Harvey sure sceptics wrongly sizing up building trade

A Cassandra syndrome may be developing about the future of Irish construction, but Brian Harvey is confident that his upbeat feedback from customers is closer to the "heart" of what is happening around Ireland's building sites.

That happy heartbeat tells Harvey that Siteserv, which floated this week on the IEX and the AIM, could have profitable years ahead.

He predicts a thriving market over the next few years for the piles of steel and wood in Siteserv's 5.5-acre site in Dublin's Lucan.

Harvey is chief executive and majority shareholder of Siteserv, which comprises two companies, Rent-a-Fence and Donohue Scaffolding. He set up the umbrella company in 2004 with the backing of the ubiquitous Niall McFadden's investment vehicle Boundary Capital and some private investors.

Harvey and McFadden's relationship dates back to their college years in UCD in the late 1980s, where now 40-year-old Harvey studied politics and economics before cutting his professional teeth with a stint in public relations firm Drury Communications.

His sojourn in the PR game lasted only two years. "I wanted to work in industry: is that diplomatic enough?" Harvey says of his reasons for jumping ship.

He progressed to head of sales at Irish company GKN, before a more radical move to Miami. "My wife is South American and we all know Miami is the capital of South America," Harvey says.

Seven years later, after working in business-to-business sales at American contract logistics giant Ryder Systems, Harvey returned to Ireland in 2004. He and his wife wanted to bring up their three small sons back here, so Harvey started looking for a new outlet where he could use his experience.

Cue McFadden, who helped Harvey source Rent-a-Fence and also crunched the numbers. The investors paid about €5 million for the company, which is a leader in the temporary fencing market, providing fencing in locations ranging from building sites to the Oxegen festival.

The quantum leap for the business came this June after a long search for another likely building services company. Siteserv bought 35-year-old Donohue Scaffolding, a leader in the Irish scaffolding market and seven times the size of Rent-a-Fence.

At 62, founder John Donohue was looking for an exit strategy. He is still involved with the scaffolding company and has a shareholding in the Siteserv holding company.

Donohue's heavyweight customer base included the likes of Sisk, Siac, Roadbridge and Menolly Homes.

Combined revenues at the combined company rose 15 per cent to €39.4 million in the year to the end of April last, and combined operating profit amounted to €6 million, according to the prospectus circulated by Davy.

"Our objective over the next six to nine months would be to double the size of the business in terms of turnover," Harvey says.

Siteserv floated on Wednesday at 55c and is the 20th company Davy has brought to the 23-member IEX, the smaller company enterprise exchange in Dublin.

Siteserv had an allocated room at Davy's recent mid-cap conference in Dublin's Four Seasons Hotel, where Harvey hobnobbed with European institutional investors. The following day brought Harvey and his team to a London roadshow. The flotation is 3.5 times over-subscribed, with Siteserv raising about €10 million.

British institutional investors were even keener than the Irish, Harvey says. "I think they like the Irish story."

He is thinking big. The flotation raised funds that will be used both to pay down debt and to fund acquisitions.

Harvey says he is currently talking to a couple of companies, and is in "advanced" talks with one.

"We could probably have funded another acquisition without going to AIM but in terms of three or four more acquisitions and growing aggressively, we decided the best strategy would be to go on AIM," he says.

He expects to spend up to €80 million on acquisitions in the next 18 months. Siteserv's two companies have 1,500 customers and service more than 2,500 building sites around the State.

The vision is to grow it into an all-encompassing site services business. Anything from high-visibility vests to portable site offices could be a nice add-on, he suggests.

"Our aim is to have four or five companies servicing those sites."

He is also keen to build the group's presence outside its Leinster stronghold. "Our plan is to concentrate on Ireland for the next 12 months, then move to the UK and replicate the model."

Some 70 per cent of Siteserv's customer base is in residential construction, with the balance in the civil engineering field, and Harvey says he wants to grow the civil engineering side.

As the biggest individual shareholder in Siteserv, with a 27.5 per cent stake, he says he is confident about the future even if there is a levelling off in the Irish market.

"We go on what our customers tell us," Harvey says. "The majority of our customers, the large contractors, tell us that they have enough work on their books for three years. On the civil side, their view is that they have enough work for eight years. Look at the billions being spent on infrastructure."

A select group of business luminaries also clearly see Siteserv's potential. The company is chaired by Hugh Cooney, head of corporate finance at BDO Simpson Xavier.

Bernard McGlade, a veteran of both Siac and CRH, is financial controller. Boundary is represented on the board by Martin Cole, formerly a partner in Mazars.