Global Dominion Access was established in 1999 as an engineering, construction and multi-technology service supplier group whose value proposition is the maximisation of the efficiency and productivity of its clients’ business processes by applying technology as a transformational element and offering end-to-end solutions.
Global Dominion has 3 business segments:
- B2B 360 Projects (29% of 2021’s adjusted revenue)
- B2B Services (53%)
- B2C (18%)
In the B2B 360 projects segment, a new production process or new infrastructure is created, in which the subsequent design, implementation and maintenance is carried out. Projects are usually one-off orders with high margins. These are comprehensive projects (typically multi-year) with a margin profile of more than 15%.
B2B Services refer to the framework contracts for operation and maintenance outsourcing and process improvement projects. These contracts typically involve recurring revenues with adjusted margins that should come close to a contribution margin of approximately 12%.
In this sector, we have seen how the largest companies in local markets have been able to grow successfully through acquisitions whilst showing higher margins than competitors. We believe that Global Dominion can successfully expand internationally in a market characterised by high levels of fragmentation and a very limited number of global entities.
During all these years, the company has been able to secure and develop a solid M&A activity with a purchase EBITDA ratio between 5 – 6x (with the aim of becoming 3X EBITDA in year three).
The largest shareholder of Global Dominion is ACEK Desarrollo y Gestión Industrial S.L., owned by the Riberas Family. Joan and Francisco Riberas are amongst the best-known businessmen in Spain and also the largest shareholders of multinational firms CIE Automotive and Gestamp. Global Dominion has a strong management team with a long-term view. Anton Pradera, Chairman, and Mikel Barandiaran, CEO, are founding members and own over 10% of the shares (over 5% each).
From 2016 to 2021, Global Dominion grew sales at a CAGR of over 16%, demonstrating its capacity for securing a growing order book and designing accurate operating strategies to properly address customers’ needs. Average organic growth during the period was 9.6%. The EBITA margin increased from 5.83% in 2016 to 6.56% in 2021.
At the current price of €3.32 (market cap: €615M), the P/E ratio (2022) ≈ 10x and the EV/EBIT multiple (2022)≈ 8x. We believe that those multiples do not reflect the ability to generate cash in perpetuity of a company able to grow organically at high levels, to take opportunities to acquire global firms at attractive prices, and maintain a good capital allocation policy. In addition, it is very likely that its hidden value in the renewable energy division will be unlocked in the near term.