16.5 million, more than double that achieved in the previous year, and impressive EBITDA growth of £2.5m during the year.

This is a hugely impressive result for the team, that comes only 12 months after the end of one of the harshest downturns the oil and gas industry had experienced in several decades, and one that culminated in hundreds of thousands of redundancies.  The downturn has been so severe that several of EPI’s competitors haven’t survived, whilst others continue to struggle in a market that is slowly recovering, yet confidence levels remain well below their peak in 2014.

EPI is clearly bucking this trend and a critical part of delivering this strategy, and leveraging the opportunity, was the support of EPI’s funding partners.

Investing through the downturn

EPI experienced an extremely challenging period to navigate but the directors recognised an opportunity to sustainably invest in a diversification strategy in order to emerge from the downturn a stronger business.  The successful deployment of this strategy has seen EPI become a truly global consultancy company, providing services today in over 50 countries at any one time, alongside introducing new complementary services that have been developed organically or via M&A.

EPI’s confidence in its ability to invest and continue growing through the downturn meant that a finance solution was needed to support this strategy.

EPI has a strong and stable client base, including tier one operators such as BP, Total, Chevron, Shell, Equinor and ExxonMobil. This provides the Group with an enviable invoicing book, however many of EPI’s contracts are for supporting these clients operating in higher risk or more challenging territories from a funding perspective.  During the competitive process EPI ran to identify its funding partner, understanding and providing maximum flexibility and headroom despite these challenges was a key requirement.  

Understanding the full scope

Richard Bradley, Chief Operating Officer at EPI Group explained, “It was the first time we had looked at alternative finance, and it ended up being the perfect solution. We were confident that the investments we had made through the downturn and diversification strategy we had deployed would deliver strong growth as market conditions improved and we therefore wanted to find a competitive partner who would provide a working capital facility to flex and grow with us.  We needed to find a funding provider that understood the credit list versus a list of approved territories they could operate within. It suits us well as we have so many fantastic AAA and blue-chip clients with very few bad debts or credit notes.”

Rob Adams, Client Manager at IGF added, “At IGF we look past the red tape and see the bigger picture. In this case, enabling us to provide funding based on the secure client base and the liquidity of existing collateral that EPI holds. Even in a downturn invoice finance is a viable option for many businesses. It suits current business needs, whilst offering the flexibility to grow along with the business.”

EPI and IGF created a bespoke plan where IGF looked at the business laterally and structured a £3 million invoice discounting facility. This facility has provided the flexibility needed to support the company over the last three years and into the future.

Bradley continued, “We quickly realised IGF offered not only a solution and insightful advice, but relationships were at the core. They took the time to understand the full scope of our business and recognised the opportunity.”

Investment strategy delivers high reward

The original funding facility from 2016 is still in place today. Since then, EPI has almost trebled its sales ledger, increased headcount by 20% and having doubled its turnover last year, is on track to deliver impressive growth again in both 2019 and 2020.

Bradley continued, “Since the funding facility was put in place in 2016, it has generated advanced cash and allowed us to increase our headcount and make strategic investments. It’s hard to recognise where the business was from a few years’ ago, and we’re now able to look at growth opportunities which would not have been possible without this funding support.”

Adams concludes, “The alternative finance provision put in place, has provided EPI with the flexibility needed for it to prosper. Our relationship and the funding facility have grown alongside the business making it a long-term funding solution that ensures EPI can continue on its rapid growth trajectory.”

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