“Data centres are the new offices,” proclaimed a headline in the Financial Times in March, and not without good reason – because although some form of office life will eventually return for many, the coronavirus pandemic has surely put paid to our former collective phobia of remote working.

The nine-to-five and the daily commute may well be over, ushering in a new era of flexible working: and it’s the infrastructure of the internet – data centres – that will make this possible, with the design and building consultant Arcadis recently predicting that “nearly one billion more people will become mobile broadband users over the next five years”.

This is all good news for FEL Group, one of the UK’s leading data centre specialists. Its managing director, John Higginbottom, describes the Scunthorpe-based company’s strategy thus: “Anything in the data centre environment, we can take care of it for you.” It is a simple but effective philosophy that recently helped FEL to see off a number of competitors to win a contract with CityFibre, the UK’s third national digital infrastructure platform. Thanks to this deal, FEL expects to grow 246% in 2021, and the business has secured funding of £1.75m from BOOST&Co to support this growth. 

Rapid growth and a transformative MBO

Simply put, says Chris Silverwood, who owns the corporate finance boutique CorpFin and advised on the deal,FEL Group plays a leading role in managing the critical infrastructure of the nation”. The equation is fairly simple: without well-managed data centres, internet connectivity suffers. But FEL’s beginnings are a lot more humble than its status in 2021 might suggest. “The business started back in 1997, as just an owner-managed business: a very small firm doing air-con installations and maintenance,” Higginbottom says. 

But there are few places where an expertise in cooling is more important than data centres, and when Virgin Media came knocking, the business took off. “Over a five- to ten-year period, FEL grew from a handful of people to a team of 70, with turnover of almost £30m,” Higginbottom says. Today, the company has 30 staff. The growth prompted by the relationship with Virgin Media stalled until, in 2019, the business was in a precarious position, and Higginbottom led a management buyout that turned the firm around. 

“John and his management team have made great progress since completing an MBO, transforming FEL’s customer base and product offering,” says principal Faye McDonough, who led the deal from BOOST&Co’s Cambridge office. “The business is now well placed to grow through 2021 and beyond, with fantastic new momentum and significant contract wins. Working with the team has been a delight, and I look forward to celebrating their future success as they continue to play a critical role in building the UK’s infrastructure.”

Using a loan to build on business momentum

With the company’s foundations reinforced and growth on the horizon again, FEL is looking to the future. Higginbottom is “extremely proud of the hard work by our team in securing the CityFibre deal over an 18-month period and becoming a chosen partner of a leading infrastructure provider”, and the contract is a source of great excitement, given how many data centres CityFibre may require.

“We know there is already a significant demand for modular data centres. Over the next few years, this will only increase, and we are well placed to serve CityFibre and other leading providers,” the managing director says – and this is where the investment from BOOST&Co comes in.

“It will help us massively,” Higginbottom says. “It funds the working capital around what we need to do initially with CityFibre, it enables us to strengthen our team and it gives us the chance to finance any further growth opportunities we’re looking at. It’s an absolutely amazing bit of funding for us.”

Silverwood is similarly positive about the benefits of the partnership between BOOST&Co and FEL. “Changes to how we all live and work, which have only been expedited by the pandemic, have driven further demand for the services that FEL offers,” he says. “In BOOST&Co, John and his team have found the perfect financial partner to enable them to fund what I have no doubt will be an exciting next chapter in the history of the group.”

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