Startup Flux Group Buys Norwegian Valve Supplier IKM

The oil service industry could be witnessing the emergence of a major equipment supplier whose chief products will include valves and related technology.

In late June, it was announced that Flux Group, a startup focusing entirely on the oil service industry, planned to acquire the IKM Valves business of IKM Group, a diversified company based in Stavanger, Norway, which is, of course, the center of the Norwegian oil industry.

A Statoil gas rig in the Norwegian Sea

This gas rig in the Norwegian Sea belongs to Statoil, which does business with IKM Group.

The deal is scheduled to close in mid-August, according to a representative of Flux Group, which is also based in Stavanger. Financial details have not been disclosed, but Flux Group is acquiring 100 percent of the shares of IKM Valves. The transaction is also contingent on approval by the Norwegian Competition Authority, which is expected.

IKM Valves, with headquarters in Stavanger and another office in Bergen, Norway, specializes in standard and custom manual and actuated valves ranging in diameters from 0.5 to 60 in.

The valves are primarily for use on offshore rigs and in undersea drilling operations. They include slab-gate valves, expanding-gate valves, ball valves, check valves, and control valves. Among specialty versions are methanol/MEG (monoethylene glycol) injection valves; linear, quarter-turn, and fail-safe subsea actuators; rotary gate valves; and pig diverters.

The parent company, IKM Group, is selling the valves business, because it does not fit with its diverse portfolio of operations, according to an IKM Valves representative. IKM Group has a number of businesses, many of which are involved in engineering, process instrumentation, various fabrication industries, and the design, development, and optimization of undersea oil fields.

One example of the latter, IKM Ocean Design, received a contract earlier this year from oil producer Statoil to optimize the field architecture and infield layout of the Johan Sverdrup pipelines, in ocean water that is up to 120 meters (about 394 ft) deep.

The Johan Sverdrup field is the largest undersea oil discovery on the Norwegian continental shelf in 30 years. It is due to go into production in 2019. Another unit of the group's businesses, IKM Consultants, was awarded a five-year oil and gas consulting services contract by BP Norway.

Flux Group is owned by HiTecVision, an investment company with headquarters in Stavanger and offices in Oslo, Norway, and Houston in the United States. Flux Group, which started operations this year, wants to acquire and further develop "preferred suppliers of equipment to the oil and gas industry," according to a released statement. IKM Valves is the company's first acquisition, as part of what a Flux Group representative calls a "buy-and-build strategy."

HiTecVision, meanwhile, is underwriting Flux Group and its acquisitions through HiTecVision Fund VI. The fund, HiTecVision's fourth, closed in 2011 after raising $1.5 billion in just four months, mostly from North American and European institutional investors. The fund's original capitalization target was $1.25 billion.

HiTecVision concentrates its investments in the oil and gas industry. Last January, the company bought a majority stake in DeepWell, a well intervention company based in Haugesund, Norway. Using Fund VI capital, HiTecVision's investment came to NOK285 million ($45.8 million), which reportedly valued the 10-yr-old company at NOK400 million ($64.3 million).

Other holdings or investments of the company include Aquamarine in Norway, an equipment integrity services company; Vryhof Anchors, a mooring equipment manufacturer, also in Norway; Bridge Energy of the U.K., which specializes in exploration and production; and Offshore Merchant Partners, a Norwegian financial services company.

Flux Group and IKM Valves are looking forward to working together. Statements from both companies indicate that the personnel and operations of IKM Valves will be unchanged. Flux Group CEO Jens Chr. Terjesen has said his company intends to encourage the "entrepreneurial spirit" of IKM Valves and build a "long-term competitive group that can support customers' needs [while meeting their cost-optimization goals ..."

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