THE INDEPENDENT VOICE OF EUROPEAN PRIVATE EQUITY

INSIDE BVCA Summit 2020 A round up of key discussions from the BVCA Summit 2020.  //realdealseucom GP Workshop How to market a fund successfully. Sink or float GPs must undertake IPOs with caution. PEA Shortlist Deal, House and Advisory awards shortlists for the Private Equity Awards. THE KEY TO LUXEMBOURG

Region focus: Why Luxembourg is a fund jurisdiction of choice.

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& Contents 18 Q&A: Alterdomus Editorial Fund admin and PE relations; and KYC processes. Leader Talya Misiri 4 Alphabites BWAM calls on industry, Pictet’s first thematic fund 20 and more. Lightbulb Credit Comment Trade credit ratings All grown up 6 and PE-backed growth. As the industry matures, it must become BVCA Summit 2020 A roundup of key discussions more aware of the responsibility it has from the BVCA Summit 2020. 21 Webinar: Staying to make a positive impact on its ahead of the curve Tech innovation and portfolio companies, but also the world. 8 managing risks. Luxembourg rebounds and ready to lead Luxembourg accelerates 22 digitalisation and ESG Q&A: Apex in alternatives. Challenges and opportunities facing PE.

onus is on private equiteers to think beyond high returns, profit and their personal gains. Speaking at the BVCA Summit earlier this month [page 6], 11 BVCA chair and chair of Silverfleet Neil MacDougall Q&A: JTC 24 stated that the PE industry should invest to “solve Sustainable investment PEA Shortlist real world problems”. post-lockdown. Private Equity Awards’ Deal, PE has a critical role in supporting the economic House and Advisory shortlists. recovery and the UK’s transformation in the wake of Covid-19, he explained. David Gauke, head of Public Policy at Macfarlanes said at a time when there is 12 considerable need for economic investment in GP Workshop 32 businesses, PE is going to be absolutely vital. “I How to market a fund Organic growth hope there is a growing awareness and recognition successfully. Key examples of organic of how important that sector is going to be in growth success. changing the world.” Additionally, increasing demand from LPs in Real Deals the magazine has reached the ripe age of terms of transparency and accountability around 21 this month! ESG, combined with growing regulatory scrutiny 13 While we cannot celebrate our birthday in across the world, is forcing private equity and their Crestbridge 34 person, this year, we have taken to celebrating via portfolios to act more responsibly. Luxembourg LP Corner our first virtual Private Equity Awards [on the 3 Comment Lincoln Pensions: Impact of November], our upcoming celebration of diversity Small but mighty Navigating funds post-Brexit. carve-outs on DB pensions. and inclusion in the industry with our Future 40 Our focus on Luxembourg this issue also explores Diversity and Inclusion Leaders soon to be how the growth of the region has led to increased announced and a bumper 44-page issue! pressure to responsibly administer funds. As a fund In this magazine, we provide you with heaps of jurisdiction, Luxembourg is one to beat and content in our region focus on Luxembourg [page 8 although small, it is certainly mighty. 14 35 onwards] , a round up of one of the industry’s As a centre for financial services, the country Q&A: TMF Q&A: EY biggest events, the BVCA Summit 2020 [page 6], and and its many service providers continue to flex their The benefit of one stop The changing tax landscape more on the deals and moves shaping the industry. muscles and adapt to the ever changing financial shop providers. in Luxembourg. In a number of countries around the world, the landscape. Noted in our cover story [page 8], age of 21 is widely celebrated. The coming of age Luxembourg has emerged from this period of and transition into adulthood. In the US, 21 is the dislocation in good shape and eager to accelerate age where people are permitted to drink legally, it is digitalisation and ESG in the alternatives space. the “crown year” in Holland where the young adult The jurisdiction serves asset managers across 15 36 is treated like a King or Queen as part of a the globe and is able to match local structures. It is Podcast DIBS celebration, and in the UK, it is not uncommon for also increasingly providing one-stop-shop solutions In conversation with Jim A round up of deals from parents to speak about the growth they have seen in [as discussed on page 14] and is offering alternative Strang and Mounir Guen. the last few weeks. their child over their 21 years. Some fly the nest and options for funds post-Brexit [page 13]. The move onto the next stage in their lives. But for all, jurisdiction is a frontrunner when it comes to fund the step into adulthood brings much greater domiciliation and services and it is its continually responsibility. forward-looking approach that has helped it to achieve this. 16 38 Global responsibility The region has certainly stepped up and Sink or float People With the maturation of the industry, private equity continues to serve its existing and new clients GPs must undertake IPOs Appointments from Riverside, is being reminded of this responsibility too. The wholeheartedly. ● with caution. Alantra, Tikehau and more.

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RD471-03.indd 3 23/10/2020 12:22  / realdealseucom Alphabites European PE outperforms BWAM calls on investment BRIEFS: listed equities - Arcano launches Invest Europe firms to promote racial equity secondary fund Arcano Asset Management has European buy-outs have had an The group has penned an open letter to encourage the investment launched the fourth generation annualised net IRR of 15 per cent for of its secondary market over a decade, compared with 5.84 per community to take meaningful action to dismantle systemic racism program, Arcano Secondary cent achieved by the MSCI Europe. Fund XIV, targeting €300m. This has been revealed by two new The new private equity fund will Invest Europe reports; Benchmarking invest globally, with a particular Public and Private Markets with the focus on Europe and the US. Public Market Equivalent and, The Arcano said it will invest at least Performance of European Private 80 per cent in the secondary Equity Benchmark 2019. Both reports market, while the remaining 20 examine PE’s long-term per cent will be used for direct outperformance of public equities. co-invests in companies. European growth investments and The fund aims to take venture capital also beat equities advantage of new opportunities benchmarks. Venture capital returned a to invest in private companies net IRR of 16.79 per cent over a 10-year at current, attractive prices. horizon, performing on par with North With the launch of the new American funds during the same period. fund, Arcano further Eric de Montgolfier, CEO of Invest strengthens its position in the Europe, said: “With the publication of alternative assets market. these two reports, Invest Europe is demonstrating European private equity’s clear outperformance, while EQT launches supporting the drive to more growth strategy consistent and robust performance metrics that can enable investors to EQT has launched EQT Growth, compare assets more easily.” ● a new investment strategy focused on partnering with founders and management teams from technology, tech- Triton Debt enabled and scalable businesses. As part of the new strategy, Opportunities EQT has hired Marc Brown, former Microsoft corporate II raises €744m vice president of corporate development, as partner and Triton Debt Opportunities II has head of EQT Growth. completed its fundraising with Having joined the firm earlier commitments of €744m, surpassing its this year, Carolina Brochado, targeted €550m. TDO II received strong EQT partner in London, will join support from existing investors and EQT Growth. EQT’s latest commitments from a range of expansion into growth, institutional investors globally, positions the firm as one of few particular from European and US private markets firms globally pension funds. with investment strategies that Triton has also raised a Separately ndustry organisation Black Women in Asset Furthermore, BWAM has made five recommendations for address the entire company Managed Account, which will serve as Management (BWAM) is calling on the investment investment firms and institutional investors. These are: build lifecycle. an overflow account for the fund. The industry to promote racial equity through their an anti-racist investment portfolio, promoting equity and new fund is already 40 per cent investment activities. justice; expand the pipeline of young Black women entering invested, deploying capital throughout The group has penned an open letter to investment careers; promote Black women to senior Earth Capital 2020. encourage the investment community to take leadership positions; develop partnerships with Black reshapes business As the market recovers, Amyn Pesnani, meaningful action to dismantle systemic racism. This can women to support investment activities and advocate for Head of TDO, said there is “a healthy Ibe done through promoting racial equity through policy changes that dismantles systemic racism in society. Earth Capital has its extended pipeline of exciting opportunities ahead.” investment portfolios, recruitment, community engagement “Dismantling systemic racism creates a more sustainable equity ownership of the TDO II will invest in the same and public advocacy. and equitable society, however, investment firms have been business. Earth Capital sectors and geographies as Triton’s The communication is being published during Black slow to see racism as a serious investment risk,” says co-founders Stephen Lansdown private equity funds, focusing on the History Month “to keep these issues front and centre within Jacqueline Taiwo, co-founder of BWAM and associate and Gordon Power have invited industrials, business services, the asset management industry”, BWAM said. general counsel at TowerBrook Capital Partners. “Our letter the senior team Phil Culver Evans consumer and health sectors, across The letter highlights findings from the McGregor Smith sets out actions I believe will lead to progress and give Black (CFO), Richard Burrett (CSO) the Nordics, DACH and Benelux. Review (2018), which reports that equal participation and women a greater voice in shaping investment decisions.” and Neil Brown (CRO) to become It invests in non-control positions progression across ethnicities would add £24bn per year to Formed in 2019, BWAM has 300 members and has shareholders, while remaining across the capital structure in mid-market the British economy. And, other studies have shown that become a valuable community for investment professionals, majority shareholders companies, with its average investment closing the racial wealth gap in the US alone would create an lawyers, consultants, administrators, and other advisers in themselves. size typically between €10-40m. ● additional $1trn in earnings and add $8trn to GDP. the asset management industry. ●

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RD471-04_05.indd 4 23/10/2020 12:23  / realdealseucom Alphabites Elaghmore Sovereign raises £30m Pictet launches co-founder as pipeline of hands over opportunities first thematic fund reigns The fund will invest in 20 to 25 tech-focused funds and grow Sovereign Capital Partners’ founding partner and managing UK private equity firm Elaghmore will target up to 20 direct co-investments in private partner of the firm Andrew Hayden Partners has closed an additional £30m has now taken the role of chair; fund to add to its initial Elaghmore Fund 1. companies over an investment period of 3-4 years. promoting Dominic Dalli to managing Co-founders, David Manning and partner. Andy Ducker, launched the first fund Hayden will continue to chair in December 2016 with an initial raise Sovereign’s investment committee, of £60m from institutions in the US while Dalli will lead transactions and Europe. alongside driving the strategic The additional £30m has come from direction of the firm. US institutions to create Elaghmore Fund Dalli will also manage operations 1A and will allow the firm to capitalise on with the support of his fellow partners. growing acquisition opportunities in the Hayden co-founded Sovereign in UK small to mid-cap market. 2001 and since then, the business has Ducker pointed out that the grown to become a leading buy & build pandemic has led to a pipeline of house in the lower mid-market. interesting opportunities, “especially The firm has partnered with over 50 as Government support schemes end, businesses to deliver over 250 buy and and bank support is limited.” build transactions. “Another driver is that many New managing partner Dalli joined owners are concerned that possible Sovereign in 2002 with a strong changes to Capital Gains Tax background and expertise in healthcare. rumoured for next year, means that He was promoted to partner in 2008 and this is the time to realise the value of has led healthcare and pharma deals in a their own investments,” he added. number of businesses since then. ● Since the original fund launched, Elaghmore has completed nine acquisitions, which have been combined to create three distinct Investindustrial businesses: The Total Vehicle Solutions (TVS) Group, Alucraft and The Hexcite launches Group. ● €600m China- LitCapital Italy fund Investindustrial, China’s sovereign raises €34m for wealth fund China Investment Corporation (CIC) and Italian bank, second fund Unicredit have launched a €600m fund to invest in Italian mid-market LitCapital has closed its second businesses. growth capital fund on €34m to invest The new vehicle, the China-Italy in the Baltics. Industrial Cooperation Fund (CIICF), LitCapital Opportunity Fund has been will be managed by Investindustrial. established in cooperation with The new fund will target Italian mid- Lithuania’s INVEGA and €6m has been market companies primarily in the invested from the European Regional ictet Alternative Advisors (PAA) has stage of the global digital transformation, and hence there consumer, industrial manufacturing Fund. launched its first thematic PE fund, which will continues to be many attractive investment opportunities. and healthcare sectors, with a view to The new vehicle secured focus on technology investments. “Software, for example, remains the fastest-growing accelerating their business commitments from key institutional The fund will back 20-25 best in class funds sector globally, with an expected double digit compounded development in China and Baltic pension fund investors and globally and will target up to 20 direct annual growth rate over the next five years. internationally. existing investors, most of which have co-investments in private companies over an “Unsurprisingly, the private equity universe of tech Andrea Bonomi, managing principal increased their commitments. investment period of 3-4 years. focused fund managers has been increasing in size and of Investindustrial, said Italy has The fund aims to provide substantial PThe fund will take advantage of the irreversible trends number in the last decade. We believe technology as a investment opportunities with “solid growth capital investment to Baltic ongoing in the digital transformation of the global economy theme is attractive from an investment perspective, as most foundations and clear growth paths companies in the range of €3m to €30m. and its impact on society, global and local economies. The software companies are still privately held. Once the globally” and that “Italian mid-market LitCapital has made 10 investments recent pandemic has accelerated these ongoing trends and technology fund is established, we will consider our next companies deserve to be both bigger so far, seven of which are already has further underlined the strong reliance our society has move, possibly into healthcare.” and more competitive on a global scale.” exited. The firm’s portfolio has developed in only a few years towards digital processes, Since 2008, PAA has set up 11 multi strategy funds and As the sole manager of the new fund, generated more than 25 per cent IRR software applications or social networks. manages numerous segregated accounts with $17bn of Investindustrial will make investments and delivered more than 2.6x multiple Pierre Stadler, head of thematic private equity, explains: assets under management, having started investing in alongside Investindustrial VII, which on invested capital. ● “Technology remains a fertile sector. We are still in the early private equity in the 1990s. ● raised €3.75bn in November last year. ●

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BVCA Summit 2020 Tackling “Digital tools climate will not change is impact deal “one of the sourcing” greatest – Gilles opportunities Collombin of our time” Digital tools will not impact the speed at which deals are sourced, it – Mark Carney has been argued. The pandemic has led to numerous Tackling climate change and ESG shifts in how private equity firms are concerns is “one of the greatest managing their portfolio companies opportunities of our time”, former and evaluating new deal opportunities. head of the Bank of England, Mark Most notable has been the increased Carney has said. adoption of technology. Speaking at the conference, UN Speaking at the Summit, Special Envoy for Climate Action and Livingbridge founding partner Shani Finance, Carney, explained that private Zindel said: “Technology has saved time equity firms have a significant role to and money, particularly in international play in assisting portfolio companies, deals and it can be a huge enabler. But, owners and management teams to private equity is not a desk-based job ensure that they are implementing and that won’t change…We are much ESG considerations into their better in a room together.” businesses. Gilles Collombin, partner at “This is not about having a portfolio Earlier this month the British Private Equity and Venture Charterhouse Capital Partners, said the that is purely made up of green assets, pandemic has driven more efficiency in this is about helping companies to using digital tools for deal management. transition from where they are today to Capital Association hosted its first virtual annual conference. “We were doing this before the where they need to get to”. pandemic to an extent, but perhaps Emphasising his message to Key themes of the day included ESG and climate change; the now we are doing it better.” However, management teams and investors, Collombim also noted that digital tools Carney added: “Ensure that every evolution of PE firms and hybrids; impact investing; will not impact deal sourcing. financial decision takes climate “Technology is about efficiency and change into account. Ask yourself, is secondaries and more. Clearly, in unprecedented times, when it comes to sourcing deals, speed this part of the solution or part of the is not of the essence.” problem when it comes to climate many speakers highlighted the asset class’ important role in Henry Sallitt, co-founder of FPE change?” Capital, agreed that communication with Carney also highlighted the “three making a real difference to society and the modern world. portfolio companies “is now a lot more R’s”: reporting, risk management and seamless” thanks to digital platforms like returns that need to be taken into slack and zoom. However, he said: ‘there account when monitoring ESG. By Real Deals team is no substitute for an in-person Responding to Carney’s comments meeting” and “the key question will be in a following ESG panel, the speakers how to balance this in the future.” ● were all in agreement that the reporting element is the greatest near- Emotions and unconscious needs term challenge. Geoffrey Geiger, head of private equity funds & co-investments at USS, to play a key role in PE activity said: “The biggest near term challenge is agreeing what the reporting standards are and aligning between motional finance looks at the key role “Emotions and unconscious needs play a key role in PE GPs and LPs.” emotions play in investment decisions in activity, even if this is not formally recognised. We need to Christoph Lueneburger, managing private and public markets. A key focus of the start recognising how emotions, conscious and director at TowerBrook agreed that the study area is considering the impact of unconscious, are the fundamental drivers of everything we difficulty in the reporting element is uncertainty, such as in the current market, on do, even if we don’t like this.” understanding the “metrics worth investment decision outcomes. He added: “Acknowledging this can only enhance the reporting on and how are they related Speaking at the BVCA Summit this month, Richard quality of our investment decisions.” to value creation”. ETaffler, professor of finance and accounting at the Warwick Also speaking on the panel was David Cooper, managing Moreover, Vanessa Maydon, Business School (DWS) discussed a recent emotional partner at Cooper Limon. Cooper said there is some corporate affairs director of Cinven, finance study of PE stakeholders. The DWS report, “Rational recognition of the role of emotions, but pinning down its and Stephanie Wall, ESG manager at or Emotional: The Real World of Private Equity”, revealed influence could prove extremely beneficial for decision Palatine, also shared the same view. that while the majority of respondents felt feelings were makers. “A lot of PE investors recognise that gut feel and Maydon offered an additional reason, more important than data analysis, 40 per cent viewed intuition play a primary role, especially when it comes to the noting that different regulations emotions as something that should not be talked about. big decisions.” He says there is a lot more that could be done around ESG have blurred reporting That is an outlook that Taffler said is out of step with the to determine, tracking and managing what influences gut requirements. ● psychological reality. feel and emotional decision making. ●

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Is purpose in “We are at a PE a trend or tipping point” is it just a of impact talking piece? transparency Purpose and responsibility has – Sir Ronald been on the agenda for private equity firms for some time. Cohen Increasing demand from LPs in terms of transparency and Sir Ronald Cohen, who chairs the accountability around ESG, combined Global Steering Group for Impact with growing regulatory scrutiny Investment, has called on the finance across the world, is forcing private industry to push for impact equity and their portfolios to think transparency. more about their responsibility. The VC veteran said: “We are at a Speaking on a panel at the BVCA tipping point…Governments are going Summit, Anna Grotberg, associate to come out of Covid, laden with debt partner in EY-Parthenon, said this and high levels of unemployment. We trend has been accelerated since the have to achieve transparency if we outbreak of the pandemic. “The topic want our system to create solutions of conversation is now deeply focused rather than problems when it pursues on the purpose and responsibility that profit.” many private equity-backed portfolios This, as Cohen sees it, is now are bringing to the table coming out of possible with the help of big data. this huge economic crisis… “Technology has allowed us to Conversations are centred on the jobs measure the impact companies create, that private equity is helping to secure bringing it to the centre of our and the essentiality of some of the economy alongside profit.” services that private equity-backed Cohen and Professor George companies are giving to society.” Serafeim at Harvard Business School Grotberg pointed to the growth of PE industry should invest to have been working toward a system of impact investing, noting that 700 private impact-weighted accounting, which equity funds are now signed up to the adds the impacts companies create principles of responsible investing (UN “solve real world problems” through their products and their PRI); a clear sign of a shift toward employment practices to an purpose-driven investment practices. accounting system. Groteberg added that there is a – Neil MacDougall Cohen said this system will become growing body of evidence which an important way of valuing suggests a greater focus on responsible companies in the future. The “big investing leads to superior returns. E has a critical role in supporting the Mastering public perceptions effort” now, he said, is for investors However, when asked if purpose economic recovery and the UK’s If the past years of media and public scrutiny is anything to and governments to mandate can be a strong lever for value creation, transformation in the wake of Covid-19, it has go by, its the downsides and necessary cutting of losses companies to publish impact-weighed the panel was divided, suggesting this been highlighted. that have been leading public perceptions of the PE accounts. Cohen said he hopes this is still a disputed area and one that is Neil MacDougall, chairman at Silverfleet industry. system can be adopted by 2022. “It’s likely to be given greater focus going Capital Partners, and BVCA chair, noted that The recovery and transformation will come with coming, it’s coming very soon,” he forward. ● times of change are usually those when PE returns are very significant and unavoidable changes for companies, said. ● Pstrong. “Our role is to invest money and time in making sure especially those negatively affected by the crisis. that the best ideas prosper and develop and get applied to MacDougall pointed out that there are likely to be solve real world problems.” significant cuts and restructurings. “You can’t save every As an industry that invests in peaks and troughs of the position, but you can save certain ones. People will paint the economic cycle, leaders have an opportunity to bring their industry in a bad light because of these cutting your losses expertise to bear help out of uncertainty. sort of actions.” Despite what the public may think, he asserted that this Economic transformation process is critical for the UK economy and a key tenet of In the wake of Covid-19, PE and VC investment is proving PE’s role. “It is fundamental that this actually happens and pivotal in areas like biotech where a lot of the tools and the that we don’t have businesses kept alive by subsidy which equipment and solution are being developed. Software is ultimately has to be switched off.” MacDougall says private incredibly important space where PE has made industry equity has a responsibility to better communicate that to the changing investments that are enabling a lot of the key UK public. remote working and virtual tools. Which will be features of Michael Moore, director general of the BVCA added that how people continue to work and operate going forward. while progress on this front has been made, the industry has Also speaking on the panel, David Gauke, head of Public to do more for and in the eyes of the public. “We can’t just Policy at Macfarlanes said at a time when there is say that we do a great job for investors, we have to be able to considerable need for economic investment in businesses, explain to other stakeholders and society what we do, why PE is going to be absolutely vital. “I hope there is a growing we do it and why it is good for the country.” awareness and recognition of how important that sector is According to the BVCA, 972,000 people in the UK are going to be in changing the world. It’s a sector that has a employed by PE and VC backed businesses. In the past 5 huge role to play.” But, he was not sure if the public sees it in years, BVCA members have invested £43bn, 90 per cent of the same way. those investments were into UK SMEs. ●

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Luxembourg rebounds and ready to lead

A pragmatic and flexible approach to Covid-19 disruption from the regulator and industry has helped Luxembourg emerge from this period of dislocation in good shape and eager to accelerate digitalisation and ESG in the alternatives space. Nicholas Neveling reports.

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RD471-08_10.indd 8 23/10/2020 12:25 t the end of 2019, before Covid-19, social private equity community conducted by the LPEA, 90 per distancing, travel restrictions, face masks and cent of respondents did not anticipate changing staff counts Zoom calls, Luxembourg was able to look back and 80 per cent assessed the impact of Covid-19 at medium. on another year of successful expansion and No panic. No hysteria. growth in its funds industry. “Luxembourg’s response to Covid-19 disruption has been Net assets under management (across funds resilient and organised. There has been minimal disruption in all asset classes) had reached a 20-year high to service provision and liquidity management tools (LMT) of €4.71trn, 16 per cent up on the previous year. have been effective. There have been hardly any AThe only other global jurisdiction with funds managing suspensions or fund gatings,” Marc-André Bechet, deputy more capital was the US. director general at the Association of the Luxembourg Fund The Grand Duchy’s private equity industry was among its Industry (ALFI) says. “There was of course a major dip standout performers. Domestic private equity assets under across all assets classes in March, but the market has management climbed by just under a fifth through the year. rebounded strongly since then. From April to August net The number of funds worth more than €1bn doubled and inflows to funds totalled €160bn. There has not been a run Luxembourg’s regulator, the Commission de Surveillance on funds. Nobody has overreacted.” du Secteur Financier (CSSF), issued more than 110 new The fund industry’s reaction to lockdowns and transition operating licences to global asset managers, private equity to home-working has been particularly seamless. In the firms, banks and payment institutions. April LPEA survey, 89 per cent of respondents felt ready to deploy contingency plans and ensure business continuity. THE PANDEMIC RESET “The fund administration industry has also been The outbreak of the coronavirus and subsequent fortunate to have made strong advancements in lockdowns, however, upended expectations across all digitalisation,” says Robert Brimeyer, country executive for industries and jurisdictions. The Stoxx Europe 600 Stock Luxembourg at Alter Domus. “It was a huge transition, but it Market Index shed a third of its value from the middle of went very smoothly because the digital infrastructure was February to the middle of March, and in a paper published already there.” by the Luxembourg Private Equity Association (LPEA), the “Service providers have been able to quickly respond to net asset value of private equity portfolios fell by more than the challenge and implemented home-working, with a fifth in Q1 2020 before staging a recovery later in the year. minimal disruption,” Daniela Klasen-Martin, Luxembourg The scale of the disruption and subsequent volatility has managing director and group head of management company inevitably challenged the Luxembourg private equity services at Crestbridge, adds. “The landscape has been community, yet the jurisdiction has managed to navigate these shifting rapidly and dramatically, from changes in economic near unprecedented headwinds with minimal disruption. substance, to amended value-at-risk limits, and modified Although net assets under management did slide from liquidity management requirements within portfolios. By US$4.71trn to US$4.40trn in April, when lockdowns were in ensuring meticulous attention to detail on all regulatory and full force, the industry is still bigger than at any time prior to compliance issues, service providers are removing a 2019. potentially burdensome and onerous variable in their Despite all the uncertainty that the pandemic wrought, clients’ operational activities. This will go a long way in Luxembourg’s private equity professionals have kept their minimising, or at least mitigating, the Covid-elicited focus on the long term. In a survey of the Luxembourg disruptions to their business.”

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"The dialogue between the CSSF and the industry has been excellent. Both sides have been pragmatic and flexible.”

JOINED UP THINKING accelerated. In 2013, Luxembourg company behaves and treats its staff The pragmatic approach of the CSSF launched the Special Limited and suppliers impacts its productivity, has been as important as the response Partnerships (SLP), effectively financial performance and ability to of the fund ecosystem to the transposing the US and UK limited recruit talent.” pandemic. partnership structures private equity With these two strands already “The dialogue between the CSSF was used to across the range of embedded in its long-term plans, and the industry has been excellent. Luxembourg fund offerings. The Luxembourg has been well-prepared Both sides have been pragmatic and Reserved Alternative Investment Fund to meet the demands of clients and flexible. Communication with all (RAIF) arrived soon after in 2016. This investors in these areas. stakeholder groups has been frequent allowed for new funds to be regulated On the sustainability side, for and clear,” ALFI’s Bechet says. at alternative investment fund example, ALFI renewed its Corporate Joost Mees, managing director for manager (AIFM) level rather than Social Responsibility (CSR) Label this Luxembourg at JTC, says the CSSF requiring the CSSR to sign off every year, an accreditation issued by the “made every effort to ensure the single new vehicle. Private equity firms National Institute for Sustainable operational continuity of the can also have their fund’s AIFM, Development and Corporate Social Luxembourg fund industry”. He says auditor, depositary bank and Responsibility (INDR) and first some of the most helpful measures administration, as well as a holding secured by ALFI in 2014. included the Grand Ducal regulation, company, in a single jurisdiction, a On the digital front, meanwhile, the issued in March, which provided very appealing offer as Base Erosion jurisdiction showcased its technology measures that allowed board and Profits Shifting (BEPS) tax rules place capabilities in October when VNX shareholder meetings to proceed ever higher stock on substance. Exchange, a Luxembourg-based digital remotely, even when not allowed by asset investment platform, completed articles of association, given the public LOOKING FORWARD the first ever VC deal in Europe using health risk. The measure has been With its alternatives framework in blockchain technology. extended to the end of the year. place and tested, and with the initial With a difficult year behind the Klasen-Martin says the wave of Covid uncertainty negotiated, alternative assets industry, government’s extension of tax return Luxembourg’s private equity Luxembourg is looking to what lies deadlines, a wide-reaching stimulus community is now looking to what ahead in a post-Covid market with package and the CSSF’s comes next. confidence. ● encouragement of the uptake of digital What has become evident through ID systems when face-to-face the course of the pandemic has been identification is not possible are the critical role of digital in the future further examples of how the state and of financial services and the increasing regulator have supported attention paid by investors to Luxembourg’s fund industry. sustainability. Alain Kinsch, EY Luxembourg These have been two areas partner and co-chairman of the ALFI Luxembourg has already been focused Private Equity Committee says the on and is now positioned to lead. robustness of Luxembourg’s ability to In the Grand Duchy’s Agenda 2025, maintain business continuity through a strategy document for the financial 2020, however, is also the result of a services industry published by long-term focus on building up the Luxembourg’s Agency for the jurisdiction’s alternative assets Development of the Financial Centre, capability. “Leading on Sustainability” and “Growing the alternatives industry “Pushing Innovation” are two of the in Luxembourg has been a long-term six key strategic objectives for the priority. The industry was a small one industry. in Luxembourg ten to 15 years ago, but “The pandemic has accelerated it has been on a strong upward digitalisation, and Luxembourg is at trajectory. The jurisdiction has the forefront of bridging the gap. The expanded its alternatives toolbox and jurisdiction had already prioritised moved up the supply value chain from digital in its Agenda 2025 and back office accounting to compliance, following lockdowns, that is simply tax and legal structuring. Covid-19 progressing at a much faster pace,” hasn’t changed that,” Kinsch says. Bechet says. “On sustainability, Covid Indeed, Luxembourg’s first private has sparked a surge in interest and equity structure, the SICAR, was only activity. Morningstar figures show that launched 15 years ago. Since then, and net inflows into sustainable funds have against the backdrop of the AIFMD’s more than doubled this year. Investors roll-out across Europe, growth in the are recognising that ESG jurisdiction’s alternatives industry has considerations go to value. The way a

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RD471-08_10.indd 10 23/10/2020 12:25  / realdealseucom Q &A JOOST MEES Managing Director – Luxembourg, JTC JTC’s Joost Mees reflects on the jurisdiction’s resilience, how the pandemic could see long-term changes to the way private equity funds operate and sustainable investing in a post-lockdown world.

By Nicholas Neveling

How have Luxembourg fund restrictions imposed due to the service providers reacted to Covid-19 pandemic have stopped this Covid-19 disruption? Have approach in its tracks, so the they been able to maintain managers have to adapt their strategy service levels and business to convert roadshows into a virtual continuity? roadshow, which might have to look Luxembourg fund service providers very different to the traditional one. have moved swiftly in converting their One interesting conundrum will be regular business continuity plans to how technology will keep virtual make sure they could provide the client events engaging and interesting. same level of services whilst As the remote-working environment respecting the necessary measures drags on, one should be conscious taken by the government, especially that it might become increasingly related to remote-working. Apart from difficult to retain investors’ attention making sure services were via digital meetings. continuously delivered, focus has For service providers, remote- been on re-evaluating the risk working, in some form, is here to stay management framework to address and the industry needs to respond by the new and enhanced risks that digitalising even swifter than Covid-19 is creating. envisaged and making sure their IT A change from physical, in person security is more robust than ever. meetings to telephone and video conferencing has enabled service Is there a particular providers to keep close to their clients investment trend that you see and other stakeholders. It was difference in lead times for various (20 March 2020) provided several growing in Luxembourg, post interesting to see the kind of creativity funds. I believe the impact on private measures to facilitate board and Covid-19? shown on the business development equity funds especially, might actually shareholder meetings, and in As I think we are seeing in other side, where virtual social events, like be twofold; on the one hand, it has particular, the possibility to hold the jurisdictions, there is a clear trend wine tastings and similar events were proven to be hard for funds to value meetings without a physical presence, developing for green, sustainable and organised on a regular basis. Size does their assets due to the pandemic and for all Luxembourg companies and responsible investments – while this matter in these uncertain times, and thus delaying potential assets, other entities. may have been exacerbated by the larger, global organisations might be predominantly in the space of retail The regulator’s efforts in global conscience-shock of a better equipped, based on their investments. Whereas, there is a lot of combination with the Grand-Ducal pandemic, it was a trend that was investment in software solutions, than dry powder, so a lot of funds are eager regulation have provided essential already in the making pre-Covid. smaller firms, and we have been lucky to invest, but given the difficulties in regulatory support to all service Luxembourg ranks as the second and prepared in that respect. valuing assets, one wonders whether providers in offering the most greenest financial centre in the world the moment is right. seamless experience for their clients after Amsterdam, and lists more than How have new fund activity Deal activity has been low in Q2 & and stakeholders as possible. The half of the world’s green bonds. levels compared year-on-year Q3, but will hopefully recover in Q4 aforementioned regulation has just At present, Luxembourg funds to 2019? How has the drop in and Q1 of 2021 as there will be more been extended until the end of the currently represent 31% of all overall private equity deal and visibility on the financial impact at the year and the CSSF is developing a European responsible investment fundraising activity affected level of portfolio entities. circular that will lay out a set of funds, and the jurisdiction is a global Luxembourg’s private equity remote-working recommendations for leader in ‘inclusive finance’ with a 61% community? What support for the funds Luxembourg financial outfits. market share of global assets under We have seen significant interest in industry has the Luxembourg management in microfinance new projects in the alternative government and regulator Will Covid-19 drive any long- investment vehicles – according to investment sphere throughout 2020 been able to provide? term changes to how the funds Luxembourg for Finance 2020. for Luxembourg investment vehicles, From the start of the Covid-19 crisis, industry works more Luxembourg is making a real effort almost to the level of 2019, however the Luxembourg regulator, CSSF, has generally? to support this trend. The the period between set-up of the made every effort to ensure the The virus will force new ways of Luxembourg Ministry of Finance vehicle and first closing has increased operational continuity of the working in the fund industry. On the announced on 2 September 2020 that significantly in this environment. The Luxembourg fund industry, fundraising side, roadshows have for it had become the first European volatility in the market provides for encouraging remote-working as one of some time been the preferred means country to adopt a reference uncertainties at the level of managers the early adopters in Europe. For of courting new investors. However, framework for sustainable bonds (the and therefore, we see an obvious example, the Grand-Ducal regulation travel and in person meeting Sustainability Bond Framework). ●

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RD471-11.indd 11 23/10/2020 12:28  / realdealseucom

QUOTES: GP WORKSHOP The best way to market a fund is to focus on relationship building with How to market a fund successfully LPs early and before you need to ask them for Investindustrial’s Carl Nauckhoff and Neuberger Berman’s capital. A long period of pre-marketing is critical to Elizabeth Traxler discuss ways to successfully position a fund the velocity and volume of the funds raised when you and how marketing has evolved since the global pandemic. do launch your fundraise. Ask for a warm introduction to an LP through another investor or through your placement agent. Touch base with that LP quarterly to keep them updated on your investment strategy, portfolio progression, team and exits. SUNAINA SINHA managing partner, Cebile Capital

My approach has always been to give investors a “warts and all” view. I find that LPs really appreciate openness about tough Carl Nauckhoff, senior principal Elizabeth Traxler, managing director, investments and humility on winners. I once read a book and head of IR, Investindustrial Neuberger Berman, by Harry Hill (the comedian) and his advice We begin with a strong internal IR team, with client facing professionals There are a couple of themes that funds will need to consider when was “Open up your routine and project management professionals. It is a seven person strong team marketing. The first theme is that you want to make sure that the fund with your best joke and in Europe and the US to make sure that we have a broad reach. can check the box. What I mean by that is most people that are finish it with your second Secondly, we start from our existing investor base, who, for us, has allocating capital to private equity do not have fungible capital. They best joke”. I apply that always been the loyal, sticky anchor who tends to always invest more as can’t just invest in anything that’s interesting; and maybe they have principle to stories from our a group than what they invested in prior fundraises. Then, you need to different types of capital they can allocate. So the key thing is to find track record. make sure that you take in new capital of the highest quality and really out if they have capital to invest in that box and if you can fit into that GARRY WILSON think about how to address evolving preferences. box. It’s part of the communication and prep work to understand managing partner, Endless where they have capital as you don’t want your fund to get boxed out. A Pre-marketing lot of people have capital that is allocated on an annual basis, so if you For new capital, we look at additions to our investor base by type and come to market to them today, they may have no capital left. You geography. In the past, funds had been raised fairly quickly, but with should consider timing closes to get those investors. On the one hand, the more investors that are further from you, it can be difficult for these investors obvious tools that are to be on board with that same speed. So, the speed of fundraising tends Early deals necessary to be successful to be at the detriment of adding good investors from overseas. As a result, One thing that can be very helpful [in marketing a fund] is if you start in fundraising include we made a conscious effort to pre-market in Asia and the Middle East investing your fund before the final close, and you have some assets matters such as brand and that worked well in the process for Fund VII. already. If they’re performing well, we call those funded primaries, recognition, excellent track There are different cycles across countries, so in Japan for instance, which may entice investors. But if those assets start to underperform, record, longstanding the country has a clear budget cycle that starts at the beginning of the investors may not be as interested. dedicated teams, and deep year. Historically, they wanted to start the year with a list of names they Moroever, some managers have turned their annual meeting into a knowledge of the investor had in mind, so relationships needed to be established early. much more detailed annual meeting for potential investors. This universe. But I would For fund VII, we also wanted to add more public pension capital in becomes a sort of due diligence day, at the same time as their annual highlight several other North America, particularly in the US. To appeal to these investors, we meeting. Investors have been more willing to have these calls and important themes. Firstly, utilised our office in New York and our partners were able to invite meetings as they aren’t travelling anymore, so there is a lot more before launching any potential investors to our office to get to know us. We were also doing transparency from a conversation perspective with GPs and having that product, it is crucial to lots of video calls, even pre-Covid, in order to build that relationship. information is important. consider three key factors: fund managers capabilities People or strategy? Resources and culture in the current market It is a combination of both the people representing the fund and the One thing that funds have started to weave into their pitch is that they environment, macro vision fund strategy that are important to investors. For us, the strength of have strong client services for their LPs. It’s not just giving information in order to position Investindustrial is our great professionals, but also our strategy. An during the fundraise process and irregular information after that, but it portfolios strategically and investor needs to feel that they can invest large amounts of capital on is an infrastructure that they have developed to support LPs’ increasing according to market cycles, behalf of their pensioners or insurance companies, etc. and whether I need for ad-hoc requests, more visibility and greater input. A lot of the and market intelligence as an investor will still be around or not, the institutional relationship is larger LPs are looking for a partnership and someone has to manage collected from the investors still there. That common culture is important above anything else. that. Certain firms are using these sevices as a selling point. themselves. The successful A challenge when it comes to marketing funds is that some combination of these three Reference pool managers think that their pitch is more unique than it sounds! The key factors are necessary to A strong reputation among fellow investors, with portfolio company thing is that investors are looking to understand the repeatability of offer and build products managers, with the financial community, and that overall body of your track record or of the strategy that you’re marketing. There are two that fit well amongst the references is worth a lot. Having very high, consistent feedback from ways in which it can be articulated well and that is highlighting their client base. Also critical in those sources are much more important than an even stronger track team and their resources. While that sounds generic, many managers today’s investment record with negative references. Investors love to make copious focus solely on the most senior level team and oftentimes, I’m asking, environment is the amounts of reference calls during their due diligence; guided by the GP who does the work? And how many team members do you have at the approach to ESG matters. and on their own initiative. If the reputation isn’t strong enough, then mid and junior level? Being able to build on a team and grow a team, PEDRO HAMPARZOUMIAN investors will become aware of that. shows a culture of retention. It’s really important to understand the partner, Arcano Partners people, the culture and the processes that have built that track record.

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RD471-12.indd 12 23/10/2020 12:30  / realdealseucom

COMMENT

Navigating funds post-Brexit Daniela Klasén-Martin, Group Head of Management Company Services, Managing Director at Crestbridge Luxembourg explains how Super ManCos offer a workaround for UK managers who are soon to be cut off from Europe.

ith less than Brexit vote. According to a 2020 PwC three months report, since December 2018 there to go until have been increases of 243 employees the end of and 17% in AUM which is the the Brexit equivalent to 592bn EUR. transition period, asset managers face the loss Spotlight on Luxembourg ofW the cross-border relationship that After the US, Luxembourg is the “With a trade deal looking allows them to manage and sell world’s biggest funds center with over funds in the European Union. increasingly unlikely, private $320bn AUM investment funds. Funds based in Luxembourg can be How can you market your equity managers without a marketed and sold in more than 70 fund in Europe after the countries around the world. Brexit transition period ends? European presence already are The need to hire substance The UK’s asset management industry requirement meeting experts to is largely under-prepared for the UK enlisting the help of third party facilitate ManCo activities has to be regarded as a third country, facilitated a supply vs demand according to a recent PwC report, super-management companies, a problem in many of the promising with 80% of alternative managers fund domicile options as service and 60% of UK listed UCITS funds cost-efficient alternative to setting providers compete for a shrinking lacking existing presence in Europe. talent pool. Luxembourg benefits from There are a number of options facing up your own European office.” having a well-established and UK asset managers in this position, experienced workforce that also such as obtaining fresh authorisation, shares cultural and linguistic affinities relocating or delegating. are much less costly than a manager employees, of which at least two with France, Belgium, and Germany. With a trade deal looking establishing their own presence should be senior managers with All the data supports a sector wide increasingly unlikely, private equity within Europe or running their own proven experience in risk, adoption of Luxembourg-based managers without a European management companies. Managers compliance and investment SuperManco’s with over 39% of the presence already are enlisting the that use this approach will be able to management. top 50 EU ManCos AUMs’ being help of third party super-management tailor their sales and marketing These new regulations make housed in Luxembourg, which brings companies, a cost-efficient alternative approaches rapidly, as new regulations ManCos expensive to set up, largely the total AuM of Luxembourg to setting up your own European and authorisations around Brexit due to the high staff costs of hiring ManCos to 3991bn, which is a 592bn office. These are attractive, as the become clearer. highly skilled employees that have the increase since December 2018 (The services supermancos provide for a The increasing popularity around right substance category expertise. PwC ‘Observatory for Management fund can be rapidly scaled up or ManCos has put a spotlight on the Given the additional requirements Companies’ 2019). down to meet manager needs and space. Regulators have cracked down and in particular, the increased Luxembourg may be compelling regulatory stipulations. It’s for this on so called letter-box entities, which on-sight controls that the regulator is for US private equity managers in reason that ahead of the previous were being used increasingly as a box implementing, it is becoming more particular because of their special Brexit deadline and its numerous ticking exercise as opposed to actual expensive to run a fully compliant limited partnership (SCSp) structure, extensions, supermancos saw a huge management hubs. New regulations operation and to provide a quality which does not have a legal surge in demand. Delegating to Super require a minimum of three to four service when you act as a service personality, similar to limited ManCos has been one of the most provider, according to Daniela partnerships in English law. Ireland promising approaches for asset Klasén-Martin, Group Head of does not yet have a similar structure managers so far and the PwC Management Company Services, in place, though there are ongoing ‘Observatory for Management Crestbridge. discussions there to allow for the Companies’ 2019 report showed an This conversely makes Super creation of a similar structure. increase of Super ManCos in ManCos more attractive due to the It looks increasingly unlikely that Luxembourg since the previous year. ability to umbrella two or more politicians in Westminster will authorisations (AIF and UCITS for convince Brussels to back a compelling Why Third Party Super example) under one entity which equivalent to the UCITS regime before ManCos are so popular allows for certain, more generalised the end of the year. If you are one of the Simply, third party supermancos are a services such as oversight and UK asset managers unsure about how quick way for UK managers to gain administration can be mutualised. to navigate the Brexit problem, we hope access to the European market. Luxembourg based Super this article provides some compelling They also allow managers to be ManCos have experienced huge solutions and encourages you to get in agile, implement rapidly and they inflows of business since the touch with us. ●

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RD471-13.indd 13 23/10/2020 12:31  / realdealseucom Q &A TMF GROUP Anja Grenner, Market Business Development Lead Fund Services, TMF Luxembourg. Marco Cipolla, Founding Partner and Managing Director, Selectra Management Company TMF Luxembourg’s Anja Grenner and Selectra’s Marco Cipolla discuss one stop shop providers, the benefits of domiciling in Luxembourg and remaining ahead of the curve.

How did TMF Group decide will continue over time, and I’m on the acquisition of Selectra? convinced Luxembourg will increase What did the business have to its market share in alternatives, offer TMF? And what does the because of the unique ecosystem and combination of the businesses high-quality services. Political stability mean for Selectra? and the AAA rating, multicultural Anja: It is easier for clients to talk to environment ability to serve clients in one party only. Most of our clients every language, good quality of service come from outside Luxembourg and providers with a complete tool box, for them, it is easier to consider a and continuous support from the “one-stop-shop” solution. We can government to the financial industry obviously provide multiple functions, makes Luxembourg continuously but respond to the client with one attractive for existing and new voice. managers. Huge investments on There are a number of “one-stop- digitalisation and services integration shop” providers in Luxembourg; and will help Luxembourg remain the we know that if you do not have an jurisdiction of choice for each fund. AFIM offering, it also makes it more difficult to service your clients. So, Anja: As Luxembourg is such a small that is what triggered the search for a companies, but also to local SPVs set “one-stop-shop” solution. country, the large majority of our partner - and Selectra was able to in the context of a Luxembourg fund Concerns can be raised around clients come from abroad, which offer a well-established and a mandate. So, if a Luxembourg fund independence, if all services are forces us to listen to their requests. well-managed company that has all invests globally, we can service the provided by one party. This is an Also, there is a large range of the required licenses. Selectra is fund and all SPVs. TMF Group will important question, but in our case structures that can be used for setting authorized to manage real estate, have the ability to offer a seamless the AIFM on the one side, and the up funds in Luxembourg. Wherever private equity, private debt, fund of service in Luxembourg through the depositary and central administrator, our clients are based, they tend to find funds and also infrastructure funds. acquisition of Selectra, but also on the other, are two legally separate a structure that resembles the one that Selectra has the experience but it also vertically to service the entire chain of entities. While they may be under one they know from their home country. provides existing fund structures – in entities including fund services and roof, there are regulatory barriers Since we introduced the Special short, it is the perfect partner for us. SPV services in Luxembourg and between the two entities. It is a tried Limited Partnership and revamped the abroad. On top of that, there are many and trusted model that is accepted law relating to the this, managers from Marco: After seven years of successful jurisdictions where we also provide throughout Luxembourg. the US and the UK can use structures organic growth in Europe, Selectra fund administration services, like I think that fund-related services they know. was looking for a partner for its Jersey, Guernsey, China, India, from one provider is the best Being such a small country on the non-organic growth, and TMF Group Singapore and Australia. solution. map, Luxembourg has always been has been the perfect match. Solidity, quick in responding to the demands international reach (TMF Group Is it better for private equity Marco: PE managers have the of its clients. covers more than 85 jurisdictions) and managers to access their complex task of managing their Luxembourg has reinvented itself integration of services (one-stop-shop administrative services from portfolio and investors, their most so many times over the years, it has solutions) are the key elements for a one sole provider? valuable assets in the fund project. always been forward-looking and can success story going forward. Anja: Fund managers often question To do so, a single integrated locate future growth early. what the benefit of one single service partner and single point of contact, What does the business now provider is; and whether they should be which can help them in reaching these How is the funds industry in offer overall? How does this putting all their eggs in one basket. The goals, is fundamental. Benefits for PE Luxembourg evolving and how compare to competitors? answer is that when the fund is up and managers are in operations, data is it ahead of the curve? Anja: The fully-fledged service running, servicing it can become fairly management, automation (with new Marco: Luxembourg is getting ready offering alone is not what sets us apart complex. If you use multiple service digital solutions) and proximity (with for the future. Technology is the first – there are a number of administrators providers, it is often the asset manager local presence close to their business). driver, with digitalisation and process who do this. It’s TMF Group’s who will have to coordinate those. This optimisation. unrivalled international presence can take a lot of time; and I really do Luxembourg has built a strong Sustainability is the second driver, across 85 jurisdictions, with real not think it is the job of the asset reputation as a fund service with not only new products dedicated operational presence where we service manager to handle this coordination. If centre. What is keeping this to sustainability, but a full integration our clients - not just representative I look at our US clients, for example, going and what is attractive of ESG principles in the industry. offices - that differentiates us. In these they have the additional challenge of about the region for Luxembourg has decided to countries, we offer local being in a different time zone from alternatives managers? position itself at the forefront for administration services to local Luxembourg, so they tend to go for a Marco: Attractiveness of Luxembourg both drivers. ●

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RD471-14.indd 14 23/10/2020 12:36  / realdealseucom

PODCAST IN CONVERSATION WITH JIM STRANG AND MOUNIR GUEN Hamilton Lane’s Jim Strang and MVision's Mounir Guen sat down with Real Deals for a wide-ranging podcast covering everything from how private equity has fared through Covid-19 disruption and LP risk appetite to operational diligence and the what the future holds for single country mid-market funds

that bigger managers could satisfy I think about fundraising today, the ON THE PANEL: these criteria. LPs had also expanded operational due diligence is now their direct investment programmes dwarfing the commercial and legal Jim Strang alongside their primary activity to due diligence at the moment.” Hamilton Lane manage their return outcomes. Again, Guen added that there still wasn’t Jim Strang is a managing this played to the strengths of larger a consistency to how operational due director at global private managers who had the capacity to diligence was conducted, but that the markets investor Hamilton offer more co-invest. focus on operations was a positive for Lane and the chair of “The larger funds are able to give the industry overall, despite the Hamilton Lane EMEA. In more co-invest, so when you package it additional workload it placed on GPs. addition, Jim is a fellow at all together, the market is heading in a Strang said that benchmarking London Business School, a direction that favours larger platforms,” softer but crucial factors, like senior adviser to Bain & Guen said. “The mid-market funds can leadership, succession and deal Company and the chair of outperform the mega-funds, but there attribution across a unique group of the Hg Capital Trust. is volatility in their performance. The firms a was a particular area of question is whether you want to take interest. By Nicholas Neveling that volatility in these times or have “Data is prevalent and you turn to it Mounir Guen that safety?” because it is comforting, but it doesn’t ovid-19 has caused MVision give you the whole picture because it is profound disruption Mounir Guen is the founder Operational diligence: as all about humans,” Strang said. “You across capital and chief executive of fund important as returns? need to have a way to understand that, markets in 2020, but adviser MVision and has Operational diligence of a manager and relatively rank that to get a sense of despite the upheaval worked in the industry for has become increasingly important for what you are getting.” private equity has more than 30 years, advising investors, who are paying almost as The next step was to go beyond navigated the crisis well. Portfolios on more than 300 fund much attention to the governance, basing people decisions on gut feel, Chave been triaged, liquidity positions closes during that time. processes, infrastructure and and improve the depth of interactions strengthened and the transition to reporting of a manager, as much as the between LPs and GPs to reveal homeworking facilitated. returns track record and investment insights about teams. But what comes next for private established brands, is actually quite a proposition. Guen said it was interesting to equity in a post-pandemic world? Real low one,” Strang said. “The golfer Strang said Hamilton Lane had compare the current market with Deals spoke to private equity mega brain Gary Player is a hero of mine and he wholly separate teams to assess earlier periods in the market where Jim Strang, a managing director at global would always say that in golf, it is not operations and investment strategies. there wasn’t as much choice and a private markets investor Hamilton Lane how good you are when you are good, An investment team reviewed the higher number of first time funds. and the chair of Hamilton Lane EMEA, but how good you are when you are investment case and was completely “The way that an LP made a and MVision founder Mounir Guen, in bad. For private equity, even when it is separate from the operational due commitment was to spend time with a an in-depth, hour-long conversation on bad it is pretty good, which is very diligence team. Both teams reported manager. The average fundraise how the asset class has transformed and helpful.” into the investment committee and involved ten or 12 meetings… what the future holds. Strang added that although there both had to give an opportunity the sometimes more,” Guen said. “People had been some downward pressure green light for an investment to spent a lot of time together and both Here are some of the highlights: on upside returns, there was “a mixed proceed. GP and LP could get a feel for the picture” with some GPs continuing to “The stakes continue to rise and other person.” ● Investor risk appetite and consistently deliver outperformance. the bar that is set around standards of return expectations The asset class’s improved governance across multiple Strang said the goal of any GP was to operational capability and ability to dimensions is very high. Most “keep the lights on until the optimum take advantage of multiple expansion sophisticated investment teams will time to exit the business”, and that had supported ongoing strong risk/ have some kind of operational due given private equity’s control of returns. diligence track,” Strang said. liquidity decisions, the asset class had Guen added that pre-Covid, the Guen said: “Back in the early an asymmetric risk/return profile. The investor community was already 2000s, if you said you did private private equity value proposition was preparing for the cycle to peak and that equity, people gave you money. The still evolving and the fact that the there was “a drive to safety”. This saw flow of capital into the industry was industry was continuing to grow LPs focus on “consistent returns, regular faster than the governance was showed that it was meeting investor deployment and principal protection”. growing and then a light went off and risk/return requirements. This had moved the needle in investors started looking at how GPs “The loss rates in private equity, favour of bigger private equity ran their businesses. Operational due especially from the larger more franchises, as there was “comfort” diligence is still in its early days but if

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RD471-15.indd 15 23/10/2020 12:37  / realdealseucom

Analysis

By Sam Birchall

he $2.5bn IPO of KKR’s British Post-IPO ecommerce platform The Hut Despite the widely-reported stock market Group in September, followed successes, there is still lingering skepticism by Allegro’s debut on the around IPOs, much of which is rooted in reality. Warsaw Stock Exchange, which Historically, PE’s track record on the exchanges saw the private equity-backed have been dogged by disappointment. This was Polish online retailer rocket to a explored in a recent Bain & Co report: Reversing $17.7bn valuation, is breathing the Winner’s Curse of the IPO, which analysed new life into Europe’s lacklustre IPO market. 90 global IPOs backed by buyouts between 2010 Prior to these deals, only eight other and 2014 and found that over 70 per cent of Tbusinesses floated on the UK exchanges so far in these underperformed. Luxury-car maker Aston 2020 according to the latest PitchBook data, and Martin and retail chain Poundland are two activity on the European exchanges has been examples of companies floated by PE firms that equally sluggish, with just 119 listings during this subsequently failed to deliver on shareholder time. returns. Bain’s report goes on to say that the IPO Devastation caused by the pandemic and is “more hype than substance,” underlining the ongoing uncertainty around Brexit is partly to risk associated with weak post-IPO performance. blame, but Peter Whelan, senior advisor at PwC, Post-IPO performance is critical for the thinks the recent push online means the Sink or company and for the investors, including the exchange market is ripe for a comeback, with PE firms that retain partial ownership. It technology companies leading the way. “It is an requires a detailed strategy that lays out where interesting landscape right now...We’re seeing growth will come from and what systems are in that the market is open, especially for businesses place to track this progress. Whelan, however, with an online offering and sponsors are going to float? believes risk management is now being given want to take advantage of that.” less attention. “You often have a situation Pawel Padusinski, partner of Mid Europa where there is a lot of support during the IPO, Partners told Real Deals, until recently “the IPO but after that it can quite quickly fall away.” market has not been strong.” However, Managers are then put under pressure and can Padusinski notes that many PE-backed face difficulties, especially in an environment of businesses in the last half decade have remote working, by the time the first set of undergone transformations and “emerged as results are revealed. higher quality businesses with strong prospects “There is a danger that in a situation like this, as listed companies.” where the market is hot and sponsors have a Richard Sanders, partner of Permira, said business in the right sector, companies are Allegro was one such business that was “more rushed into an IPO,” Whelan said. suited to public markets...a consumer brand, a national champion with a strong growth story.” The rise of SPACs Indeed, Allegro, the Polish ecommerce platform Another trend to be swiftly gaining momentum owned by Cinven, Permira and Mid Europa as an alternative approach to the traditional IPO, Partners, is Europe’s biggest IPO so far this year, is the SPAC strategy. Special purpose acquisition valuing the company at a $17.7bn valuation. vehicles, or SPACs, are blank-check companies Allegro’s IPO follows a number of other tech that raise money through an IPO to buy other IPOs to have priced this year in Europe. KKR companies and are increasingly being seen as a made a profit of more than 300 per cent by more efficient way to enter the stock market. selling its minority stake in online retailer The They allow PE investors to draw from public Hut Group during its public offering on the backers, which widens their investment base and London Stock Exchange. can be faster than raising capital from LPs. This “You can talk about IPO windows, but the comes as pricing an IPO at a time when the reality is that high quality businesses can IPO stock market has been notoriously volatile can regardless of market and economic conditions. be hazardous. And for a lot of those companies, their time has The recent uptick in GP-led IPOs is breathing “The SPAC IPO market has been resurgent in come to IPO,” Richard Sanders, partner of recent years and has continued to accelerate Permira said. life into the dormant UK and European through the summer of 2020. SPACs have gained Nonetheless, Whelan said deals like this are exchanges. Still, GPs must proceed to float a foothold as a preferred vehicle for private restoring confidence in the IPO market, companies to enter the public markets in these encouraging sponsors to push forward their exit with caution when entering a hot market or volatile times,” Daniel Forman, a partner in plans and take advantage of the hot market. “If Proskauer’s Capital Markets Group, said. sponsors are looking at an online digital business else run the risk of sinking. Already, the strategy is permeating into all for an exit in 2022 or 2023, they may be parts of the industry and, according to data by well-served to bring that forward and go to PitchBook, SPACs have accounted for 38 per cent market sooner rather than later.” buyouts and the weight of PE’s proverbial dry Now, however, due to multiple factors with of US IPO filings and have raised $6.5bn in 2020 powder that dual track processes - openly receptive public markets and perhaps also driven so far. US sports betting company, DraftKings, Shifting sentiment pursuing an IPO, while simultaneously exploring by a reduced level of fundraising by small to was brought public via merger with a blank Sentiment around the IPO market is certainly the sale of portfolio companies through a private mid-cap PE houses through the lockdown, check company in April of this year, and improving. According to one market analyst, a auction - have increasingly been seen as a feint; Whelan said the scales are starting to tip. “It SportsRada, a preeminent sports data company, trend prompting this shift is the success of the much to the frustration of the public market. could be that the strategy on the dual track will is considering a similar move later this year. public funds in providing support to companies According to Whelan, far fewer exits have gone become more balanced toward IPOs.” However, SPACs have not caught on in Europe that are looking to survive post-Covid. For the down the IPO route following a dual track If this trend continues, more GP-led IPOs yet, due to structural differences which make the last few years, such has been the dominance of process. could look to launch in the coming months. strategy less favourable in the region. ●

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RD471-16.indd 16 23/10/2020 12:38 Corporate | Funds | Capital Markets | Private Client

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Plus representative office in the US Information about our regulators is available online  / realdealseucom Q &A ROBERT BRIMEYER Country Executive Luxembourg, Alter Domus Alter Domus’s Luxembourg head Robert Brimeyer discusses navigating lockdown, the evolution of the relationship between fund administrators and private equity clients and why the KYC process would benefit from standardisation.

By Nicholas Neveling

How did Luxembourg’s financial environment and an attractive suite of services industry come through vehicles for structuring funds. This is the lockdown period? all it takes to be competitive in the eyes Overall, I would say Luxembourg has of fund managers and investors alike. come through lockdown well. All regulated entities were required to How has the focus on ESG have sound business continuity plans changed the way firms report in place before the Covid-19 and think about their pandemic, and although nobody businesses? could have anticipated what would ESG has moved away from nice happen this year, those processes have marketing to something that firms and proven resilient. investors take very seriously. It has The fund administration industry gone beyond a statement on a website has also been fortunate to have made to something that actually makes a strong advancements in difference in how companies operate. digitalisation. At Alter Domus, we The work we do for clients on ESG is normally have 1,000 people in our much greater than it was as recently Luxembourg office, but during as two years ago. With sound ESG lockdown we had less than 10 people reporting now in place with many coming in to answer phones, open fund managers, the focus has shifted and dispatch mail and send faxes. It to embedding ESG into investment was a huge transition, but it went very decision making. Managers want to smoothly because the digital invest in robust target companies that infrastructure was already there. continue to be on track to meet our more sophisticated and have built up deliver a meaningful contribution in One ongoing concern has been annual sales target, and I sense that specialised teams, systems and terms of ESG and thereby generate the large proportion of our workforce our peer group have had a similar processes. There has also been a push sustainable added value to their that live in Belgium, France and experience. Launches may take a for more standardisation of terms and investors. Germany —if they work from home little longer, but overall the market reporting templates which has allowed beyond a certain threshold, their has proven resilient. Many of our for more automation to happen. A recurring theme for all personal tax positions are impacted. clients have been very quick to While in the past, fund stakeholders in the fund Governments have been pragmatic improve their liquidity positions early administrators merely tried to fulfil industry is KYC and AML and initially made allowances for this on in the crisis and none have faced client requests and instructions, requirements. Where do those until the end of June and those any significant issues. However, specialised players are now actively regulations stand and is there allowances were then extended to the medium and long term impacts will supporting their clients to become anything that can be done to end of the year. We’re hopeful that exist and will probably vary more efficient and accepting more improve the process? those allowances will continue into significantly depending on each standardisation and automation. Complying with AML/KYC rules both next year as we continue operating fund’s investment strategy. Administrators today are delivering on the investor and investment side is under this new normal. real added value and are able to no longer a differentiator; it’s a “must Alternative assets have support managers in handling the have” or “must comply” topic where What about your clients undergone a significant period complexity of regulatory compliance. focus should now be on boosting across the alternatives space? of growth and transformation efficiencies for all stakeholders. Many How have they reacted and during the last decade. How In the current market, what players have implemented investor what impact has there been on has the relationship between would you say a private equity portals and other ways to automate new fundraising and fund the fund administrator and firm looks for when deciding the KYC processes, but a lack of formation activity? client evolved? which fund jurisdiction to standardisation and efficiency across It is important to point out that in the Fifteen years ago, alternative assets choose? the market is penalising all alternatives space, the fund cycle is a were a young asset class in Investor preferences are the number stakeholders. Presently, every long one. It can take up to a year from Luxembourg. There were only a few one criteria. Investors will only back stakeholder has slightly different the moment we win a new fund client specialised service providers and most funds that are in credible jurisdictions processes and standards, and to when the fund is actually launched, of them provided a very basic service. where it is easy to do business. investors have to provide slightly investors are onboarded, and capital Another observation is that fund terms, Luxembourg has a long track record as different identification packs to calls can commence. as well as reporting requirements, were a fund structuring jurisdiction and has different funds. The industry should Although some fund launches all quite bespoke at that time. built a cluster of specialised service strive for more standardisation and may have been postponed, we Today, fund administrators are providers, a stable regulatory and tax efficiency around this process. ●

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RD471-18.indd 18 23/10/2020 12:38 Drive to success. Deliver on our vision.

In 2019 MVision held eight final and eight interim closes across North America, EMEA and Asia Pacific, of which three were repeat clients and two were first time funds. Our diversified client base consists of leading managers across Buyout, Growth, Real Assets and Secondary strategies, as well as Direct transactions.

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MVision Private Equity Advisers Limited is authorised and regulated by the UK Financial Conduct Authority. MVision Private Equity Advisers USA LLC is registered with the SEC as a broker dealer, and is a member of FINRA and SIPC. MVision Strategic (Asia) Limited is licensed by the Hong Kong Securities and Futures Commission. 16215-03  / realdealseucom

COMMENT PE structure & trade credit rating agencies: solving the issues James Piper, Managing Director of Lightbulb Credit explains why understanding and leveraging the complex world of trade credit ratings can be the key to unlocking growth for PE-backed businesses, even during a time of immense economic pressure and volatility.

usiness credit ratings financial crisis, Covid-19 has seen play an active part in bank lending to the corporate sector many financial aspects accelerate rapidly, with many of a business, but despite businesses seeking loans to help this many companies cover their costs as revenues stalled. still don’t understand As business costs start to rise, the direct impact they can have on companies are likely to be even more Bday-to-day operations, and more constrained in taking on additional PE investors need to be the first importantly business continuity and debt. Credit repair offers a credible growth. Understanding these credit to know of any changes to the alternative to boost PE backed ratings is complex, but even more so businesses in this difficult and in the PE environment. credit profile of their businesses, changing climate. PE is often misunderstood, especially by the trade credit rating arming them with the data they Benefits of credit repair agencies. Their complex often debt- The good news for CEOs is that the laden structures with negative net need to make key decisions and credit repair service is protected by a worth and loss-making watertight NDA that avoids any data characteristics don’t align well with maximise financial capabilities. leakage into the market. All the scoring criteria set by the rating information submitted as part of the agencies. Add to that complex credit repair process remains ownership arrangements and and management teams like the way completely confidential and does not working to EBITDA rather than Leveraging business credit it deals directly with some of their form part of general accounting statutory accounting rules, and it’s ratings biggest issues. These include: records. easy to see why this is the case. Working directly with five credit – Providing funding growth through In the current economic climate, The idea for business credit repair rating agencies in the UK, Lightbulb working capital rather than the PE investors need to be the first to came after spending many years working Credit helps businesses to identify investor injecting funds know of any changes to the credit in a Plc and PE-backed turnarounds, their specific issues and take direct –Breaking down the specific profile of their businesses, arming which often involved working closely action and is the only service of its EBITDA vs. stat accounting issues them with the data they need to make with all of the UK credit rating agencies. kind in the UK. By collating and and explaining how non-cash key decisions and maximise their It quickly became clear that due to a sharing company YTD MI with the items can affect accounting results financial capabilities. number of issues within this long- agencies, ratings and limits can be – Having a positive impact on Ongoing monitoring of credit can established process, companies were not re-evaluated, often in just a few days. tendering for new work also put businesses in a better always getting ratings that reflected their All without revealing more data into – Enabling trade credit insurance position to proactively manage, current operating status. the public domain, which has proven understand and improve to be a useful tool for the PE The benefits also extend to relationships with their key suppliers The UK trade credit market investors who have worked with management teams on the ground as and clients. There are five main credit rating Lightbulb Credit so far. it’s quick to deploy and delivers An improved credit rating can agencies in the UK and all LLPs and Business credit repair is helping to instant results, immediately solving a achieve positive and significant Limited companies are rated using their turn the tide for PE backed problem that could have had severe results in a short amount of time, respective algorithms. The scoring businesses, simply because investors negative implications if ignored. which is now more important methodology for each agency is than ever. different, but all utilise data from Covid-19 effect on business For PE backed businesses, keeping Companies House, alongside payment With the impact of Covid-19 creating control of credit ratings could be the data collected to evaluate how suppliers even more challenges within the credit key to giving their company the are paid against agreed credit terms.terms. backdrop, companies in the UK are stability and strength needed to Business credit ratings directly facing turbulent times. The Office for prosper post Covid-19. impact on working capital, tendering National Statistics (ONS) said gross and funding, but many businesses domestic product (GDP) fell in the ● To get in touch with the author don’t monitor their ratings or really second quarter by 20.4% compared directly, please contact: understand how they can be with the previous three months. This is [email protected] or improved. With more credit checks the biggest quarterly decline since connect with James on LinkedIn: being done than ever before, and comparable records began in 1955, with https://www.linkedin.com/in/james- each credit rating agency having a the UK appearing to be the worst hit of piper-amct-432b8516/ different approach, it’s vital to get all the G7 nations. To find out more visit www. specialist help in this area. In contrast to the 2008 lightbulbcredit.com

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RD471-20.indd 20 23/10/2020 12:39  / realdealseucom

WEBINAR STAYING AHEAD OF THE CURVE Tech has become an increasingly critical factor in PE transactions. In a recent Real Deals webinar, industry stakeholders discussed managing new risks while integrating tech innovation into portfolio strategies.

your environment, it can come back portfolio companies.” ON THE PANEL: and harm you. People want to see Though Gourley claimed that with change in the post-virus world. increasingly niche tech investment Karine Gourley Companies need to have basic firms will still need experts from managing consultant strategies for their carbon footprint.” outside their companies. “We [at at Intuitus He claimed that tech companies that Intuitus] have an extensive consultant are good for both the environment network that we utilise and draw on Giancarlo Beraudo and the economy are going to be the for very specialist expertise. While it partner at Ambienta “sweet spot” for the next generation may make sense for [PE firms] to have of investors. that capability in house, I think there Ian Oxley will always be the need to augment partner at Origination that. For specialist deals, I can see an Silverfleet Capital The virus has challenged many firms’ ongoing need for independent traditional deal sourcing approaches. advisors.” Host: Alice Murray Beraudo said that it has required editor of The Drawdown some rethinking especially when it Tech on exit comes to tech and SaaS deals. “If you With new emerging markets and By Simon Thompson think of generating deals and technologies, so too comes new risks. prospects in a B2B context, it is Beraudo asserted that technology both to the technology the company through trade fairs. This year all of investments have risk factors on exit may be built on, as well as the them have been cancelled. The way that are less familiar to PE investors. technology integrated into its you originate business has had to “If you think about how you were operations. “The pace of change in become more digital. This means doing exit preparation years ago, it technology is accelerating, the virus more of a presence on the web, you was a lot around financials, VDD, tax, has brought a lot of it to the fore.” need to engage with customers, in a legal and insurance. Now tech DD is digital and remote way.” becoming as important.” Tech and ESG compatibility As highlighted by Oxley, Gourley explained that this reality hile tech is increasing opportunities Ambienta is a sustainability focused Silverfleet’s sourcing approach to tech can lead firms to do ‘ongoing DD’. and targets in the market, it is also investor. The way the firm looks at deals starts early on. Before “We have had an ongoing relationship bringingW a number of risks less markets and investments is always identifying targets or tapping into with a firm, where we have gone in 18 familiar to the PE industry. In a recent through the environmental impact of industry networks, Oxley revealed months after the initial process to Real Deals webinar, industry experts its product and services. Giancarlo that the firm’s process starts in check up on the DD discussed how best to assess tech Beraudo, partner at Ambienta said that mapping and analysing tech sectors recommendations we made and how risks and integrate opportunities into that has naturally brought the firm to and different markets' demands. “It they have progressed.” She asserted the portfolio. Here are some key tech companies. “It is all linked, the goes right back to where we start, we that in tech, it makes sense to engage points from the discussion. moment you deliver efficiency to your are looking at different technologies in DD in preparation for a sale. “It is a customer and reduce production costs, and sectors and then seeing where little bit like selling your house, you Tech emergence you also deliver an environmental there are opportunities.” are better off understanding where the With IT becoming a backbone of many benefit. That might be in consuming problems are before the surveyor organisations, the PE industry is seeing less energy or making less waste. If Dedicated tech panels turns up.” ● tech become a larger force in the you’re delivering a cost saving, you’re With the increasing nichification of market. Technology assessments are also likely to be delivering an ESG tech, many firms are bolstering their increasingly creeping into the viability impact." Beraudo noted the mega trend expertise and strategies with insights checks of more PE transactions. Karine of digitisation as a key example. “When and advice from different tech Gourley, managing consultant at you transform a business process from experts. Oxley said Silverfleet’s Intuitus said tech due diligence is physical meetings and paper being inhouse tech panel is made up of top becoming front and centre in sizing up signed, to fully digital and remote, you tech expert advisors in each of the any deal. “It is about understanding have convenience, cost reduction and sectors the firm covers. “They give us what the vulnerabilities and the also an environmental benefit; no insight into the upcoming trends that opportunities are within each travel, no waste of fuel, no paper, you we need to be aware of. We try to have organisation. In each sector you can save trees.” at least one person who can answer see where technology is providing Oxley suggested that the virus has each technology question pertaining companies with unique advantages.” only emboldened investor’s interest in to different companies. For other Technology is central to a lot of tech opportunities linked to climate needs, we have a network panel the deals that Silverfleet Capital do. change. “People are noticing that the approach, a black book which is Partner, Ian Oxley, said that pertains air is clean and realising if you harm available for all of our deal teams and

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RD471-21.indd 21 23/10/2020 12:40  / realdealseucom Q &A

RENAUD OURY Group Chief Revenue and Data Officer, Apex Group Apex’s Renaud Oury discusses the trends, challenges and opportunities facing the private equity industry in the Grand Duchy.

By Talya Misiri

What market trends are you landscape, there has been a renewed currently seeing in focus on ESG investment, driven Luxembourg? indirectly by the pandemic. During the last decade, Luxembourg Quality ESG data capture, has emerged as one of the most analysis and reporting is critical for important hubs for private equity fund ensuring risk mitigation and domiciliation, capital raising and sustainable returns for investors. transaction activity. We are seeing We listened to the investor concerns many managers who have previously that our private equity clients are launched funds in offshore receiving about ESG investing and jurisdictions but are now looking to developed an ESG Ratings and come onshore, often at the behest of Advisory service for private their investors. This is not a trend markets. limited to the private equity space, although the structures available and What should funds look for range of service providers in when choosing their service Luxembourg mean that the jurisdiction provider in Luxembourg? is particularly attractive to managers. As the number of private equity The Covid-19 crisis has certainly funds domiciled in Luxembourg slowed down the sustained pace of grows, so too does the demand for investments in the private equity outsourcing of fund administration, sector, which has been growing particularly as compliance costs and steadily for more than 10 years, regulatory pressures grow. When particularly in Luxembourg. Since the establishing and launching a fund in 2008 crisis, markets have been very the market, arguably one of the most volatile and interest rates are very low, important decisions you will make is this makes debt cheaper and pushes How can funds position How has Covid-19 impacted that of which service providers will yield down. Private equity players themselves to take advantage the services that funds in support you through the process and have done well in this context, by the of upcoming market trends Luxembourg require? beyond. very nature of their industry. and regulatory requirements? The Coronavirus pandemic brought Managers are now increasingly It is interesting to note that many challenges to the private equity seeing the major advantages to What impact do you fundraising fell only 4% over the first industry and at Apex we have worked having one provider – primarily the anticipate Brexit will have on six months of the year compared to hard to support our clients through cost and administrative efficiencies Luxembourg’s funds industry? 2019. As private equity has raised a this pandemic and market achieved, seamless integration and a Luxembourg is among the biggest lot of new money in recent years, fluctuations. Crucially, we responded single point of contact for ongoing winners from Brexit as businesses shift many distressed businesses may be to client demand and created Apex management of the relationship. operations out of UK. Many private supported with this capital, if their Connect, a 24/7 secure portal with Speed to market is also a clear benefit equity funds need to guarantee that business models are sufficiently online dealing functionality to of using a single-source solution as it they have access to the European resilient. It is therefore possible that improve efficiencies and remote can greatly reduce time spent market to be able to raise capital, which private equity will achieve its best accessibility of fund data. navigating through different KYC Luxembourg facilitates. To support performance since the years In addition, to improve the ability processes with multiple providers, business flowing from the UK, following the financial crisis of of fund managers to work remotely, which can be a source of great Luxembourg has created a transitional 2007-2008. Apex launched a pioneering Digital frustration for managers. regime to allow UK investment firms to The biggest area of diversification Bank and Onboarding platform for Whilst a fund’s initial priority will continue to provide cross-border will probably be into private debt asset managers via a Luxembourg- be appointing a service provider with services into Luxembourg in the event a combined with an increased interest based subsidiary, European local expertise and boots on the “no-deal” Brexit. However, it is worth in distressed transactions over the Depositary Bank. This digital ground, we encourage managers to noting that this regime is only available next 12-24 months. banking solution removes the need take a longer-term view, and assess to those firms with existing mandates, It’s a good time for those for managers to provide physical whether the service provider is which have contracts in place before managers, including large direct document copies or the need to send well-resourced and positioned to Brexit and as such UK firms will not be lending firms with distressed information via mail. support your business’ needs in the able to rely on the transitional regime to situation capabilities to capitalise on Finally, not only in Luxembourg, future, and in other jurisdictions you enter into new agreements after Brexit. the current conditions. but across the private equity may look to enter. ●

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RD471-22.indd 22 23/10/2020 12:42 Axentia Technologies Matrix Technology

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RD471-24_29.indd 24 23/10/2020 12:46  / realdealseucom THE DEALS THAT MADE 2019 Innova Capital Once again, European private Central and Neomedic Eastern Europe Innova Capital exited Neomedic in a €70.5m deal, equity managers delivered six years after it acquired the hospital operator for Deal of the Year PLN150m (€35m). The company operates four admirable returns for their hospitals across Poland and a number of ARX Equity Partners outpatient and primary care medical centres. In Anwis 2018 it reported revenues of around €28m and saw investors in 2019. Over the next 7,600 babies born in its hospitals. The firm ARX Equity Partners generated a 3.3x return and an achieved success by focusing on the range and IRR of over 30 per cent on its exit of window cover quality of specialist services offered. six pages we profile the very manufacturing company Anwis. The Polish-based company was acquired by Novaco Invest, a best deals from each European subsidiary of the Warema group. Under ARX’s five Jet Investment years of ownership, the company consistently Benet Automotive increased sales and more than doubled its region. These are the workforce headcount. The company achieved a Jet Investment exited components manufacturer turnover of €32.6m in 2018. The strategy Benet Automotive to trade buyer Teijin to push transactions that exemplify the positioned the company to benefit from the fast its expansion strategy in Europe. During Jet’s growth of the e-commerce channel in key export ownership, the company succeeded in markets in Germany and the Netherlands. accelerating synergistic effect with its other expertise and innovation that portfolio company Fiberpreg. The company was transformed in terms of its organisation to satisfy private equity brings to the art Enterprise Investors the robust demand in the market for Benet’s 3S products. The company has approximately 720 employees and made sales in 2018 of €35.2m. of growing businesses. These Enterprise Investors exited 3S to regional telecom operator P4 in a deal that valued the company’s enterprise value at €96m. Enterprise Investors first LitCapital are the shortlisted deals acquired a 75 per cent stake in the business for Baltik Vairas €21m in 2015 via its Polish Enterprise Fund VIII. 3S that we will recognise at operates a 3800km-long fibre optic network and LitCapital sold bike manufacturer Baltik Vairas to offers tailor-made telecommunication solutions sporting goods investment company KJK Sports, that include internally developed cloud services to achieving one of its largest exits from LitCapital I the 19th Real Deals Private B2B clients in Poland. KŪB fund. Since 2013, the company’s Ebitda 3S now employs over 250 people and quadrupled and it achieved revenues of €58.5m last Equity Awards. generated €20m in revenues in 2018. year. The firm has focused on expanding the

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company’s activities in the development, enterprise value of €330m. At the time, AURELIUS refurbished opening per week. The Financial Times manufacturing and sales of electric bicycles in said the exit was the largest and most successful values the company at up to €1.9bn. Lithuania. exit for the firm to date and reflects the significant Baltik Vairas is one of the largest companies in effort exerted on the business over the last four Europe for the development, manufacturing and years. AURELIUS supported the company’s growth sales of e-bikes and bicycles. through a strategic acquisition programme and Germany, Austria extended the company’s geographical footprint and operational efficiency. It also implemented a and Switzerland Mid Europa Partners €60m investment program, which included Bambi upgrades to existing machinery and processes, Deal of the Year product innovation and a company review of Mid Europa sold Serbian confectionery producer operational and commercial activities. AnaCap Financial Partners Bambi for €260m, making a 4x money return. The heidelpay exit value represented nearly a third of the €880m fund it deployed to invest in the company. Bambi Bridgepoint AnaCap Financial Partners sold its holding of was part of the Danube Foods Group including eFront heidelpay GmbH to KKR in a deal that valued the dairy group Imlek and mineral water producer company at c.€700m to €800m and represented Knjaz Miloš and was acquired by Mid Europa in The sale of investment management software an IRR of 80%. AnaCap exited the business two 2015. Since then, the firm has strengthened the provider eFront to BlackRock generated a 4.8x years after its initial investment. In this time, it company’s brand recognition and customer base return for Bridgepoint. Bridgepoint acquired the supported the business both through organic through disposing its chocolate division and French-based company in a €300m transaction in growth and strategic M&A, totalling seven investing more in its core biscuit brands. 2015 and aimed to provide the company with access acquisitions. Founded in 2003, heidelpay enables Karlovarské minerální vody, a.s. and PepsiCo to new clients and to enhance its value proposition. its clients to accept online and mobile payments agreed to acquire the company in June 2019. eFront’s software has more than 700 clients and is and is used by over 30,000 merchants. It currently used to manage the alternative investment lifecycle, has an above market CAGR of more than 100 per from due diligence and portfolio planning through cent since AnaCap’s acquisition. TFI Capital Partners to performance and risk analysis. Piotr i Pawel The Carlyle Group TFI Capital Partners sold its stake in Polish CVC Capital Partners Vereinigte Wirtschaftsdienste supermarket chain Piotr i Pawel to South African Parex (vwd) listed food retailer Spar Group that owns stores in the UK, Ireland and Switzerland. The co-founders CVC sold the industrial mortars business of French The Carlyle Group exited Vereinigte of the company are brothers Piotr and Paweł Woś, construction company Materis - Parex Group - in a Wirtschaftsdienste (vwd), a European provider of who created a supermarket chain as part of a Polish $2.55bn deal. CVC Fund V was deployed for the software solutions for investment professionals, to family company from a small local store in Poznań. business and the Parex team has delivered a very Infront ASA for €130m, almost double its initial strong performance, increasing sales from €750m investment. Carlyle originally invested in vwd in a in 2013 to over €1bn. Over a five-year period, Parex €72m take-private deal in 2012 through its Carlyle entered three new countries, opened 16 new plants, Europe Technology Partners II (CETP II), a pan- France and Benelux added 11 bolt-on acquisitions and built a new global European small & mid-market buyout fund. R&D centre. Headquartered in Frankfurt, Germany, vwd is a Deal of the Year provider of software for the investment industry. It assists wealth management and investment Apax France Investcorp professionals with making smarter, more efficient INSEEC U SecureLink and regulatory-compliant investment decisions.

Apax France sold education service provider Investcorp sold cybersecurity infrastructure and INSEEC U to Cinven for about €800m, managed services provider SecureLink Group for Deutsche Beteiligungs representing a 14x return on its investment. Since an enterprise value of €515m, nearly four years on Infiana Apax France’s investment, INSEEC U has grown from acquiring the company. SecureLink was sold from a collection of reputable schools into a to global telecoms group Orange, and experienced Deutsche Beteiligungs more than doubled its structured and coherent education platform, strong organic growth, adding leading providers in capital investment through the sale of films offering multi-disciplinary academic programmes Scandinavia, the UK and Germany to its platform manufacturer Infiana. Following the closure of its and increased employability to over 25,000 and expanding in China during Investcorp’s €700m DBAG Fund VI in 2012, DBAG acquired the students in France and abroad. Over the five years ownership. company, then named Huhtamaki Films, in 2014 of ownership, Apax has worked with the company for €141m. The company develops polyolefin films management to broaden the course base and for a range of growth industries and generated a expand the range of programmes offered and to Main Capital revenue of €227m last year. Infiana serves an create centres of excellence around French Axxerion international customer base from two specialities including luxury goods. manufacturing locations in Forchheim, Germany, Main Capital sold its stake in Axxerion for €75m in and Malvern, USA. Infiana has been sold to a trade sale to tech and consulting group Pamplona to continue its next phase of growth. Apax France Nemetschek Group, nearly two years on from the Altran closing of its €85m Fund IV that was deployed to invest in the company. During Main’s ownership, EQT Apax France exited consultant Altran to Capgemini the business broadened its product-suite towards Charleston for €3.6bn. Under Apax France’s ownership, the the real estate segment through the acquisition of company focused on increasing Altran’s share of the Plandatis in 2018. Axxerion delivers its SaaS-based After founding German care home operator outsourced R&D market and rationalising its property and real estate management software to Charleston in 2014, EQT has sold the business to portfolio of activities and geographies. In March 2018, about 2,000 global customers across many Italian healthcare group KOS. The business was Apax Partners and Altamir assisted Altran in the $2bn industry sectors. founded by the private equity firm with the vision acquisition of US-based Aricent. Altran now has over to pursue a buy-and-build strategy in the German 47,000 employees in over 30 countries. In 2018, it care home sector. In the last five years, EQT and reported a revenue of almost €3bn, nearly double the PAI Partners Charleston’s management team have executed revenue it generated when it was acquired. B&B Hotels nine add-on acquisitions, opened several greenfield projects and has grown revenues by 16 PAI Partners exited French-based budget hotel times, as well as building a growth platform with a AURELIUS Equity Opportunities chain B&B Hotels in a deal valued at nearly €2bn to focus on quality care. Headquartered in Füssen, Solidus Solutions the merchant banking division of Goldman Sachs. Germany, Charleston operates 47 care homes with The group almost doubled its Ebitda since PAI’s 4,050 beds, four day care centers and seven AURELIUS generated a 16x return on its exit of acquisition, which the company attributes to an ambulatory care locations. It generates revenues of Solidus Solutions to Centerbridge Partners for an aggressive growth strategy averaging one new or over €160m and has around 3,400 employees. As

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part of the exit, EQT has also sold Charleston’s real capabilities and assisted with the re-design of its revenue from €39m in 2017 to a forecasted €89m estate portfolio to Primovie, a European healthcare commercial strategy. In addition, Lameplast this year and also expanded into the E-Mobility and educational focused real estate fund managed established a strategic partnership with a Florida- sector. The sale has given the company an EV of by Primonial REIM. based injection moulding company for the local c.€380m. production and commercialisation of plastic packaging. Kennet Partners Eurazeo HYPE Innovation Moncler Ambienta Kennet Partners sold software specialist HYPE Safim Paris-based Eurazeo exited Moncler in a €445m Innovation in a secondary buyout deal to Main deal. After holding the Italian luxury clothing brand Capital after holding the business for five years. Ambienta received a 3.6x money return on the since 2011, the private equity firm made a cash-on- Kennet’s support led to recurring revenues with a transatlantic sale of Italian hydraulic components cash multiple of 4.8x and an IRR of 43 per cent. CAGR of c.27 per cent between 2015 and 2018. The specialist Safim to U.S. car parts maker DexKo Eurazeo sold its remaining 4.8 per cent stake in firm initially engaged with HYPE’s management Global. The deal generated an 80 per cent IRR. Moncler via an accelerated bookbuilding to team in 2014 and built upon its organisational Backed by Ambienta in partnership with its institutional investors. Since its initial investment, development and market position during its founding Mamei family and the new management Eurazeo assisted with the business’ continual holding. The company currently serves a team, Safim expanded its market share, gained key growth and expanded its points of sale from 60 to diversified and global blue-chip customer base global customers, acquired its German distributor 200. In 2013 Eurazeo was involved with Moncler’s with over 220 customers across various industries. and strengthened its expertise in electronics. The IPO and oversaw growth in luxury spending, These include: Airbus, Nokia, Deutsche Post DHL Milan-based private equity firm also applied its expanding its international presence and the Group, Fujitsu, Volkswagen and Toyota. “ESG in action” program to integrate ESG development of a wider retail network. management guidelines and practices into the company’s daily operations. With the investor’s OpCapita support, Safim was able to double revenues and Palamon Capital Partners NKD increase profitability in 24 months. Il Bisonte

OpCapita made a 4x return on the sale of fashion Palamon Capital Partners banked a 3x return on its chain NKD to TDR Capital. Since its initial ArchiMed first exit from its third fund Palamon III. The sale of investment in 2013, OpCapita was instrumental in Primo Group Italian luxury retailer Il Bisonte generated a 26 per recovering the once loss-making business to now cent gross IRR. Founded in 1970 in Florence, Il out-perform the market. NKD swung from a €34m Healthcare-focused private equity firm ArchiMed Bisonte is a large, independent producer of hand- loss to €45m Ebitda in 2018. Over the past three secured 3x return on its exit of Primo Group to crafted luxury leather handbags and accessories, with years, its growth has outperformed the market, Aksia in October. The secondary buyout generated a footprint covered Europe, the US and Asia. During with an average 7.5% increase in sales per year. a 36 per cent annualised return, equal to three its holding, Palamon institutionalised the business’ Headquartered in Bindlach, Germany, NKD is a times ArchiMed’s initial investment. Archimed management, rationalised and modernised its leading discount clothing retailer. It operates a acquired the Italian dental services chain in 2015 product range, expanded into new markets through chain of c.1,800 small-format stores across through its inaugural MED I fund, which closed on wholesale, online and selective retail expansion and Germany, Austria, Croatia, Italy and Slovenia. In €150m. In the holding period, the number of developed its online retail channel by appointing a addition to its capital investment, OpCapita Primo’s directly owned dental clinics rose from 15 digital team and launching a redesigned website. Its supported operational aspects of NKD’s business, to 50 and its workforce expanded to 200 from 80. points of sale increased from less than 200 to over assisting with buying and pricing decisions. The Primo Group’s profits also rose by 36 per cent in 400, which led to a doubling in revenue from €20m firm also re-built the company’s supply chain, this time at entry to more than €40m in 2019. including reducing the number of suppliers while increasing their geographic spread, and closing underperforming branches. Artá Capital Trilantic Europe Gascan Gamenet Group

TPG Capital In under two years, Artá Capital generated 2.7x Trilantic Europe sold Gamenet to Apollo for a 3.5x Transporeon return from its sale of Gascan. The Spanish firm return in October. The deal, which saw Trilantic sold the energy company to UBS Asset Capital Partners IV Europe sell its remaining stake TPG generated a 2.5x return, c.35 per cent IRR on the Management Funds for €118m in February, in Italian sports betting and gaming business sale of its majority stake in Transporeon Group. The generating an IRR in excess of 65 per cent since it Gamenet Group to the US private equity firm, global cloud-based business network for industrial invested in 2017. Gascan is a key player in the piped recorded a 15 per cent IRR following its nine-year logistics company was sold by TPG to UK rival Hg in LPG segment in Portugal, serving more than hold. Trilantic Europe first acquired a controlling a deal valuing the business at over $800m. 65,000 domestic clients located throughout the stake in Gamenet in November 2010 via a primary TPG initially backed Transporeon in 2016 and country. It manages its own supply infrastructure, deal. During Trilantic’s ownership Gamenet grew has supported management in expanding the comprising over 2,000 tanks and nearly 750km of 10-fold from €14m at entry to €158m Ebitda and company internationally, investing into research associated pipes, and supplies over 12,000 tonnes increased its number of employees from 80 to and development and extending its suite of of LPG each year. During Artá’s ownership, Gascan almost 800. Gamenet gained access to the capital platform-enabled visibility, data and data-related hired a new management team and acquired 12 markets with the issuance of four high yield bonds products. This was achieved through organic piped-propane gas operators, gaining 8,000 new in the 2013 to 2018 period and listed on the Milan growth and the acquisition of market customers in the process. With Artá’s support, stock exchange in 2017. intelligence provider TIM Consult in 2018. Gascan also promoted the development of energy efficiency business Energyco. Nordic Deal Meditarranean Charme Capital Partners ATOP of the Year Deal of the Year Charme Capital Partners sold its majority stake in Cinven Aksia Group ATOP to IMA Group. Through the exit of its Visma Lameplast majority stake, Charme generated a 4.5x return and an IRR in the range of 100 per cent. Charme first Cinven agreed to exit its stake in business Aksia Group sold Lameplast to Genstar Capital- acquired ATOP via a special purpose vehicle in management company Visma to Hg and the backed packaging material maker Tekni-Plex for an 2017 through its Charme III fund. Italy-based Canada Pension Plan Investment Board (CPPIB). EV of €88m and a realised IRR of over 60 per cent. ATOP manufactures machines and automatic lines The transaction represented Cinven’s final The manufacturer of primary plastic containers for used in the production of electric motors that realisation of Visma, following its partial realisation the pharma industry was acquired by Aksia in 2016 encompasses the E-Mobility, automotive, to an Hg-led consortium in June 2017. in a leveraged management buy-in. During its household appliances, and power tool sectors. Having followed Visma since 2008, Cinven holding, the investor has supported the During Charme’s ownership, the business doubled ultimately invested in Visma in 2014. strengthening of the management, R&D in size, achieving a 28 per cent Ebitda, increased Since 2014, Cinven worked closely with

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Visma’s management team and its locking systems that has transformed the way commercial drug product, doubled its capacity co-shareholders to generate strong financial people have access to buildings. Its technology and and made large investments in operational performance, with revenue growth of more than software are developed and patented enabling infrastructure. 25 per cent per annum and transformed the electronic locking without batteries or cables. GHO Capital first backed the company in Group into a more “pure-play” cloud-based 2015. The company is led by chief executive solutions provider, driving a premium exit Mark Egerton. valuation for Cinven. Silverfleet Capital Phase One Hg EQT Silverfleet has agreed to exit digital imaging Foundry AutoStore software company Phase One for a 4.6x return. Danish private equity house Axcel agreed a deal to Hg sold British visual effects software provider EQT sold automated cubic warehouse systems acquire the business. Foundry to US trade buyer Roper Technologies in provider AutoStore to THL Partners, retaining a Silverfleet supported the company’s transition a deal valuing the business at £410m (€479m). ten per cent stake. from a hardware focus to a software-centric Foundry has been under private equity ownership Headquartered in Nedre Vats, Norway, business focus. This helped drive a revenue for a number of years and has demonstrated AutoStore’s cubic warehouse solution has compound annual growth rate of 38 per cent in continued growth. automated more than 350 warehouses in 28 its software imaging business unit between 2014 Carlyle first backed Foundry in 2011, countries globally. EQT initially became aware of and 2018. The business is headquartered in acquiring it from Advent Venture Partners. Hg AutoStore in 2011 through its previous portfolio Denmark, with operations in Germany, Hong backed the company in 2015. company XXL’s use of the cubic system. Kong, Israel, Japan and the US. The company The creative software business extended its Following the business since then, EQT acquired also acquired Mamiya Digital Imaging in 2015 offering from a purely film-based focus with a AutoStore in January 2017. During its ownership, and subsequently created Phase One Japan. single product, Nuke, to a number of high-end EQT worked with management to accelerate products servicing the commercial, TV, design AutoStore’s growth journey. Revenues and games industry. quadrupled in two years, Ebitda increased by 4.5x Foundry was established in 1996 and has and the workforce more than doubled. UK Large Deal of worked on a number of successful films over the years, including the Harry Potter Franchise, the Year (EV Gravity, Guardians of the Galaxy and Star Wars. IK Investment Partners Ellab €200m+ on entry) KKR IK Investment Partners sold a majority interest in Trainline global thermal applications solutions and services BC Partners supplier Ellab to EQT, retaining a minority stake. Acuris KKR floated UK bookings website Trainline last Founded in 1949, Ellab is a global supplier of summer and saw the group’s value rise to £2bn on solutions for validating, measuring, recording and BC Partners sold its majority stake in financial data day one of trading. Pre-listing, the firm owned 79% monitoring critical parameters of thermal business Acuris to ION Investment Group in a deal of the company, which was reduced to 25% post- applications. During IK’s ownership, Ellab has valued at £1.35bn. BC Partners reportedly returned IPO. KKR sold down shares worth £28m in successfully broadened its product portfolio, a 5x money multiple from the exit, although the September, fully exited the group in November. executed a M&A strategy and continued to firm declined to comment KKR acquired Trainline from Exponent Private strengthen its organisation. The company also It is understood that the European buyout Equity for £450m in 2015 and grew the business more than doubled its number of employees over firm will retain a 25 per cent minority stake in organically and via acquisitions with deals like the the past three years, creating over 100 new jobs Acuris which will see BC Partners executive purchase of French online ticketing company whilst maintaining its strong profitability. Nikos Stathopoulos, who led the deal, remain on Captain Train. the group’s board. Acuris, known formerly as Mergermarket, was Litorina sold to BC Partners by Pearson for £382m in 2014. L Catterton Fresks Group Elemis The deal delivered a 7x return for UK private-equity Litorina sold building supplies firm Fresks to trade Exponent Private Equity, Natural cosmetics company L’Occitane firm August Equity, which backed SecureData in buyer Kesko for €200m. Company sales have more Loch Lomond International acquired UK skincare brand Elemis 2012 and sold the business to Orange. August than doubled from SEK 850m to SEK 2.1bn during from Steiner Leisure, a business owned by Equity initially invested in SecureData in 2012 and Litorina’s holding period, with the firm supporting Exponent Private Equity sold its majority stake in consumer-focused private equity firm L Catterton. supported the management team in making four a buy-and-build programme of eight bolt-on Scotland’s well-known whiskey distiller, Loch The deal valued Elemis at $900m (€788m). bolt-on acquisitions, including Cygnia acquisitions. Lomond Group, to Hillhouse Capital for £400m. Founded in 1990, Elemis owns a range of Technologies in April 2017. Established in 1842, Loch Lomond is a skincare brands and sells through five The exit was led by SecureData board producer of malt, blended and grain whisky. The strategic distribution channels, namely member Mike Biddulph and August’s Mehul Norvestor Equity business had remained in family ownership until digital, retail, QVC, professional spas and Patel. The sale marked the seventh exit by Nomor Exponent acquired it in 2014 for a reported £210m. onboard ships. August Equity since the start of 2018 and During Exponent’s five-year ownership, Loch L Catterton first invested in Steiner Leisure in brought the total enterprise value of Norwegian private equity firm Norvestor Equity Lomond expanded its international presence. The 2015 and has since worked with Elemis to realisations during this period to more than sold Swedish pest control company Nomor whiskey distiller now generates 70 per cent of its expand its product range and appeal to a wider £1bn. Holding to US-based trade buyer ServiceMaster for revenue from overseas markets, up from 10 per consumer audience. $200m. During its ownership, Nomor made nine cent at acquisition. Chief executive Colin Matthews strategic acquisitions in Norway and Sweden and and his senior team reinvest in the business. The Carlyle Group increased revenues from SEK 104 million in 2013 to graze approximately SEK 500 million. Nomor is today the UK Small/Mid-Cap fourth largest pest control company in Europe. GHO Capital Carlyle Europe Technology Partners sold healthy Quotient Sciences Deal of the Year (EV snack business graze to consumer giant Unilever. It was reported that the company was sold for Sievi Capital GHO Capital, the specialist healthcare investor, less than €200m on £150m. iLOQ sold a majority stake in Quotient Sciences, a Founded in 2008, graze began life as a snack provider of software platforms used for R&D and entry) box delivery service, with a focus on Sievi Capital sold Finnish self-powered digital drug discovery, to Permira in July 2019. During personalisation based on order history. It is now locking systems provider iLOQ to Nordic Capital. GHO’s hold, Quotient’s annual revenues grew to a multichannel brand, with products available in Founded in 2003 in Oulu, Finland, iLOQ is a more than £100m (€119.5m), established its August Equity store, via ecommerce and direct to the provider of self-powered digital and mobile product in the US, validated its position as a SecureData consumer.

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Carlyle first invested in graze in November Livingbridge company into new markets, changed its culture and (€61.2m) and the business is now placing £300m 2012. The company has since experienced Sykes Holiday Cottages invested in technology and marketing. of gross written premiums into the market. strong growth in its delivery service, as well as Employee numbers have grown from 160 to expansion into retail stores in the UK and US, Livingbridge sold a majority stake in UK holiday more than 500, with Synova supporting 12 including Sainsbury’s, Boots, Costco and home provider Sykes Holiday Cottages to Phoenix Equity Partners acquisitions and expansion into other specialist Target. Vitruvian Partners. Travel Chapter areas including real estate, commercial and Livingbridge partnered with the company for healthcare insurance. five years and helped it reach a record year in Phoenix Equity Partners made a 3.6x money return Inflexion 2019 with bookings up 26 per cent, taking 1.6 and an IRR of 62 per cent on the sale of its stake in Cawood Scientific million people on holiday. The business’ profit UK holiday accommodation business Travel Tenzing Private Equity rose to over £20m during the year to September Chapter to ECI Partners. FMP Global Inflexion made just under 3x money from its sale 2019 after sales of £68m. In April, the company Chief executive James Morris will reinvest in the of Cawood Scientific, only two years on from acquired a majority stake in Bachcare, a holiday business as part of the deal and continue to lead it. Tenzing Private Equity sold its investment in FMP buying the business. rental company in New Zealand, with over Phoenix first invested in the business in April Global to Hg’s IRIS Software Group, banking a 5.4x Investors close to the deal said the return 2,000 properties. 2016, putting £30m (€33.4m) into it through its return on exit. was attributed to three bolt-on acquisitions fourth fund, which closed at £415m in July 2017. Founded in 2006, FMP Global provides that greatly boosted the company valuation. Under the firm’s hold, Travel Chapter made payroll services and software, with operations These broadened the breadth of service in Mobeus Equity Partners 20 bolt-ons and increased its property portfolio, spanning 135 countries. other market sectors and geographically, and Plastic Surgeon headcount and revenues. Since backing FMP Global in 2016, Tenzing also enhanced scale. The business is said to has supported the growth of the business by have also greatly benefitted from added Mobeus Equity Partners sold Plastic Surgeon, the helping to widen its service offering, expand investment in technology and data surface repair and restoration specialist, to Polygon Synova Capital overseas, and broadening its payroll expertise. optimisation. Group, in a deal that delivered a 5.6x money multiple Stackhouse Poland Specifically, during its investment, Tenzing Waterland Private Equity acquired the and an IRR of 20.5% over an eleven-year hold period. focused on re-engineering FMP Global’s analytical sampling and testing service Mobeus originally invested £2m to support the MBO vSynova first backed Stackhouse, an marketing strategy to fuel growth, with a specific company, joining HistoGeneX in its portfolio, of Plastic Surgeon in 2008 and supported the insurance brokerage focusing on high-net-worth focus on lead generation from Tenzing’s which conducts scientific tests for developing, business through the subsequent recession, which customers, in 2014 when it invested alongside Entrepreneurs Panel. approving and monitoring new anticancer affected its key house-build market. During the chief executive Tim Johnson. During Synova’s FMP Global also built M&A capabilities drugs. investment term, the management team took the hold, revenues have more than tripled to £55m throughthree strategic acquisitions. ●

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House of the Year Shortlist 2020 Real Deals is pleased to announce the House of the Year shortlists for the 2020 Private Equity Awards. The shortlists recognise the private equity houses that excelled in fundraising, new deals and exits, as well as the overall evolution of the firm. Congratulations to all the finalists!

Global House of the Year Continental Regional Advent International House of the Year The Carlyle Group Altor Equity Partners CVC Capital Partners FSI KKR Invision Permira Miura Private Equity TA Associates Paragon Partners ProA Capital Pan-European Summa Equity House of the Year Ufenau Capital Partners Astorg Five Arrows Principal Investments Special Situations GHO Capital House of the Year Keensight Capital Alchemy Partners L-GAM Alteri Investors Oakley Capital Aurelius Equity Opportunities Triton Endless Waterland Private Equity Sun European Partners UK House of the Year Bowmark Capital Inflexion Livingbridge Mayfair Equity Partners Synova Capital



RD471-30_31.indd 30 23/10/2020 12:50 Advisory Awards Shortlist 2020 Real Deals is pleased to announce the Advisory Awards shortlists for the 2020 Private Equity Awards. The shortlists recognise the achievement of the lenders and advisers who have gone above and beyond over the past year. Congratulations to all the finalist!

Asset-based Lender Pan-European Legal of the Year Adviser of the Year Leumi ABL Latham & Watkins ABN AMRO Commercial Finance DLA Piper Secure Trust Bank Commercial Finance Addleshaw Goddard Wells Fargo Mayer Brown IGF: Independent Growth Finance Clifford Chance Weil, Gotshal & Manges (London) Commercial Due Diligence CMS Adviser of the Year Eversheds Sutherland Armstrong CIL Management Consultants Placement Agent Luminii Consulting of the Year onefourzero Rede Partners Candesic FirstPoint Equity Asante Capital Group LLP European Corporate Finance Athos Partners House of the Year Houlihan Lokey Arma Partners Campbell Lutyens Baird William Blair Regional Legal Adviser Houlihan Lokey of the Year Clearwater International Ltd Foot Anstey LLP BDO Gateley Legal DC Advisory Taylor Wessing Rothschild & Co Wardynski and Partners Capital Law Ltd Fund Administrator of the Year Specialist Adviser Apex Group of the Year Vistra Aon IQ-EQ Intuitus SANNE Validus Risk Management Langham Hall Palladium Digital Group THE Crestbridge SIA Group P R I VAT E JTC Chatham Financial Intertrust Ramboll EQUITY Aztec Group Capstone AWA R DS UK Corporate Lender of the Year HSBC UK UK Corporate Finance 2020 Ares Management OakNorth Bank House of the Year HMT CVC Credit Partners Arma Partners Tikehau Investment Management Baird Sumitomo Mitsui Banking Corporation Spectrum Corporate Finance Investec Bank Houlihan Lokey Hayfin Capital Management Grant Thornton UK Alantra Rothschild & Co



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Organic Growth

Often an overlooked aspect of private equity value creation, organic growth is essential for materially improving companies’ professionalism, geographical reach and product and service offering. Real Deals presents some examples of organic growth success. Simon Thompson reports. Nuxeo KENNET PARTNERS Michael Elisa, managing director

Nuxeo is a provider of software for the of customer data. The volume of this management of very large amounts of data is growing exponentially as banks complex content within organisations. offer an increasing number of products, 5 It enables customers to manage digital each with their own compliance and Five of the content at a massive scale. KYC requirements. Content includes Fortune 10 The volume of content that is being customer applications, scans of companies are produced today by businesses has customer IDs and signatures, tax customers. momox exploded – this can take the form of documentation, etc. The increase in traditional documents, images or video. regulatory compliance that is affecting VERDANE Unfortunately, the technologies for most industries has dramatically Staffan Mörndal, partner managing content have lagged behind the impacted financial services and Nuxeo 9x growth of content and that’s where was well positioned to help banks and The number of Nuxeo steps in. Nuxeo offers software insurance companies manage these large customer momox is a Berlin-based online provide a lot more focus on that allows companies to manage content responsibilities. contracts platform founded in 2004 that sustainability, and welcomed several % at an extreme scale. Its customers include Nuxeo has seen major uplift in value increased by 9x. purchases and acquires used books, key hires into the organisation that are 25 Fox, Orange, LVMH, and Siemens. following the implementation of these media and clothing and then sells now helping us put sustainability at the The business organic growth strategies. Since our 2016 them via it’s own online shops and also core of momox’s value proposition saw 25% growth BUILDING A WORLD investment Nuxeo’s cloud-based on various marketplaces in Germany, and organisational culture. in 2019 vs 2018. CLASS TEAM revenue is 25x higher. The company has 25x Austria, France and the UK. momox’s Examples include renewable energy Kennet and Goldman Sachs acquired attracted top tier customers and Cloud-based brand, leadership in a rapidly growing sources, LED lighting across all Nuxeo in 2016. Immediately, we worked increased average customer spend. revenue niche supported by offline-to-online momox’s warehouses across Europe, % to build a world-class board of directors When we invested a customer paying increased migration, and strong position to using sustainable materials for 35 and strengthen the management team. $100K pa was a big customer. Today the by 25x. develop into a substantially larger packaging and sourcing environmentally momox saw a We added two highly experienced company has several customers paying European market leader with an friendly office materials. Also, momox’s 35% increase in board members – Steve King, former over $1m pa. The business sells to 5 expanded assortment underpinned close to 1,900 employees can now enjoy its customer CEO of Docusign, and Dave Kellogg, Fortune 10 companies. The number of our original investment decision in vegetarian monthly company breakfasts, base since former SVP Marketing at Business larger customers, who pay more than 2018. Today, it is the largest and most locally sourced fruit, as well as vegan Verdane’s Objects. Around the existing CEO and $250k year, has increased 9x since our profitable re-commerce business in and organic snacks in the office. Today, investment. CTO, we recruited an extremely initial investment. ● Europe, supported by consumer momox saves the world about 7,500 experienced chief marketing officer and preferences for sustainable business tonnes of CO2 per month, the a CFO we had worked with previously models. It is a large-scale volume equivalent to 45,000 peoples’ energy at another Kennet portfolio company. operation, sending out 1.1 million consumption according to Germany’s 7500 We try to elevate the talent at our packages per month. target energy consumption per momox is now businesses top-down. A great board of inhabitant. saving 7500 directors makes it much easier to hire MANAGEMENT MENTALITY tonnes of Co2 the best senior management; great SHIFT REBRANDING WITH per month. senior managers inspire top quality When we first invested two years ago, SUSTAINABILITY hires in their own departments. momox had yet to place sustainability Our sustainability initiatives made at the core of its value proposition. sense both for the value of the DEFINING THE momox’s mission has always been to company and for consumers TARGET MARKET give second hand items a new home, identifying with the brand. momox Today, Nuxeo focuses on two key areas: but at the time of our investment, the conducts a regular customer service the first of these is digital asset company emphasised affordability survey to better understand its management, particularly for companies over circularity as the primary reason customers, and at the time of with fast product life cycles such as to buy its products. There were also a investment, the most important reason media, fashion and consumer electronics. number of baseline initiatives that by far for why customers chose momox These businesses use images or video as needed to be put in place to make the was affordability. A few months ago, a key part of their accelerated product business as a whole more sustainable. after a lot of our changes were made, life cycles, from product development To drive the change, we realised we our monthly customer service surveys through to customer experience. needed to make some far-reaching started reflecting that the most The second area of focus is changes to the board and to the important reason that consumers shop Enterprise Content Management. For organisation. We brought in new with momox is because it’s the easiest example, financial institutions have to members to the board who could way to sell and shop sustainably. ● retain and manage enormous amounts

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Tekman Education MIURA PRIVATE EQUITY Carles Alsina, investment director

Tekman is an innovative educational Spain are received extremely well in service provider headquartered in Latin America. We launched Barcelona, Spain. It develops and operations there with the opening of 2x provides K-12 schools with education our office in Mexico, where we Increased programmes and academic solutions, experienced great interest for company predominantly in the language and Tekman’s differentiated methodology revenues by mathematics areas. When Miura and approach. Besides Mexico, where c.2x. invested in 2016, the market was there is an enormous growth potential, completely dominated by traditional we also also established a market publishing houses delivering typical presence in Ecuador, Chile and programmes and textbooks that aren’t Argentina. 500 too different to those students had Onboarded Outright Games back in the 60’s and 70’s. Miura DIGITAL EDUCATION more than 500 Private Equity identified Tekman EMERGENCE new schools ROCKPOOL INVESTMENTS Education as an opportunity to invest When we invested, there wasn’t an since investing. Ben Hutchinson, investment manager in an extremely enterprising and online programme that covered or met flexible company, with a unique and up with the school academic refreshing approach to multiple curriculums in Spain or Latin America, % Outright Games is a global publisher of recognised an opportunity to enhance disciplines and study areas. so we identified these needs and the 94 video games, making family friendly the financial expertise and strength in emergence of these trends and Tekman interactive entertainment with the the core management team with the 25 INCREASED PRESENCE IN decided to develop Onmat, a fully maintained a biggest franchises in the world. The introduction of a high-calibre CFO Global SCHOOLS digital math programme for secondary 94% client company’s core focus is on creating with significant gaming sector distribution Throughout our markets we identified education. In addition, the work we renewal rate. quality games based on well-known experience. We were also able to network grew a huge opportunity to increase put into digitalisation of our education brands or characters, including Paw introduce an industry expert as non- to 25 countries. Tekman’s presence in schools, through programmes, as well as our company’s Patrol, Ice Age and Jumanji, from executive chairman, also with strong product development and operations has proven totally global entertainment companies such financial acumen. partnerships with our school clients. successful, more so with Coronavirus. as Cartoon Network and DreamWorks. We don't simply sell a product, we Indeed, Tekman’s schools have been Rockpool supported Outright Games DIGITAL EXPANSION 18 provide a service partnership. We are able to continue with their lessons from the very beginning, providing Growth to-date has been largely due to Product very close with our schools, we work to without significant impact. Since growth capital to an already successful an expanding portfolio of core PC and portfolio help them tailor and implement these March 2020, more than 60,000 and ambitious management team in console video games. We expect this expanded programmes, we coach them and teachers have signed up to our online 2016, with the aim of establishing a growth rate to be accelerated as to 18 video support them as they transform their training webinars to help them with highly skilled, niche leader within the Outright use new digital channels, game titles. schools and curriculums. We the ‘new normal’. fast-growth gaming sector. such as subscription and streaming envisioned to maintain Tekman’s Since our investment and thanks to services, to exploit their existing dominant position in the innovative these organic growth strategies, REINVESTING FOR portfolio of games, and the business educational space. Tekman has increased revenues by 2 RAPID GROWTH creates content for the adjacent £6.5m times, started operations in four new In the beginning, the strategic mobile gaming market. We have Raised net LATAM EXPANSION Latin American countries, onboarded direction was clear: use Rockpool’s invested heavily in our in-house profits to a As a Spain-based education provider, more than 500 schools, achieved a 94 growth capital investment and cash capability to benefit from the trend forecasted we understand the Spanish speaking per cent client renewal rate and tripled generated from trading to launch a within the gaming sector towards the £6.5m in 2020. market and education systems the businesses staff headcount to 150 portfolio of video games to the PC and digital distribution and consumption intimately. Education products from people. ● console markets. This strategy of of gaming content. We also launched continuous re-investment in future Outright’s first mobile product to growth put the company on an market in September 2020. exponential growth curve, as the Investment in a broad, international number of titles and their associated network of brand owners, developers revenues increase each year, alongside and distribution partners has also been growth in sales from the expanding a key component of Outright’s organic back-catalogue. growth strategy. This has been The size of the current portfolio particularly beneficial at underpinning launched will be 18 titles by the end of growth with new title opportunities the current financial year, including 6 and lowering the cost of launching a launched post the outbreak of Covid- title to market, increasing achieved 19. However, the rapid pace of growth gross margins. Outright has expanded created challenges, especially in an its global presence to help service this industry where development and cash network, opening offices in Los investment has to happen up to 24 Angeles, London and Madrid, which months before titles are launched to are complemented by a global market. distribution network in over 25 In order to achieve ambitious countries. By following a clearly growth targets, tight cash management defined organic growth strategy, the and project forecasting accuracy was business has grown substantially since key to ensuring the company did not we invested. It is forecasting net profits over-trade. As part of this, we of over £6.5m in the current year. ●

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LP CORNER ALEX HUTTON-MILLS Managing Director, Lincoln Pensions Lincoln Pensions managing director Alex Hutton-Mills discusses missed M&A risk in carve-out transactions and the impact on DB pension schemes.

By Talya Misiri

In the current macroeconomic transferring the liabilities to a third environment, carve-out M&A party. In the recent acquisition of has resurfaced as a theme for Asda by TDR Capital and the Issa corporates and private equity brothers, Asda was sold pensions-free companies alike. Why is this as the pension scheme had been happening now? transferred to an insurer prior to the Historically, private equity firms auction process. Market innovation, would buy non-core assets from large including DB pension scheme corporates, polish the acquired consolidators and other similar business unit and then look to exit, options, should provide more options having created value. to facilitate carve-out M&A activity. Management teams in corporates With the Pension Schemes Act, will assess their business units and trustees will have a seat at the table consider what M&A opportunities for material transactions given the may arise from time to time. This need for the new notification picture and decisions around requirements that will come into play. managing a portfolio of business units tends to become much clearer during How can carve-outs be macro-economic downturns. In the managed to ensure pensions present circumstances, because of are not impacted and all Covid-19 and the related parties are content? macroeconomic downturn, business The trustees of the target pension units that may have potentially been scheme need to understand how considered marginally non-core, will strong the employer covenant is likely have become more clearly pre-transaction and what impact the non-core and a source of potential covenant (or credit strength) where the process fails because of the transaction may have...to determine liquidity. This will present supporting the scheme. Moreover, as DB scheme. Accordingly, you need to whether mitigation is required to leave opportunities for private equity firms DB schemes are typically seen as a use your negotiating leverage to set the scheme no worse off post-deal. with dry powder to look at carve-outs “debt-like” item for purchase price the agenda of whether to have the DB If you’re the seller, you need to for these non-core assets. We adjustments in M&A transactions, the pension scheme liabilities transferred make sure that you structure things in therefore think there’s likely to be combination of the above ingredients with the business unit or retained with a way where you are comfortable with more activity with carve-out M&A as could, on the face of it, have a more the residual group. the likely outcome for the scheme and PE firms focus on portfolio prominent impact on value. The As a buyer, it goes without saying the valuation impact of transferring all management more actively. pension scheme could, therefore, that your preference would be to buy /part of the scheme with the non-core complicate the deliverability of an asset as cheaply as possible and to asset or leaving it behind with the How are DB pensions non-core carve-outs. Buyers need to minimise the liabilities assumed as residual group. One often overlooked considered when executing be more alive to DB pension scheme part of that transaction. The extent to aspect is making sure that you are carve-out deals? issues when thinking about what which a buyer will be comfortable clear whether bidders will have a clear Covid-19’s impact on the broader presents itself as an opportunity in assuming pension scheme risk will understanding of the potential impact macroeconomy has generally affected carve-out M&A, either for PE or by PE. therefore be a factor in the decision to of the scheme on the auction process both funding levels of DB schemes participate in an auction process. and value. It can make sense to weed and the sponsors supporting those What are the risks to pension Notwithstanding the advent of the out bidders who clearly don’t schemes. Some sectors, e.g. retail, schemes in a carve-out Pension Schemes Act (when it comes understand the potential impact of casual dining and transportation, have situation? into force end-2020 / early 2021), PE pensions on the deal. This should been affected more than others. The This will depend on the relative size does not need to fear businesses that improve the chances of a successful, UK Pensions Regulator has also been and importance of the scheme and support DB pension schemes. deliverable transaction. advocating more prudent funding the negotiating leverage of the seller Investors must go into those Finally, as a buyer, you need to targets for schemes and new and potential buyers. If you’re the situations with their eyes open and understand what pensions and other legislation in the form of the Pension buyer, you would rather take the have clear views, based on pragmatic risks you may be taking on; factor the Schemes Bill has also complicated the business without the pension scheme advice, whether they are able to pension scheme into your pricing picture for deal-doers. in ordinary circumstances. However, manage the pension scheme risk and considerations and include pensions For schemes that are sponsored by the seller may not be willing to sell on accrete value during their hold. in your exit considerations to force multiple employers in a Group, that basis – and the least desirable Depending on the circumstances, a you to plan how you will manage that carve-out M&A could have an impact outcome for a seller will be a failed seller may be able to take actions to DB scheme risk during your holding on the strength of the employer auction process for a non-core asset, maximise the exit value – for example, period in preparation for an exit. ●

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RD471-34.indd 34 23/10/2020 12:53  / realdealseucom Q &A OLIVIER BERTRAND Private Equity Tax Partner, EY Luxembourg EY Luxembourg’s Olivier Bertrand discusses the changing international tax landscape in Luxembourg and what PE funds need to know about it.

By Talya Misiri

Base erosion and profit both of these hallmarks being subject shifting (BEPS) has rapidly to an additional main benefit test moved to the implementation where it should be assessed if one of phase. What does this require the main purposes of the transaction PE funds to do exactly and is to derive a tax advantage. Missing a how can EY help? filing obligation may lead to penalties There has certainly been a couple of which are likely to be around developments including BEPS, ATAD €250,000. I and ATAD II. BEPS has led to the In July 2020, Luxembourg signature of the Multi Lateral introduced a six-month deferral with Instrument (MLI) with one of the respect to the MDR filing obligations. main impacts on private equity being In difficult times, reducing the the Principal Purpose Test, an administrative burden on taxpayers is anti-abuse measure under which the very welcome by the industry! benefit of a double tax treaty can be Interestingly enough, this denied to a company if it has been postponement was very timely and established with the main purpose of enabled managers to avoid the burden deriving a tax benefit. of reporting transactions in the In addition to withholding tax on Cayman Islands without additional dividend and interest, asset managers main benefit test, as Cayman was should also consider potential black-listed until very recently. non-resident capital gain tax when they exit an underlying asset. With Overall, what are the key risks year-end coming close, some of those that have to be considered by risks might even lead to tax accruals private equity when reviewing in the scope of the 2020 audit; the a company following the first year of effectiveness of the PPT. order to mitigate any exposure in to a fund that it considers to be tax changes in the international Asset managers are also impacted terms of double / triple taxation. transparent, such payment might not tax landscape? by ATAD I, introducing an interest be deductible if it is received by an Since 2019, the additional tax risks we limitation rule under which the tax With the recent investor (through the transparent just discussed have to be taken into deduction of interest expense is implementation of ATAD II, fund) which considers the same fund consideration, if not accrued in the generally capped at 30% of the what should alternatives as opaque and therefore does not scope of the audit. EBITDA. managers be aware of? What include the payment in its taxable But let’s rather address the very In practice, asset managers more does the ATAD II basis (so-called deduction non positive answer that over the last few investing into distressed assets outline that GPs should inclusion outcome). years, asset managers have been should consider a particular risk of consider and when? massively hiring in Luxembourg and non-deduction of interest expense if For asset managers and PE houses, The Luxembourg Ministry of setting-up high standard the income they realize does not two particular measures are of Finance has called for a draft infrastructure with skilled back- qualify as interest income for tax particular importance: the hybrid law introducing a six-month office, middle-office and front-office purposes as this would trigger the instrument mismatch and the hybrid deferral to the MDR Law (Law employees strongly substantiating application of the interest limitation entity mismatch. of 25 March 2020). Why and the use of intermediate holdings with rules, i.e. taxation of a larger portion of While the hybrid instrument what does this mean for funds solid commercial rationale (risk capital gain. mismatch refers to instruments that domiciled in Luxembourg? fencing, external lending, exit Whether fair or not, everyone has a have different qualifications in 2 What does the Law require? strategy, co-investment, management view, but taxation is generally different jurisdictions, the hybrid Under the MDR Law, cross border incentive plan, etc.). happening at the level of the portfolio entity mismatch is more difficult to arrangements should be reported if We have also seen an exponential companies and underlying asset and address and relates to the difference they contain at least one of the increase in the number of such taxation is most probably already in qualification of entities, but both indicators (called “hallmarks”) set out Luxembourg funds and alternative embedding the new tax restrictions measures aim for the same result - by the Directive. investment fund managers, giving and anti-abuse measures (ATAD, the non deductibility of payments For private equity houses, the most even more purpose to the BEPS, etc..). that are not taxed in a timely manner likely hallmarks to consider would be Luxembourg tax operations as it My view is that in the alternative at the level of the investor. transactions with low tax makes it more obvious to set-up your investment world, the investment For example, if an intermediate jurisdictions, and transactions where holding entities in the country where structure should remain tax neutral in holding company makes a payment income might be turned into capital, your fund is established! ●

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RD471-35.indd 35 23/10/2020 12:54  / realdealseucom Deals in brief

TRANSPORT, POLAND Aurelius will work to build on the Target PEKAES business by exploring further sector Out Innova Capital consolidation and leveraging its operational expertise. Innova Capital has sold its stake in Aurelius was advised by Rothschild logistics operator PEKAES to sector & Co (financial), Goodwin Procter player GEODIS of France. (legal) and KPMG (tax). Based in Błonie, in central Poland close to Warsaw, PEKAES provides PHARMA, FRANCE logistics services and a general cargo Target H2 Pharma network in Poland, with 20 national In Ardian distribution terminals. Under Innova’s holding, PEKAES Ardian has taken a minority stake in underwent a transformation and H2 Pharma, a French developer and expansion in the Polish and producer of generic drugs. international logistics market. The Established in Ile-De-France in business has transformed from a 2009, H2 Pharma is a player in the traditional road transportation production of non-sterile prescription business into a modern, competitive and non-prescription liquid logistic-intermodal business, meeting pharmaceuticals. The company’s international standards. automated production processes has In this time the business saw an Cinven, Permira and Mid Europa allowed it to continue to grow Ebitda rise of over 100 per cent. The competitively in its operating markets portfolio company’s growth and complete 2020’s largest European IPO and strengthen its strategic success attracted the interest of buyer positioning. GEODIS. Online marketplace Allegro’s debut on the Warsaw Stock Exchange has Ardian’s backing will allow H2 Pharma to consolidate its share of the TRANSPORT, HUNGARY seen the PE-backed Polish ecommerce platform rocket to a $17.7bn European market and diversify its Target Waberer’s International offering with expansion into other Out Mid Europa valuation. This is Europe’s biggest IPO so far this year. PE owners areas of growth, such as regulatory A EY affairs and quality control. CF Rothschild & Co Cinven, Permira and Mid Europa priced the IPO at the top end of a L White & Case, Lakatos, Köves és Társai FINANCE, SPAIN marketed range, capitalising on trends in online shopping. The deal is Target Indigo Capital CEE-focused private equity house Mid In Alantra Europa Partners has agreed to sell 24 expected to bring Europe's IPO market back to life, following a lacklustre per cent of its equity in Waberer’s Madrid-based GP Alantra has International to Trevelin Holding, a period of listings last year. Allegro's IPO follows a number of other tech acquired a 49 per cent stake in pan- member of Indotek Group. European private debt asset manager The deal has also granted a call IPOs to have priced this year in Europe and the US. Cinven, Permira Indigo Capital. option to Indotek over Mid Europa’s The investment will further remaining 47.99 per cent share capital. and Mid Europa acquired the company for $3.253bn in October 2016. In diversify Alantra’s offering while The transaction is subject to strengthening Indigo’s position in the customary anti-trust clearance and is three years the ecommerce group has demonstrated significant cash European sponsorless market. expected to close by the end of the Indigo backs companies valued first quarter 2021. generation and scale, with annual GMV and net revenue reaching between €20m and €300m, and has Rothschild & Co acted as exclusive completed investments in France, the financial adviser to Mid Europa. White approximately 25 per cent and over 30 per cent growth, respectively. UK, Italy, Switzerland and the & Case with the support of Lakatos, Netherlands. With offices in Europe, Köves és Társai acted as legal counsel Goldman Sachs, Morgan Stanley, Barclays, Bank of America, Citigroup, Asia and the Americas, Alantra is and Ernst & Young as transaction seeking to expand its European services adviser for Waberer’s. Santander and BM PKO BP organised the Allegro flotation. footprint and the firm also partnered with Spanish insurer Grupo Mutua MANUFACTURING, THE earlier this year. NETHERLANDS headquartered in Milsbeek, (commercial), AlixPartners The non-core GKN division Following the completion of the Target CNC Holding Netherlands, CNC serves markets in (operational), ERM, Marsh manufactures off-highway wheels and deal, Alantra will have more than €1bn In Sun European Partners 45 countries. The company benefits (insurance), and Royal provides innovative engineering of assets under management. A EY from recurring earnings due to its HaskoningDHV (technical). CNC was solutions. The company’s global C PwC established and diversified customer advised by EY (M&A and financial), footprint provides Aurelius with a ENVIRONMENT, UK CF ING, Rothschild relationships, significant barriers to AKD (legal) and Custom strong platform for future add-on Target ClimateCare E ERM entry, substantial historical Management. acquisitions. The UK-headquartered In Averna Capital M AlixPartners, Custom Management investments, unique know-how and company currently employs around A KPMG I Marsh high-quality product. MANUFACTURING, UK 900 people worldwide with four CF Many Waters L AKD With Sun European Partners’ Target GKN Wheels & Structures manufacturing facilities in the UK, D Bridgepoint Credit T Royal HaskoningDHV backing, CNC has ambitions to grow, In Aurelius USA and Denmark. L Ropes & Gray, Dickson Minto, and develop and transition to the next A KPMG In the coming months, Aurelius Mourant, Linklaters, Clifford Chance Sun European Partners is set to level through international expansion. CF Rothschild & Co will support GKN Wheels & acquire CNC Holding, a European Sun European was advised on the L Goodwin Procter Structures’ carve-out from GKN, Averna Capital, a mid-market producer and supplier of substrate for transaction by ING (M&A), DLA ensuring continuity in day-to-day European private equity firm, has mushroom cultivation. Piper (legal), Rothschild (financing), Aurelius has carved out GKN Wheels operations and a new brand name as taken a majority stake in ClimateCare, Established in 1953 and EY (financial and tax), PwC & Structures from GKN. a standalone entity. a profit-with-purpose environmental

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RD471-36-37.indd 36 23/10/2020 12:58 KEY: D Debt MZ MEZZANINE NC NEWCO B BROKER CF CORPORATE FINANCE L LEGAL A ACCOUNTING C COMMERCIAL T TECHNICAL MG MANAGEMENT I INSURANCE P PROPERTY A round-up of deals om the past few weeks. EV ENVIRONMENTAL

and social impact company. The business now has a 800-strong entities operating in the e-commerce actively support customers on their independent Contact Centre as a Founded in 1997, the Oxford-based workforce and has focused on industry. The company said its goal is fitness journey. Service (CCaaS) platform. company has a focus on projects that organic and external growth in to reach new market segments with the Market share of the company in MaxContact is an independent reduce carbon emissions and fund recent years, with the acquisition of Apaczka.pl platform. the owner managed segment is set to challenger brand in the CCaaS market, social development. ClimateCare 15 companies. The business is expected to benefit increase due to the business being with clients in the BPO, financial provides businesses and governments Following the acquisition, Syclef from the ongoing growth of well positioned with headquarters in services and utilities verticals. with carbon offset services, aims to work with Ardian to continue e-commerce spending globally. Worsley, Greater Manchester, and Ben Booth, CEO, and the wider sustainable development programmes its consolidation effort in its market Transaction advisors on the sell with its best in class SaaS platform. management team have developed the and environmental and social impact segment. side were PwC (M&A lead advisor) The investment will be used to MaxContact product in recent years measurement. During Latour Capital’s ownership, along with GKW and Gessel (legal accelerate the company’s and have each invested alongside FPE. Averna Investment Company is the the group introduced a new senior advisors). On the buy side were EY international expansion through The deal marks the first outside new majority shareholder in the management team, tripled in size and (financial and tax due diligence), strategic industry partnerships along investment in the business and sees a business. It's investment and made 15 acquisitions. OC&C (commercial due diligence) with their focus of serving the owner full exit for the founder family knowledge base will further accelerate and Norton Rose Fulbright (legal managed segment of the market. shareholders. the company’s growth, impact and TECHNOLOGY, UK advisor). Maven was given legal advice by FPE was advised on the transaction capacity to work closely with customers Target MTI Pannone, financial due diligence by Stephenson Harwood (legal), on meeting climate responsibilities. Out Endless INSURANCE, NETHERLANDS advice by Hurst, commercial due Altman Vilandrie (commercial), Dow ClimateCare’s founder investors L Walker Morris, Squire Patton Boggs Target You Sure diligence advice by Luminii Schofield Watts (financial and tax), will remain significant shareholders In IK Investment Consulting, IT due diligence advice Intechnica (technical DD), and partners in the business. Averna Endless has completed the sale of Out Synergia Capital by Intechnica and management due Continuum Ventures (management) was advised on the investment by MTI Technology Group (MTI), to diligence advice by Argyll Fenton. and Sales Blueprint (sales). KPMG, Ropes & Gray, Many Waters, Ricoh Europe. Pan-European GP IK Investment The management team was Dickson Minto and Mourant. MTI is a specialist IT solutions Partners has acquired a majority stake MANUFACTURING, FRANCE advised by Mazars and JMW. The ClimateCare was advised by provider that assists organisations to in You Sure from Synergia Capital Target Kersia selling shareholders were advised by Michel Dyens & Co., Linklaters and transform their IT operations by Partners. In IK Investment Gunnercooke and Pierce Corporate Smith & Williamson. Debt was leveraging the latest technologies. The Dutch insurance distribution Out Ardian Finance. provided by Bridgepoint Credit who The business has operations across platform operates primarily in the A KPMG, Eight Advisory were advised by Clifford Chance. the UK, Germany and France. property and casualty segment, CF Amala Partners, Sycomore, Marsh ENGINEERING, US Endless acquired MTI in serving over 60,000 customers. To L Willkie Farr & Gallagher, Latham & Target ANGUS Chemical MANUFACTURING, December 2016 from US-based date, 35 insurance portfolios have Watkins, Arsene Taxand In Ardian SWITZERLAND private equity firm Garnett and been added to You Sure’s proprietary M Bain & Company CF Citi and Guggenheim Securities, Target Roth Group Helfrich Capital. platform. T Aecom Morgan Stanley, JPMorgan In Patrimonium Private Equity The combination of the businesses The deal marks an exit for Synergia L Latham & Watkins, Kirkland & Ellis and Out Equistone Partners Europe will expand Ricoh’s IT Services Capital after acquiring the company IK Investment Partners has entered Nob Hill Law capabilities across Europe. in March 2019. into exclusive negotiations with Ardian Patrimonium Private Equity Fund has MTI will continue to operate Following the transaction, the to acquire a majority stake in Kersia, Ardian has acquired a 50 per cent acquired a majority stake in Roth Group, under its existing name as a separate company’s co-founders will reinvest the French food safety company. stake in ANGUS Chemical Company a provider of structural fire protection, Ricoh entity. in the business to support further Under Ardian's holding, Kersia from Golden Gate Capital at an technical insulation and coatings. Endless and the management team growth. was formed as a new company in enterprise value of c.$2.25bn. This deal is set to create synergies were advised by Walker Morris and 2016 after Hypred acquired US private equity firm Golden Gate for both partners, and Patrimonium’s Squire Patton Boggs. Antigerm, LCB Food Safety, G3, Capital, which initially acquired financial strength as a Swiss For information Kilco, Choisy Laboratories and ANGUS in February 2015 from The independent alternative investment TRANSPORT, POLAND on every private Holchem. In that time, the company Dow Chemical Company, will retain a management company will support Target R2G Polska tripled in size. 50 per cent stake in the company. targeted investments in future growth. In Abris Capital equity firm’s The transaction remains subject Ardian said it expects the sale to Roth Group shares will be bought by A EY portfolio, to the approval of antitrust close by the end of 2020. Patrimonium from Equistone Partners C OC&C authorities. Founded in 1935, ANGUS is the Europe, while the existing minority CF PwC please visit: Advising IK on the transaction world's only company dedicated to shareholders, which consist of Roth L Gesse, GKW, Norton Rose Fulbright realdeals.eu.com was: Amala Partners, Willkie Farr & the manufacture and distribution of Group employees, will stay the same. Gallagher, Bain & Company, Eight nitroalkane. Its solutions are widely With Patrimonium’s backing the Abris Capital Partners has acquired Advisory and KPMG. used to help combat the spread of business will maintain operational R2G Polska, an e-commerce delivery Advising Ardian was Evercore, Covid-19, including hand sanitizer continuity while implementing provider operating under the Apaczka RETAIL, UK Sycomore Corporate Finance, Latham gels, antibody treatments and sustainable growth strategies. brand in Poland. Target Membr & Watkins, Bain & Company, vaccines. Financial terms of the deal were In NPIF/Maven Accuracy, Arsene Taxand, Aecom, During Golden Gate’s ownership, CONSTRUCTION, FRANCE not disclosed, but it is understood A Hurst Marsh and Indefi. the firm made significant investments. Target Syclef that Abris typically makes transactions C Luminii Consulting Ardian plans to further accelerate the In Ardian between €30m and €75m. I Intechnica TMT, UK company’s growth through the Out Latour Capital Headquartered in Warsaw, Apaczka L Pannone Target MaxContact implementation of a buy and build functions as a technology platform and M Argyll Fenton In FPE Capital strategy. Ardian has acquired a majority stake, an integrator, offering shipment services A Dow Schofield Watts, Mazars Citi and Guggenheim Securities alongside the management team, in for e-commerce stores. Apaczka The Northern Powerhouse Investment C Altman Vilandrie LLC are serving as financial advisors refrigeration business Syclef, from supports companies in the Fund (NPIF) - Maven Equity Finance, CF Pierce Corporate Finance. to Ardian and Latham & Watkins is Latour Capital. development of their business, has invested in fitness platform L Stephenson Harwood, Gunnercooke, serving as the firm’s legal advisor. Latour Capital has exited its stake providing professional tools to facilitate Membr. JMW Morgan Stanley & Co., LLC and in the company after its initial daily logistics. The company achieved The cloud-based fitness software T Intechnica JPMorgan Securitiesare serving as investment five years ago. revenues exceeding €30m in 2019. solution has created a simple and M Continuum Ventures, Sales Blueprint financial advisors to Golden Gate Founded in France in 2003, Syclef With the support of Abris, R2G plans efficient digital platform. Capital. specialises in the installation and to drive the growth of the business It gives gym owners the ability to FPE Capital has financed the Kirkland & Ellis and Nob Hill Law maintenance of industrial and further through the development and manage membership whilst also management-led acquisition of Group, P.C. are serving as the firm’s commercial refrigeration systems. implementation of new solutions for allowing their personal trainers to MaxContact, a Manchester-based legal advisors. ●

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RD471-36-37.indd 37 23/10/2020 12:58  / realdealseucom PEOPLE

RIVERSIDE Pereira-Ambrosio will further and deliver greater sustainability UK and deepen the firm’s investments. Before that, he served of its Manchester office, to lead consolidate Alantra’s position as performance. relationships with institutional as an investment analyst at the growing team. Riverside Acceleration Capital a leading independent equity Bezuidenhoudt joins Earth investors in the UK. Avenue Capital Group, specialising Reed joined GCA Altium in (RAC) has appointed two new franchise in Iberia, focusing on Capital with over 25 years of Having joined Tikehau in distressed investments. 2000 as a graduate and has been team members in Cologne, increasing the firm’s market experience in investment, Capital in 2015, Alonso has Lahuerta’s appointment managing director at the firm Germany. share across the ECM spectrum, portfolio management and spent the past five years comes a few months after the since 2012. He specialises in Partner Christian Stein with a special focus on the small corporate finance advisory. Her building the firm’s presence in firm raised €120m for its third technology focused transactions. and associate Michael Aring and mid-cap space. career has focused on high- Iberia, establishing the firm’s special situations fund that will GCA Altium’s Manchester join the firm. The pair will both He will also be responsible growth technology businesses regional office in Madrid, invest in Spanish and team comprises 21 professionals, be responsible for sourcing for further developing the firm’s and private equity technology building a team covering all Portuguese companies facing one of the largest dedicated investments, executing presence in the sponsored transactions. Prior to joining investment strategies and transformation situations. M&A advisory teams outside of transactions and working with research and corporate Earth Capital, she was a senior growing Tikehau Capital’s At Sherpa, he will be London. In his new role, Reed portfolio companies, further brokerage business, this goes fund manager at the FSE Group. offering to Iberian institutional involved in investing the special will lead the team through the expanding RAC’s presence in beyond the stock exchange Crook brings 18 years of investors. She started her situations fund. Sherpa Special next phase of growth. Europe. extending into the BME growth experience in clean technology career in 1996 in the leverage Situations III plans to make Reed, who currently sits on RAC provides flexible growth segment and Euronext, and sustainable finance. He has finance departments of UBS between 8 and 10 investments, the GCA Altium European capital to expansion-stage B2B leveraging on Alantra’s business previous experience in impact and has worked in investment writing equity tickets of Strategic Board, is to join the software and technology knowledge and track record in investing at Greensphere banking at Morgan Stanley, between €10m and €25m, in firm’s UK board as a director. companies through an additional geographies. Capital, where he was an Merrill Lynch and HVB. She companies of different investment structure that The new managing director operating partner, and has also also gained corporate economic sectors with turnover MCDERMOTT WILL & maximises alignment while has 15 years of experience in worked in senior roles at Grant experience managing GSK’s between €20m and €300m. EMERY minimising dilution. the investment banking sector, Thornton and ExxonMobil. Corporate Finance activities Stein joins with experience successfully giving advice on globally. ID REGISTER McDermott Will & Emery has investing in expansion-stage over 30 transactions worth TIKEHAU Cirenza has led Tikehau made the senior appointment software and technology more than €15bn, including Capital’s UK office for four years, Stuart Layzell has been of Arvin Abraham in its global companies and in 2015, he IPOs, capital increases, M&A Tikehau Capital has made two contributing to the development appointed chairman of The ID corporate practice in its London constructed a €275m software and debt capital advisory. new appointments, marking the of the firm’s private asset Register. office. and technology investment next stage in its UK growth strategies in the region. He has He was previously the CEO Specialising in fintech and fund. He co-led the fund as EARTH CAPITAL strategy. Carmen Alonso more than 30 years’ experience at Ocorian, a global fund, corporate transactions in the managing director. becomes head of the UK and in the finance industry. corporate and private client UK and across the globe, Aring graduated from Earth Capital has strengthened Peter Cirenza has been Tikehau Capital opened its services firm. Abraham has deep knowledge University College London its European investment team, promoted to chairman of the London office in 2013 and Layzell has international in the regulatory landscape for (UCL) with a Master of Science Earth Capital Europe, and has UK, as well as chairman of currently relies on more than 50 experience in regulated financial institutions including degree in Computer Science. He appointed two new investment Tactical Strategies. professionals locally. businesses across both fund banking, payments and digital was also previously an directors in the UK, Avent In addition to her administration and wealth assets. investment professional in Bezuidenhoudt and Simon responsibilities in the Iberian SHERPA CAPITAL management. In addition, he Abraham will play a leading venture capital and is interested Crook. market, Alonso will now previously supported PE-backed role in developing the firm’s UK in alternative startup financing. Bezuidenhoudt and Crook oversee all investment strategies Sherpa Capital has named businesses, helping them to fintech practice. He joins from will join CEO Gordon Power and and capital raising for Tikehau Isaac Lahuerta as an start operating on an HSBC where he was a director ALANTRA investment associate Joshua Capital in the UK, which investment director in its international scale, particularly on the global banking division Hope, to make new investments includes private credit, real special situations team. in the technology sector. management team. Alantra has appointed André from the Nobel Sustainability assets and private equity. She Lahuerta joins with over five Prior to that, he held Pereira-Ambrosio as Fund. They will also work with will be running the UK office years of experience, most recently GCA ALTIUM management roles at Morgan managing director of Alantra’s NSF portfolio companies’ alongside Cirenza. The new working as principal at private Stanley and worked as an equity capital markets (ECM) management teams to team will bolster fundraising for equity firm BTC where he led GCA Altium has appointed attorney at Sullivan & Cromwell activity in Iberia. implement their strategic plans every strategy deployed in the special situations debt and equity Adrian Reed as the new head and Davis, Polk & Wardwell. ●

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GBI_launch-1/4_DPS.indd 6 23/10/2020 15:06 GBI_launch-1/4_DPS.indd 9 23/10/2020 15:11 38

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Vulture Editor Talya Misiri perhaps he could remember to hit mute during Senior reporter Simon Thompson his next indiscretion… or better yet, stay in isolation? Reporter Sam Birchall Reporter Solape Alatise Ego wars Contributor A journalist is nothing without his/her network of Nicholas Neveling contacts and sources, something that we take very Art Director Glen Reynolds seriously here at Vulture HQ. Sometimes, however, maintaining those relationships is easier Publisher Ram Kumar said than done, especially when it involves having Subscription sales director to pander to inflated egos. This week, for example, Steve Walsh saw the old bird try to juggle the competing egos of three rival general partners as they fought for Events director Amber Ward their quote to be the one featured in an upcoming Real Deals Media Limited story. Absorbed by their grandiosity, the old bird Moor Place, 1 Fore Street, London, watched in horror and fascination as three EC2Y 9DT sophisticated and talented dealmakers transformed into squabbling children. Oh how Real Deals is available via subscription the mighty have fallen… ● for £1,395/€1,865 a year.

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Real Deals is published by Real Deals Media Limited. All rights reserved. The views expressed by contributors and correspondents are their own. Reproduction in whole or in part without written permission is strictly prohibited. Colour transparencies, manuscripts or disks submitted to the magazine are sent at the owner’s risk; neither wrongdoing or inappropriate conduct,” the CEO the company nor its agents accept any responsibility Stock scandal stated. The old bird has a feeling his LPs might for loss or damage. Unsolicited material should be accompanied by a stamped addressed envelope. A new day and another fresh scandal in the world need a little more pursauding... Print, reprographics and production managed by of private equity. This time its Apollo’s stocks that Full Spectrum Print Media. ISSN 2049-6567. have taken the brunt of a scandal involving the firm’s CEO Leon Black and convicted sex Diva dealmakers offender, Jeffrey Epstein. Apollo’s stock dropped In true dealmaker-fashion, a certain managing nearly 6 per cent last week after The New York partner took the time to squeeze in a quick call Times reported that Black had wired Jeffrey with Vulture whilst riding in the back of a London Epstein $50m for consulting fees and a charity cab. In the fast-paced game of buyouts, this donation. What’s worse, the payments reportedly practice is relatively commonplace. But this time came after Epstein had pleaded guilty to soliciting Raptor got more than the typical “exclusive” when prostitution with a minor. And you wonder why the dealmaker abruptly stopped the call midway the buyout industry has such a bad rep? Black is through and started arguing with his driver. Being convinced he’s done nothing wrong. “There has cooped up inside during lockdown obviously never been an allegation that I engaged in any hadn’t been good for this hot-headed partner, but

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RD471-38-39.indd 39 23/10/2020 15:18 THE P R I VAT E EQUITY AWA R DS 2020

Recognising the best in European Private Equity 03 November 2020 - Livestream

This year’s ceremony will take place virtually on 3 November 2020. Host Martin Bayfield, former England rugby forward, and current actor and TV presenter, will announce and recognise the winners of these highly coveted accolades.

To recognise and celebrate the success of the industry in 2020, Real Deals will be holding a drinks reception on the 27th April 2021 for all the 2020 Awards winners.

For more information, visit privateequityawards.com, email [email protected] or call +44 (0) 20 7360 3460

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