Facility Management Industry - Industry Watch

Indian Facility Management Industry

Facility Management (FM) refers to the use of a third-party service providers to maintain a part or entire building facility in a professional manner. It is increasingly gaining popularity amongst commercial as well as residential clients driven by modernization, rapid urban development and a growing awareness of advantages arising from outsourcing non-core business activities.

The Indian facility management market accounts for 3.2% of the GDP of the country and is at present an INR 5 lakh crore market and is expected to grow at a rate of 20-25% annually. The market is highly fragmented with relatively few organized players. However, with the growing formalization of the economy, the proportion of organized players is steadily increasing.

At present, the organized FM services industry in India is valued at INR 50 thousand crore constituting 10% of the total market. This is expected to grow to INR 1.25 lakh crore by 2022.^[1] In India FM services companies have only tapped 25% of the addressable market with 75% of this work still being undertaken in-house, a stark contrast to 49% at the global level^[2]

Segmentation of FM Services

The Facilities Management Industry can be broadly classified into two segments:

Hard Facilities Management Services

Hard Facilities Management Services refers to security, operation & maintenance of property, engineering, landscaping and similar elements of an asset

Soft Facilities Management Services

Services other than hard FM which support the operation of the facility (ex: catering, cleaning, pest control, laundry, parking) are generally classified as Soft Facility Management Services

Facility Management (FM) Services
*Hard FM Services* *(Building* *Operations & Maintenance)*	*Soft FM Services* *(Support* *Services)*
Security Services	Cleaning, Janitorial & Housekeeping Services
Mechanical, Electrical and HVAC Maintenance	Pest Control Services
Plumbing Services	Catering
Asset Management Strategies	Business Support Services (Office & Help Desk Support etc.)
Short-term Repairs & Preventive Maintenance Services	Gardening & Landscaping
Energy Management	Guest House & Service Apartment Management

Key Trends

- Consolidation in the FM industry as the unorganized sector transforms and gets absorbed into the organized sector

- FM industry is gearing up for a historic shift towards automated services, with considerable investment of manpower and resources toward creating technology driven services platforms

- FM companies are competing on meeting stringent quality, environmental, health and safety (ISO 9001 & 14001 and OHSAS 180001) standards

- Several major MNCs and domestic companies have started investing in India and looking for FM services that match global standards

- Industrial and Manufacturing sector shifting from in-house maintenance to outsourcing FM services requirements

- Growing influx of trained and qualified engineers to help industry adapt to global engineering standards and best practices

Top Players

Company Name	Primary Services
Updater Services (P) Limited (UDS)	Facility Management
BVG India Ltd.	Facility Management
ISS Facility Management	Facility Management
Compass Group Plc. - India	Food Services & Facility Management
Quess Corp Ltd. – Avon, Spiffy	Business Services, Facility Management
Sanjay Maintenance Services	Facility Management
SIS Group Enterprises – ServiceMaster Clean, Dusters Total Solutions India, TerminixSIS	Security Services, Facility Management & Pest Control
G4S - India	Security Services & Facility Management
Jones Lang LaSalle, Inc., (JLL) - India	Investment Management - Real Estate, Facility Management
Sodexo	Food Services & Facility Management
CB Richard Ellis, Inc., - India	Investment Management - Real Estate, Facility Management
Cushman & Wakefield - India	Investment Management - Real Estate, Facility Management
Mortice Group PLC – Tenon FM	Facility Management
Colliers International Group Inc., - India	Investment Management - Real Estate, Facility Management
Topsgrup – Cheep Care	Security Services & Facility Management
ServiceMax Facility Management Pvt. Ltd.	Facility Management
Knight Frank India Pvt. Ltd.	Investment Management - Real Estate, Facility Management
EFS Facilities Services	Facility Management
Pest Control (India) Pvt. Ltd	Pest Control

Private Equity and M&A Activity

Year	Acquirer	Target	Target/Transaction – Note	Type
2018	IndiaNivesha	CLR Facility Services Pvt. Ltd.	IndiaNivesha picked up a minority stake in CLR Facility Services Pvt. Ltd., a manpower and facility management company for an undisclosed amount	PE^[3]
2017	Motilal Oswal PE	Updater Services	Updater Services is one of the leading FM service providers in India	PE^[4]
2017	Samara Capital	Sanjay Maintenance Services	Sanjay Maintenance Services Pvt. Ltd. (SMS) is one of the largest facilities management service providers in India operating primarily in the BFSI, IT/ITeS, manufacturing, retail and office space segments	M&A^[5]
2016	SIS Group	Dusters Total Solutions	Dusters Total Solutions, a Bengaluru-based integrated facility management services provider managing over 1,200 locations	M&A^[6]
2015	Quess Corp	Aravon FM	Aravon FM is an integrated FM service provider	M&A^[7]
2015	SILA Solutions	Evoncare Pest Control Services	Envocare offers herbal-based formulas to get rid of pests	PE^[8]
2014	True North	Hicare	Hicare is India’s second largest pest control services firm	M&A^[9]
2013	CX Partners	SIS	SIS is the largest business services organization in India	PE^[10]
2013	Sodexo	Radhakrishna Hospitality Services	Radhakrishna Hospitality is India’s largest food services player	M&A^[11]
2011	Compass Group	Vipul Facility Management Private Limited, New Delhi	National player in the facilities management industry	M&A^[12]
2011	Compass Group	Ultimate Hospitality Services Private Limited	Strong regional food services business headquartered in Hyderabad	M&A^[13]
2011	3i Group Plc.	BVG	BVG is India’s largest Integrated services company	PE^[14]
2010	Compass Group	Tirumala Hospitality Services	Regional player in food services in Western India	M&A^[15]
2010	TVS Capital	Dusters Total Solutions	Dusters Total Solutions, a Bengaluru-based integrated facility management services provider managing over 1,200 locations	PE^[16]
2009	Compass Group	Epicurean Enterprises Private Limited	National facility management and housekeeping services company	M&A^[17]
2009	ISS	Hicare	India’s second largest pest control services firm	M&A^[18]
2008	Quess Corp	Avon FM	Avon is a premier FM service provider managing more than 550 sites	M&A

Global Listed Players

Company Name	Exchange	EV (in INR thousand crore)	EV/EBITDA
CBRE	NYSE	126.7^[19]	12.7x
Colliers	NASDAQ, TSX	23.8^[20]	14.3x
Compass Group	LSE	261.9^[21]	14x
Cushman and Wakefield	NYSE	184.1^[22]	26.6x
G4S	LSE, CPH, FRA	47.8^[23]	10.3x
JLL	NYSE	54.5^[24]	9.6x
Mortice Group Plc.	LSE	0.3^[25]	3.7x
Quess Corp	BSE, NSE	15.6^[26]	37.2x
Security & Intelligence Services (SIS) India	BSE, NSE	8.4^[27]	24.9x
Sodexo	Euronext, FRA	126.2^[28]	10.5x
Median	13.4x

Target Industries
The facility management services are outsourced services and are primarily preferred by companies where a high standard of cleanliness is expected. These include companies from the IT, ITES, BPO, BFSI, manufacturing, FMCG, infrastructure, healthcare, retail, education and government sectors

Growth Drivers

The Indian Facilities Management (FM) industry is in the midst of rapid development. The anticipated growth in the market can be attributed to:
- Growth in commercial and residential real estate
- Increase in SEZs, mega food parks, smart cities and housing projects
- Greater awareness of cleanliness and hygiene amongst industries
- Reduction in operating costs of the facilities/buildings
- More outsourcing by corporates who were hitherto insourcing
- Inability to provide specialized cleaning by inhouse personnel
- Increased business activities from Tier-2 and Tier-3 cities
- Increase in outsourcing of facility management services by Government offices