Ion to spend €150m on SWS if bid wins
THE new owners of the Bandon-based South Western Services (SWS) are due to be announced on December 22.
Two bids of over €120 million are in place from Ion Equity and One51.
Neil O’Leary, boss of Ion, outlined his plans for the diverse services group that goes back to 1957.
If he wins the takeover battle with One51, he will spend €150m within three years to create a world-class services group, driving turnover up from €30 million to €200m within three years, and adding to the 600 full and part time jobs already in place.
Initially, Ion was the sole bidder for SWS before its owners, including the four West Cork co-ops and Dairygold spin-off Reox, decided to put it out to tender.
Before that, Ion had offered €100m for the core divisions including wind energy, waste management and the business process outsourcing (BPO).
At that stage Ion had contracted its Shell back office operations to SWS and had carried out significant due diligence on the West Cork business before signing the contract.
“We did a long due diligence on SWS at the time and we very much thought that they were the best in the business. We gave them a very significant contract and created a number of jobs from that contract,” he said.
Since the takeover of Statoil in November, Ion’s oil distribution operation is now a massive €2 billion operation controlled though Topaz, the company Ion set up with a number of other shareholders to execute the deals.
“SWS was very much on our radar through the contractual situation with Topaz we had a very clear understanding of that business and its potential.
“We’re quite intimately aware of that business and its capabilities and the prospects going forward in that sector.”
On the other side of the business, Ion is embedded in the energy supply business in Ireland involving the distribution of fuels, and the sourcing and importation of the fuels, he said.
“We have a very keen sense of issues arising in the energy business. That gave us a very strong interest in the renewable sector,” he said.
Topaz was awarded significant amounts of the biofuels renewable contracts with the government on the fuel additives side, but Ion on the other hand is also looking at the future of fuels.
For Mr O’Leary, what SWS has is another part of that equation — the wind energy, waste recycling and biomass energy creation which represents some of the key areas of fuel development if Ireland is to become more self sufficient on the energy front.
Mr O’Leary believes that SWS has set the standard in Ireland for alternative fuel sources and has the potential to grow significantly in Ireland and overseas with the right financial backing.
The company’s Youghal plant, under construction, that will dry sludge from burning biomass, is very much the type of activity which Ireland should be looking at if it wants to be smart about using its assets, he said.
“To get an exposure into that area is extremely attractive for us and it is all a very logical extension of what we have looked at.
“I suppose if we’ve been hugely focused on energy issues over the past few years SWS is very much on the radar as a very significant company in the renewables business. It’s number two to Airtricity.”
And it is also looking at further developments overseas where Mr O’Leary believes it has the ability to set the pace in this emerging end of the market.
“Looking into the future, what the company is very good at is not just looking at whether you can stick turbines on a hill, but it is looking at the whole thing in terms of its siting them in locations which are unobtrusive. The group is also good at working in tandem with the land owners,” he said.
It’s got a history of working well with land owners through the forestry division, working well with local county councils and indeed working well with the ESB. Really looking at best practice in and around having the activity both lucrative for all of the stakeholders involved.
It has also done its business without causing too much disharmony, given the kind of change that’s involved in that wind energy process.
To its credit, Mr O’Leary said, SWS has found isolated windy remote areas and have put up significant state-of-the-art windfarms in those areas.
“When you come over the hill in Killgarvan into the valley and you see this massive state of the art turbine, as a Corkman (he was born in Midleton and his father was from Inchigeela and the former boss of Imokilly Coop) it has to fill you with a lot of pride,” he said.
This is genuinely world beating application of the technology, he said.
“It is also fantastic having connections with Cork and the land back there and the fact that these barren mountains, that for many years people would have worked incredibly hard to get any return from them, are now actually providing a very valuable harvest.
“I think it’s a real turnaround and if you look at SWS then in total what you have is both the physical land itself in the energy side and what it can do now by being exploited in a very, very valuable way.
“And you have the people themselves and their expertise and their ability now in fact being quite leading edge in terms of the nature of the outsourcing the are doing and that very large government agencies and very large Irish companies like Independent News & Media are entrusting them with some critical functions.
“I don’t know whether the vision came from a long way back or whether it evolved.
“But one way or the other the available attributes of the land and of the people are being used in a very, very productive way and creating very significant wealth for the shareholders who share in the vision.
“It’s very much a strong good news story. And it’s a strong local good news story,” he said.
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