US venture fund HIG Capital buys 40 per cent of Engine Group

Engine Group chairman Peter Scott has finally got the expansion money he’s been looking for, raising £32.5m now with £30m promised in two years’ time from US-based ventures and private equity fund HIG Capital.

If and when all the HIG money is invested the US group will end up with around 40 per cent of Engine.

Scott told the Financial Times he wants to spend the money expanding in “America, China and elsewhere,” which presumably also means Brazil and other parts of Latin America.

HIG director Thomas Scriven said: “Engine is one of the few truly integrated communications firms in Europe and we look forward to scaling its proposition beyond its home market.”

Actually Europe is awash with companies that claim to offer ‘integrated communications’ although Scott seems to have persuaded his new pals at HIG that Engine is much more than just a collection of advertising and marketing specialists.

In London alone there are the likes of Lord Bell’s Chime and M&C Saatchi (both quoted on the London Stock Exchange) which possess similar line-ups. And then, of course, there’s the mighty WPP which controls thousands of companies. Plus there are a few highly successful single integrated agencies like independent Meteorite.

Scott went on to say that “the market has moved dramatically from the era when the massive holding companies were built” although, in its previous guise of WCRS Group Engine almost became one of them, newly-quoted ad agency WCRS buying media buyer Carat which then became Aegis. Scott was the ‘S’ in WCRS. The two arms subsequently de-merged,

A few weeks ago Scott announced to his favourite pink paper that Engine had dropped its plans for an IPO (public share sale) claiming that the market wouldn’t be ready for Engine for a couple of years, a yarn he repeated yesterday.

With stock markets nearing record levels across the world this is debatable, to put it mildly.

But the HIG investment means that he doesn’t have to worry about his share price as he embarks on world domination. He says the new funding will help him grow revenues from 2009’s £59m to a chunky $1bn in “three to five years.”

It will also allow Engine shareholders to realise some of their stakes.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.