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Keltbray’s £100m+ Infrastructure Sale Fuels New Growth Strategy
After selling Keltbray’s infrastructure arm, Brendan Kerr refocuses on building a resilient, future-ready business with ambitions beyond London
John Stephenson
November 14, 2024
Keltbray owner Brendan Kerr reveals that selling the infrastructure arm was always part of the plan. Now, Kerr aims to refocus Keltbray on commercial projects in London and diversify into energy, data centers, and battery plants - all while gearing up for growth.
What Happened
The Sale: Keltbray sold its infrastructure division to private equity firm EMK Capital in August. Valued at a “well north of £100m”, the sale included Keltbray’s rail and highways assets.
Refocusing: Keltbray will now focus on the built environment, covering demolition, piling, and superstructure work on projects like the 8 Bishopsgate tower in London.
Why It Matters
Kerr believes London's commercial sector alone is not sustainable due to fluctuating margins and project delays. Selling infrastructure enables Keltbray to focus on more diverse markets with strong growth potential, like data centers and energy.
By the Numbers
Turnover Pre-Sale: £378m from infrastructure, employing 1,100 staff.
Current Turnover: £311m, with 800 staff, aiming to reach £500m.
Appeal Cost: Keltbray has spent over £500,000 challenging a £16m fine from a demolition sector bid-rigging case, with legal fees expected to reach £1 million.
Profit Pressure: Keltbray's profit margins have taken a hit in recent years, with margins dropping to around 1.5% compared to the target of 7% pre-2019.
For context:
Profit margins across the UK construction industry are historically low. A 2021 study by consultant Turner & Townsend showed that UK construction had the lowest average margins globally at 3.9%, compared to 4.6% in North America and 6.1% in Continental Europe.
In 2019, 44% of UK construction projects ended at a loss, according to the Journal of Building Engineering.
Another analysis in Construction News found that the top 100 UK firms averaged just 2.6% profit, with the top 10 contractors operating at a loss of -0.1%.
The industry's decade-long decline in margins has been worsened by Brexit, the COVID-19 recovery, rising inflation, and material cost surges linked to the war in Ukraine. For Keltbray, these pressures have underscored the need for diversification beyond London’s volatile construction market.
How He’s Doing It
Non-Compete Agreement: The infrastructure unit, led by former Keltbray CEO Darren James, is expected to rebrand by Christmas. Keltbray will focus on projects outside road and rail.
Succession Planning: While Kerr, 59, plans to stay on as chairman for at least a decade, Keltbray’s CEO role is held by Vince Corrigan. Kerr’s two sons, who are active in the business, are being considered for leadership roles in the future.
Yes, but…
Kerr strongly opposes employee-owned trusts, citing recent collapses as cautionary tales. He emphasises the importance of private ownership for stability in family businesses like Keltbray.
Bottom Line
With a strategic sale complete, Kerr is reinvesting in Keltbray’s commercial business while exploring sectors beyond London’s volatile market. His vision for the future? A streamlined, resilient Keltbray ready to tackle new challenges, from high-tech infrastructure to green energy projects.