Dieselec generates brighter future after Thistle takeover

As featured in the Herald

When Paul Moore left school at 16 for an electrical engineering apprenticeship at Thistle Generators in Glasgow, he little imagined that 25 years later he would be rescuing the company, as he built one of Scotland’s fastest-growing businesses.

After leaving Thistle at the age of 34, with two young children and no capital, Mr Moore started Dieselec as a rival generator dealership. Nine months ago Dieselec brought Thistle out of administration to more than double its size, having just opened a London office and quadrupled the size of its headquarters in a move from Cumbernauld to Milngavie.

The business has already supplied all the standby power for major new hospitals in Scotland including Glasgow’s Victoria, and its London team has just landed a £3.5 million contract for a financial institution in central London.

Group turnover could hit £20m next year, and underlying operating profit doubled last year to £1.1m.

Emergency power generation is built in at the design stage to new developments where loss of power would be disastrous, from hospitals to supermarkets to data centres.

Mr Moore notes: “Retailers need standby power systems to keep stores operational, and keep revenue going through the doors – another factor is frozen food which they don’t want to melt and go off.”

Given its track record and the sectors it targets, the Scottish company – already employing 52 staff – sees big opportunities ahead to build a UK-wide business.

Dieselec was not only debt-free but ready for expansion, thanks to teaming up a year ago with an ideal backer in the shape of private equity group Nevis Capital, the vehicle of John and James Pirrie.

The Glasgow-based brothers had created Nevis after selling their own generator business LCH to Speedy Hire in 2006 for £62m. John Pirrie now chairs an eight-strong board including five non-executives from Nevis, which has an equal shareholding with management. Mr Moore says: “There were only two directors in the business. I said we needed more direction, someone who has done it and bought the T-shirt, to mentor us along the way, get us to the next level. We wanted an outside pair of eyes.”

The investment was the seventh Nevis had made in four years, as it bought out the shareholding of Dieselec co-founder Jim Arthur for a seven-figure sum in a multi-million pound deal.

Mr Moore says the opportunity to buy over his original employer was well-timed, as he and fellow director Brian Muirie – formerly with LCH – had grown Dieselec’s turnover from £900,000 to £7m in six years virtually on their own.

“They were an over-resourced company and we were an under-resourced company, both working in the same markets,” he says.

“At that point our business was probably over-trading,” he admits. Dieselec had no finance director, no sales force, no project managers, and no administrative team.

Recalling the intense pressures prior to the merger, Mr Moore says: “Rather than doing everything yourself I can start delegating to a proper management team. I’m still very busy, still working on average a 60-hour week, but it has calmed down a lot from where it was.”

When Paul Moore left the Bothwell offices of Thistle as sales director after 19 years, it had been his only workplace.

“At that point I wanted to go and work for myself, to make a go of it in the big bad world. I left on the first day back after Christmas and it wasn’t a pleasant experience.”

But after months spent down south dabbling in portable generators and waiting for his restrictive covenants to expire, Mr Moore began to target his old clients, the consulting engineers and mechanical and electrical contractors.

Crucially he secured a dealership with leading generator manufacturers FG Wilson of Belfast, breaking Thistle’s previous exclusivity.

“We remortgaged our houses to come up with some working capital,” he recalls. “We got some industrial premises and hired some equipment. We didn’t approach the banks, and we have never had a bank facility ever since.”

By the end of last year, Dieselec with 12 people was turning over £7m while Thistle was doing £10m with 30 people – and going under. The arrival of Nevis Capital was followed soon after by intelligence that Thistle was in trouble. “We heard rumours they weren’t performing,” Mr Moore says. “We had to act quickly.”

A deal with administrators KPMG was hammered out, saving 30 jobs, and Mr Moore spent much of his time from December to February at Thistle’s Bothwell depot, where he began his career.

He says: “We purchased the business and closed down Bothwell,” he says. “The difficult part was trying to manage the business at that time. There were still only two of us, and we were in the process of relocating to Milngavie.”

The site was acquired by Nevis last year as a base for an enlarged group of investee industrial firms. It had already moved the former Woodside Power, which it acquired in late 2009 for a reported £4m, from Airdrie and rebranded it as Apex Generators, competing head to head with Speedy.

Dieselec Thistle boasts a management structure undreamed of at the old Dieselec, with a finance director, properly resourced sales, project management, engineering services and administration, and an eight-strong team in London. Housed in a new industrial unit at Dartford, it is hungry for big contracts to follow those already won with the likes of Bank of China and Queen Elizabeth Hospital.

“We have got the potential to take business forward,” Mr Moore says.

“Once we have got the London facility up and running, our plan will be to go somewhere in the Midlands and replicate what we have done in London. We want to be the UK market leader, and we have got the infrastructure there to do it.”