25% ROIC, 4x in revenues since IPO 4 years ago, reinvesting heavily to grow further. Strong M&A strategy plus pricing power and organic growth in double digits. And a PE of barely above 7, not to mention strong visibility.
What if I told you there is a UK-listed company that rents out the critical subsea equipment that keeps the offshore energy system running? Not rigs, not ships, but the highly specialised tools: sensors, ROV gear, cutting and dredging systems, winches, inspection kits. More than 30,000 assets spread across a global network of depots, serving the biggest offshore contractors in the world.
The model is simple. The company buys complex kit once, then rents it out repeatedly to Tier-1 customers who are deliberately going “asset light”. Instead of owning their own fleets of subsea tools and fighting obsolescence, contractors increasingly outsource that headache and just pay per project.
It is fighting for a bigger share of a fast-growing pie. Offshore oil demand is proving far more resilient than the “peak oil” narrative, and the shift from owning to renting equipment among contractors means the addressable market is expanding from two directions at once. In construction, rental is already the default choice; in offshore we are still early in that transition, which gives this company a long runway.
Despite that, the stock trades as if it were just another cyclical oil-services name (if anything, worse). Why?
On the latest HY numbers, pro-forma organic growth has dipped into slightly negative territory and free cash flow screens terribly. A quick look at the company makes it an easy pass: growth has turned negative, cash generation is weak, and they are expanding aggressively in an industry that is “oil related”. I think that’s badly misreading what is actually happening underneath.
On the revenue side, the negative pro-forma growth is largely self-inflicted and temporary, and it has only happened once, in this half-year, since COVID. Forecasting no growth or negative growth from that datapoint is, in my view, wrong. Management has deliberately chopped out low-margin resale activity inside a recent acquisition, replacing it with higher-margin rental and service work. At the same time, several chunky projects that were supposed to land in the first half of the year were pushed back by customers. Those delays weren’t lost contracts; they were timing issues. The projects have since mobilised for 200–500 day campaigns, and management went out of its way on the earnings call to say that every single one of the deferred jobs has now gone ahead. Layer on top an industry backdrop where offshore oil and gas capex is rising again, decommissioning is ramping, and offshore wind – after a brutal reset – is still putting gigawatts of projects through FID.
The free-cash-flow picture is equally misunderstood. Working capital has been a big drag as receivables and project timing moved against them exactly when they were integrating a major acquisition and pre-positioning equipment for expected work. Capex is also high right now, sitting in the mid-teens as a percentage of revenue, because they are still in aggressive build-out mode: expanding the fleet, adding new capabilities, and deepening their presence in key hubs. If you take those numbers at face value you conclude that this is a capex-hungry business that doesn’t convert earnings into cash.
But when you look deeper, a different story emerges. Management estimates that true maintenance capex – what they need to spend to keep the existing fleet in good working order – is around 9–10 million pounds a year, roughly half of reported depreciation and far below current capex levels. In other words, most of what shows up as capex in the cash flow statement is optional growth investment, not a structural drain.
Meanwhile, the strategic position is getting stronger while all of this plays out. Over the last decade, the company has stitched together a series of niche acquisitions in survey and robotics, dredging, heavy lifting and winch systems, and specialist services like manipulator repair and cable moulding. Now, as the biggest player in the sector, it can genuinely act as a one-stop shop for its clients, offering integrated packages that no smaller competitor can replicate. Size, breadth of offering, and deeply embedded customer relationships add up to meaningful competitive advantage.
All of this is being orchestrated by a CEO who has been in the business for well over a decade, led it through the 2014–2016 oil downturn, and has kept returns on capital in the mid-20s even while spending more than a hundred million pounds on acquisitions.
On the demand side, the setup is unusually clean. The company’s core customers – the big subsea contractors – are sitting on record multi-year backlogs. Across the three largest, backlog has more than doubled over the last four years, and 2026–27 backlogs alone stepped up by double-digit percentages just in the first half of this year. These contractors are increasingly explicit about going asset-light: they want to own a smaller fleet of strategic vessels and rent or charter the rest, including the kind of subsea equipment this company provides. That combination – record customer backlogs and a structural shift toward renting the very assets you supply – gives rare visibility into future demand.
Put it together and you have a business that has already shown it can grow, with revenues roughly quadrupling since IPO; that earns around 25% on the capital it puts to work; that is still reinvesting heavily into a space with clear structural tailwinds; and that trades on a valuation multiple usually reserved for declining, ex-growth cyclicals. The hidden upside is that most of what currently depresses the headline numbers – the divestment of low-margin revenue, the temporary project delays, the working-capital bulge and the high capex – are either one-off or front-loaded decisions that should make the next leg of growth more profitable, not less.
In the full +30-page deep dive I walk through the story properly:
1. Introduction.
2. Business model
3. Sector
4. Clients and value proposition
5. Why renting instead of owning
6. Competitive advantages
7. Financials
8. Trying to kill the thesis
9. Valuation
10. Conclusion and catalysts