17 November 2016 realdeals.eu.com

The independent voice of European

Coming to America Cut-throat competition and political upheavel have done little to rein in European private equity’s US ambitions.

P1_RD378.17.11.16.Cover.indd 9 11/11/2016 15:43 A Different School of Thought.

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Baird Capital Partners Limited are authorised and regulated in the UK by the Financial Conduct Authority. (Registered number 150154) ©2016 Robert W. Baird & Co. Incorporated. Member SIPC. MC-47235. editorial

issue 378 / 17 November 2016

contents Editorial Nicholas Neveling

04 Alpha Bites First-time funds impress; Britain’s Trumped domestic deal slump 06 e R born in the USA Why European private equity firms are heading stateside Private equity fund structures usually shield it from macro-level shifts, but when the world order is so 10 The exit route trade-off Private equity may have hoards of dry dramatically upended even firms should worry. powder, but trade buyers are putting their money where their mouths are Well, it has been quite the fortnight hasn’t it? Just a few weaknesses, appears to have held up tolerably? 14 Qualitas tries something new months after the the UK voted to leave the European Unemployment in the US, for example, is less than 5 per Union, Donald Trump has won the White House running cent and in the UK joblessness is at an 11-year low. Qualitas is to try its hand at being an a populist, anti-globalisation campaign. There is obviously something that has broken, but LP after raising its first ; Normally private equity, unlike equities, fixed income what exactly? A comment piece in this issue from Investcorp’s seed investment and cash, is shielded from the volatility that accompanies consultant Andros Payne on the idea of secular global events and macro-economic shifts. Firms can stagnation (see page 16) offers one possible explanation. 16 signs of life usually ride out the storm and wait for markets to settle. The argument he outlines is that productivity in ’s float of Convatec The financial crisis is a good example of this. Rather industrialised nations is depressed because of high debt shows that IPOs are still an option; than sparking the buyout bloodbath that many predicted levels, restricted access to education, reduced workforce Andros Payne on what secular the asset class was able to sit tight and come out the participation and growing wealth inequality. According other side – in possibly even better shape than before to sociologist and economist Robert Gordon, these stagnation means for the crash. forces reduce the average historical rate of productivity The US election result, and to a lesser extent the growth from 2.8 per cent to 0.7 per cent a year. When 18 Q&A: Geoff Cook, Jersey Finance Brexit referendum, however, have torn down the world wealth generated by technology companies is Jersey Finance’s chief executive order under which private equity has thrived for so long. concentrated among a relatively small population of tech explains how the fund management Globalisation is a dirty word. Free trade agreements are workers, there is not enough money going around to plug industry is evolving at risk of going out the window. Protectionism and the widening productivity gap. This then leads to a isolationism are the order of the day. painful reset of expectations, as productivity stalls for Bridging the Venture gap For private equity firms that have created so much the first time in more than two centuries and living 20 value by taking their portfolio companies and their own standards stagnate. Take into account the pension time A new fund of funds hopes to build businesses international, the game is changing bomb as baby boomers leave the workforce, and it is the scale the Europe’s fundamentally. And the insurrection is far from unclear where the money to cover all of this is coming industry so desperately needs over either. from. The rise of populism suggests that the re-setting In the Netherlands Geert Wilders’ Freedom Party process is already underway. 22 Deals in brief (which wants to shutdown all Mosques in the country) But as disruptive and worrying as recent events may A round up of deals from the past and in France Marie Le Pen’s Front National (which seem, it is important to pause and take a breath. Tough fantasises about a “Frexit”) are emboldened and soon to times lie ahead, but private equity can certainly adapt to few weeks contest elections. the change. There are consequences for private equity firms The asset class will not be unaffected, but it is less 24 people beyond these macro shifts too. Private equity has never exposed to volatility than, say, equities. In times of Tim Franks will lead KKR’s EMEA been a crowd pleaser and will serve as the perfect target uncertainty investors could well see private equity funds consumer and retail team from for the populists to bash around. On the campaign trail that invest in real assets as the best place to put their February; Zoe Clements to lead Trump pledged to tear down tax breaks. money. Macro shocks may impact private equity, but less Palatine Private Equity’s impact In the UK, financiers and the “liberal elites” were so than other asset classes that don’t have the same investment business constantly attacked by the Brexiteers. micro-focus and long-term activist management style. As private equity and the “establishment” tries to It is also worth remembering that private equity’s come to terms with this huge change (I recall chairing a success has not been built on shifts in forex rates or who 26 A new direction for level 20 panel earlier this year where all the speakers, myself is in office. It success flows from a methodology designed The not-for-profit organisation for included, agreed that Brexit and a Trump Presidency to navigate change. Maybe things won’t be so bad for women in European private equity were impossible), one has to ask why people have been private equity after all. Let’s hope so, but don’t for a has a new chair, a formalised so determined to tear down a system that, for all its minute think it will be easy. structure and bold plans 27 Vulture Tattoos and mid-life crises; Barrack (not Obama) and Trump; dealmakers scraping the barrel For buyout firms that have created value by taking their “”portfolio companies global , the game is changing

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P3_RD378.17.11.16_LeaderKJ.indd 3 11/11/2016 17:01 alphabitesnews Our unique take on industry goings-on.

First-time fund performance shatters long- held assumptions New data shows debut funds have consistently outperformed established vehicles.

Investors have traditionally shied first-time fund, up from 39 per cent in away from backing first-time funds, but 2013, while just 41 per cent would not new data showing that debut vehicles commit to firms raising their first fund, have consistently outperformed funds down by 15 per cent from 2013. run by established managers suggests “Traditionally, first-time funds have that attitudes could be changing. faced difficulties when securing capital Preqin found that over the vintage commitments from investors, due to years from 2000 to 2012 debut vehicles the nature of traditional closed-end posted superior median net IRRs to all fund due diligence which often relies other funds in every year bar 2004. on track record, firm and investment Some years have seen a history,” Preqin’s head of large disparity in terms of investor products Leopold the returns generated by Peavy said. “However, as first-time funds. Among the marketplace 2002 vintage funds, for becomes ever example, first-time 16.9% competitive investors funds saw a median net IRR of first-time funds of 2002 are growing more net IRR of 16.9 per vintage, compared to 10.8% for willing to commit to cent, compared to 10.8 successor funds managers setting out on per cent generated by Source: Preqin their first fundraising successor funds. process. Many investors Preqin’s analysis, which have been rewarded for covered the whole private capital choosing this strategy.” space including private equity, private Old habits, however, die hard. It is debt, real estate, infrastructure and understandable that investors natural resources, is yet another sign committing to ten-year closed-ended that attitudes to first-time funds are funds still place a heavy emphasis on Investors are growing more willing to changing and that performance track record and team stability in their commit to managers setting out on their persistence in alternative assets is not due diligence. Backing new managers, as apparent at it used to be. Investors many of whom are trying out new first fundraising process. Many have been have also warmed to first-time funds as strategies or entering nascent markets, rewarded for choosing this strategy the pressure to find attractive is not without its risks. Evidence of investment opportunities has increased. consistent outperformance, however, A Preqin survey in June found that 51 will certainly offer investors taking the per cent of investors would invest in a leap much comfort.

There have been few asset classes in total seen last year. In the year to the end of Europe that have grown quite as strongly as October just $17bn (€15.3bn) was raised for Debt downturn private debt. At the end of 2006 Europe- Europe-focused debt funds, compared to focused direct lending dry powder totalled an $33bn in 2015. almost insignificant $300m (€267m), This will be the first time in five years that After delivering steady according to Preqin, barely enough to fund fundraising in Europe has dropped. European one or two buyouts. Just under a decade later, debt fundraising had been catching up on the growth since 2010, however, data shows that figure has climbed maturer North American market during the to $29.7bn. last half decade, but the gap is likely to widen The latest batch of statistics from Preqin, again by the end of this year as $27bn has fundraising for debt funds however, suggests that the boom could be been raised by North American debt managers drawing to a close. so far in 2016. Private debt fundraising in Europe is set to “It is unsurprising, given the intensely shows signs of slowing down. fall steeply this year, with the total capital competitive fundraising landscape, that fund raised so far in 2016 reaching only half the managers are having to work harder and

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P4_5_RD378.17.11.16_Alphabites.indd 2 11/11/2016 14:30 Domestic M&A in the UK falls to 30-year low post-Brexit Just $6.1bn worth of local deals have been announced since the vote. In brief For UK general partners hoping that domestic M&A Pemberton closes European activity had avoided the worst of the volatility following the debt fund Brexit referendum, recent deal data from Thomson Reuters Pemberton has closed its European will give pause for thought. debt fund at €1.2bn, beating its The value of M&A transactions in the UK announced since €1bn target. the vote totals $6.1bn, down 62 per cent on the same period in The fund was launched in 2014 and 2015, according to the figures. The drop in deal flow means reached a first close at €547m in July that domestic UK activity is now at its lowest level for this 2015. It has received backing from 27 20-week period since 1986. There hasn’t been a domestic UK investors in Europe, the US and , deal worth more than $1bn during this period for the first time including Legal & General Capital and since 2001. Illinois Teachers Retirement System. This will no doubt be of concern for private equity firms. Through the fund Pemberton provides However, it is important to note that although single data senior debt financing to mid-market points do offer some insight, they need to be taken in context. borrowers with turnover of between Fundraising for UK managers has been steady, with the likes €75m and €1bn. Nearly half of the of Livingbridge and CBPE Capital enjoying straightforward capital has already been invested fund closes even though they were out in the thick of the across 13 sponsor-backed and referendum campaign. sponsorless deals. Thomson Reuters' data also posts a more nuanced picture Pemberton launched a €500m UK debt when inbound and outbound deal activity is taken into account. Though the figures will be of fund in September and expects to Deal value for inbound transactions into the UK may have concern, single data points reach a first close by the year end. dropped, falling 69 per cent to $55.2bn, but the comparable 2015 period included Anheuser-Busch Inbev’s $110.3bn bid for must be taken in context HarbourVest raises $4.77bn SABMiller. Strip out that one-off mega transaction and the for latest secondaries fund comparison is much kinder. Deal and economic data post-Brexit has been mixed, HarbourVest Partners has raised Outbound deals involving UK buyers and targets outside the with good and bad news for UK buyout houses. It will take $4.77bn (€4.31bn) for its latest UK, meanwhile, have increased to $88.5bn, up 59 per cent from time to see exactly what the fallout will be. General partners secondaries fund. the same period last year, and more than any comparable will no doubt be monitoring all metrics closely and hoping The Dover Street IX vehicle surpassed period since 2007. for the best. its $3.6bn target. It is more than $1bn larger than its 2013 predecessor, which secured $3.6bn, and almost $2bn larger than Dover Street VII, which closed at Heavyweight GPs sign up for ILPA reporting template $2.9bn in 2009. HarbourVest’s Dover Street funds cover a range of secondaries investments, Seven buyout houses have signed up was launched in January. The move has and profit allocation accurately reflect, including GP-led restructurings and for the Institutional Limited Partners also been endorsed by 56 LPs, while a in both their structure and magnitude, direct secondaries. Association’s (ILPA) reporting template further 125 ILPA members plan to use it the value created, and be fully on fees, expenses and carried interest. in negotiations with GPs over new fund disclosed,” he said. Better Capital nears , Apollo, commitments in the future. Transparency around fees and Blackstone, CCMP, Hellman & The asset class is “on the cusp of reporting standards came to the Gardner exit Friedman, KKR and Silver Lake have meaningful change that is in the long mainstream when the SEC launched its Better Capital is nearing an exit of its committed to the programme, which term best interests of all industry investigation into private equity in 2014. aerospace components business aims to establish “more robust and participants”, according to ILPA chief KKR, Apollo and Blackstone are Gardner. consistent standards” for fee reporting executive Peter Freire. among the firms to have been fined by In its latest interim report, the and compliance disclosures. “Investors understand that there is a the regulator for instances of malpractice turnaround firm stated that the They join and cost to producing excellent returns – in the last two years. All three have now company has attracted “strong global TPG, who signed up when the template they simply ask that the fees, expenses signed up for the template. interest”. It expects to agree a deal before Christmas. Better Capital backed Gardner, which was previously owned by Dunedin and private debt products Ryan Flanders said. The cooling market for private debt Carlyle, in 2010. It was the firm’s first Preqin says there are currently 74 Europe- fundraising is not necessarily a bad thing. deal, comprising an initial £20m focused private debt funds on the road seeking Although most direct lenders have generally investment. a combined $36bn. Direct lenders account for welcomed new entrants into the market, the majority of funds in market (53 per cent) there have been some concerns that too much LCM Partners closes third bn and capital targeted (52 per cent), with 39 capital in the space is chasing too few deals. credit fund vehicles seeking $19bn. This, in turn, could have an adverse LCM Partners has raised €2bn for its $17 Europe-focused private debt impact on returns, which third credit fund, which comprises a raised for Europe-focused debt funds held $54bn in uncalled historically have been among mix of managed accounts and a funds so far this year, compared to capital commitments as of the best in the commingled fund. $33bn for the whole of 2015 October 2016. This total alternatives space. Sixteen LPs committed to the vehicle, represents a decrease including pension funds and spend longer marketing their funds, and the from the levels recorded foundations from the US, continental downturn in fundraising may act as a sign of a at the end of both 2015 Europe and the UK. changing environment,” Preqin’s head of ($61bn) and 2014 ($55bn).

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P4_5_RD378.17.11.16_Alphabites.indd 3 11/11/2016 14:30 P6-8_RD378.17.11.16_USA.indd 6

features coming to america

By Hannah Langworth American dream North America-focused private equity fundraising A key reason for a European private equity firm to head to the US is that, despite the scale of the Year No. of funds Aggregate capital raised competition, prospects for their businesses 2010 274 $79.6bn 2011 280 $89.1bn taking a slice of a healthy market are good. The US and Europe 2012 351 $96.2bn “There is an immense pipeline of opportunities 2013 424 $178.9bn in the US,” says Vivianne Akriche, managing “”share marked 2014 504 $187bn director in Eurazeo’s new Manhattan office. 2015 456 $194.2bn “We’ve been able to identify several key targets 2016 YTD 385 $157.9bn similarities in in our areas of focus.” Ardian, which recently established a US terms of Private equity-backed buyouts in North America direct private equity investment business through an acquisition, also feels the US mid- everything from Year No. of deals Aggregate deal value market is a rich hunting ground. “Through our 2010 1,513 $123bn 2011 1,843 $133.7bn [US] fund-of-funds practice we had got to know industrial make- 2012 1,994 $157.9bn the mid-market buyout space in the US very well 2013 1,852 $185.2bn and had seen how well GPs can do there 2014 2,134 $188.8bn consistently,” says Vlad Colas, co-head of Ardian up to consumer 2015 2,182 $257.3bn US. An additional driver for the firm’s new 2016 YTD 1,805 $179.9bn venture was its investors’ desire to gain exposure demand to the US buyout space. Ardian’s LPs regard it as Average entry revenue and EBITDA multiples for here are many reasons why a European private offering plentiful targets at slightly more North American private equity-backed buyouts equity firm might choose to not expand into the attractive prices than in Europe, Colas says. US today. First: competition. The North European firms may also be drawn to the US Deal Date Average entry revenue multiple Average EBITDA multiple American buyout market is the broadest and to use their existing European presence and 2010 1.3x 10.5x 2011 1.6x 12.2x deepest in the world. It currently comprises well expertise to exploit trans-Atlantic investment over 2,000 firms, has raised $157.9bn (€142.3bn) 2012 1.6x 10.3x opportunities. “The US and Europe share marked 2013 1.7x 10.8x in 2016 alone, and is sitting on more than $300bn similarities in terms of everything from 2014 1.9x 11.9x of dry powder, according to Preqin. industrial make-up to consumer demand and 2015 1.7x 11.2x Then there are the usual issues associated with 2016 1.9x 10.1x both are huge potential markets,” says Antoine taking a business into a new market – essentially, Drean, chair and founder of placement agent the prospect of increased costs and risk with no Triago. “If you can help European companies tap Number of active North America-based private equity firms guarantee of increased income. Finally, there is into US demand or vice versa you can source (by vintage of first fund raised) the matter of last week’s election of the better deals with more potential, and ultimately controversial Donald Trump and subsequent get better traction with both existing and Vintage Existing firms New firms 2004 1,355 126 concerns about political, economic and social potential investors.” stability. Trump’s campaign pledge to change 2005 1,446 107 This strategy informed 3TS’s decision to open 2006 1,557 129 rules taxing carried interest as a capital gain may its new Washington DC office. “We mostly invest 2007 1,675 141 be of particular concern to the asset class. in enterprise software companies and the US has 2008 1,743 100 However, the past few months have seen a the single largest enterprise software market in 2009 1,770 76 number of European private firms attempt to the world, so it’s pretty clear that we need to 2010 1,750 92 2011 1,763 100 crack the American buyout world. Adopting a bring our companies there,” says managing range of different approaches, Ardian, Eurazeo 2012 1,788 111 partner Pekka Mäki. 2013 1,890 156 and 3TS are among the growing number of Proximity to the very significant US LP base is 2014 1,963 164 European houses that have made moves to also driving forays into the country. “A principal 2015 2,013 133 establish a presence across the Atlantic. But, reason [for a European private equity firm to 2016 2,304 390 given all the challenges listed above, why? establish a US presence] is the fact that the US is 11/11/2016 15:33 P6-8_RD378.17.11.16_USA.indd 7 Reborn in the USA Despite fierce competition and an uncertain political future, European private equity firms are heading stateside. 11/11/2016 15:34

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and the US market is the deepest and most Impact of the liquid investor market in the world. Those strategic considerations don’t really change US presidential because of what’s happening on a short-term election basis in the market,” says Sinha. Turning to investment opportunities, Colas says that “in the long term, we still think the US is one of the most attractive “In the very short-term there is a economies to invest in, and particularly the tail risk from the Trump victory and middle market where there is such a rich there are deals that have gone on density of companies.” He also points out that, despite last week’s developments, hold for the election” Ardian still looks far more favourably on Sunaina Sinha, managing partner businesses in the US market than those in at placement agent and secondary more unstable emerging economies. 3TS’s Mäki also thinks that a Trump market adviser Cebile Capital administration will not affect the fundamental logic of his firm’s investment

strategy. “Companies will need more modern software tools,” he says. “That will continue “As an investor we always follow regardless of what politicians do or don’t do.” any macroeconomic trends very Mäki does note, however, that headline- closely. We started to follow US grabbing events such as a change of president macro trends some time ago may spook LPs and potentially impact fundraising processes. because our portfolio companies While private equity firms with US are very much exposed to the US ambitions must not overestimate political market” threats, they must also be careful not to Vivianne Akriche, managing underestimate the more mundane risks that establishing any new business line poses, director in Eurazeo’s New York which are just as capable of troubling LPs. team Drean highlights the potential for strategy drift. “Moving into new branches of private equity as a part of an overseas move can take up manpower and focus in a way that is often “I try to continue doing the alarming to limited partners,” he says. Sinha, business we are doing regardless meanwhile, flags up people risks, namely of politics. Unfortunately “who the team you recruit in the US is, and how you integrate them into your head office politicians are trying to mess in Europe”. things up everywhere but I’m not Firms concur that these issues must be specifically concerned about what carefully considered and addressed. Reflecting might happen in the US” both of the risks highlighted by the placement the largest and most fragmented investor Risk management agents, Akriche says that an important base in the world,” says Sunaina Sinha, When looking at the reasons for European Pekka Mäki, managing partner at priority for Eurazeo is “to continue to managing partner at placement agent and firms heading to the US, it is also worth 3TS function as one team, to have perfect secondary market adviser Cebile Capital. bearing in mind that some of the risks of integration between offices, and to make sure “There are trillions of dollars’ worth of assets doing so are not as significant as they might that the DNA and the mindset of our company under management spread across thousands initially seem. is the same on both sides of the Atlantic”. and thousands of different LPs. You can’t The most obvious of these for a new US European private equity firms venturing ignore it. You can access it sitting in Europe, business at the moment are political, into the US seem fortunate therefore. Factors but that’s not as ideal as having a location in specifically the implications of a Trump affecting their progress in this desirable the US.” presidency. But while the consequences of new destination that they have little control Backing up this view, Colas says that even this may well be severe and far-reaching, over, such as market conditions or politics, though American backers already make up a many of the economic conditions that make may be ultimately less important than how significant proportion of Ardian’s investor the US attractive to a private equity firm are they manage their new business on the base its new US business “will definitely unlikely to disappear. ground, something they should be capable create new LP relationships for us”. “The US dollar is a safe haven currency of getting right.

How to crack America Three European private equity firms with three different approaches.

ardian building a team from scratch Eurazeo 3TS background that would suit Launch method M&A – we felt these would be more Launch method New office Launch method Recruitment our purposes. Location New York difficult starts. Location New York Location Washington DC “We believe Washington “We backed Seven Mile on DC is a great location to have Ardian entered into an a deal-by-deal basis through Eurazeo headed stateside in than a fund, it’s very difficult 3TS opened an office in a company. You have direct alliance with New York firm our fund-of-funds platform. August 2016, setting up an to find partners that would be Washington DC last month. flights to most places in Seven Mile Capital Partners, These deals are performing office in New York. in line with us, given how we It is headed up by Sever Europe and a huge labour whose seven-strong team all extremely well, so when they work and the flexibility we Totia, who was hired from US pool for both for our agreed to join the French said they were raising their Managing director in have. So that very much firm Edison Partners. businesses and for our own firm, in October 2016. first fund we quickly offered Eurazeo’s New York team limits the number of purposes. It’s less them the opportunity to do Vivianne Akriche says: potential partners. Managing partner competitive and pricey than Co-head of Ardian US so under the Ardian umbrella. “We were always open to any “New York was the first Pekka Mäki says: New York, Boston or Silicon Vlad Colas says: The team has been together interesting combinations natural step for the firm when “The key trigger for us was Valley. And it is the area “We had been thinking about for six years and has within the US market but entering the US market. It’s finding the right person to where Sever, our new entering the direct space in established relationships in given the uniqueness of our such an important financial head the office. Sever is used partner, lives.” the US for a while, but always the US market, so we felt it model, which involves making centre, and the time to working remotely and is a resisted the idea of sending was a low-risk way to start private equity investments difference with is only self-starter, so we felt he has Europeans to the US or this activity.” from our balance sheet rather six hours.” the kind of working

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P6-8_RD378.17.11.16_USA.indd 8 11/11/2016 15:34 2nd of February 2017, The Waldorf Hilton,

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RD377_UKMM House AD_Full Pg.indd 2 28/10/2016 11:07 features xxxxxxxxxxxxxtrade buyers xxxxxxxxxxxxxtrade buyers features

The exit route trade-off Despite private equity’s claim to hoards of dry powder, trade buyers are the players putting their money where their mouth is.

By Lucy White

It won’t come as news to anyone in the industry that private a massive rise, but it also means that this year could be the he says. “Sensible acquisitions are a way to get kudos.” equity funds currently have a lot of cash to deploy. What might most successful in terms of value since trade sale values took Yet those trade buyers who are just awakening from their be more surprising, given this fact, is that secondary buyouts 73 per cent of market share in 2012. slumber haven’t entered into the easiest of markets. “Over seem to be becoming a less profitable exit strategy. “Industrial buyers have been a bit late to the cycle because, the last 20 years, there have always been ups and downs with In 2015, secondary buyouts of European businesses after the financial crisis, they were taking care of their own strategic players showing more interest in acquiring accounted for 28 per cent of all private equity exits and 36 per balance sheet,” says Jan Johan Kühl, managing partner of businesses and then financial players showing more interest,” cent of total exit value. Moving into 2016, the proportion of Danish firm Polaris. “However, where they’re really being says Michael Bork, founding partner of Equistone Partners divestments made by private equity firms to their peers has pushed hard now is in their ability to invest profitably – on Europe. “Both parties at the moment are quite interested – remained stable at 29 per cent. However, the value generated average, they don’t have a lot of organic growth so the logical there’s a lot of money in the market that needs to be by these deals has dropped to 22 per cent of total exit value – way is through consolidation.” invested.” the lowest since before the turn of the decade. Stewart Licudi, managing director and head of European Licudi has also felt this tension. “In the current market, we While the value of secondary buyouts may be slipping, trade financial sponsors coverage at investment bank William Blair, would have to have a good reason why we wouldn’t go to buyers are splashing out. Of the exits completed by the end of notes that this may explain corporates’ shift away from being private equity [when looking for a buyer] because they can October 2016, trade sales accounted for 68 per cent of total introspective spendthrifts and towards being proactive M&A offer very good money,” he says. It seems that corporate buyers value compared to 49 per cent the year before. Not only is this players. “Rather than doing share buybacks, they need growth,” are stepping up to the plate.

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Top trade sales of 2016 as of 31 October Target Target Quironsalud Target Brakes Group Target The Priory Group Target O3b Networks Sector Leisure Sector Pharma, medical Sector: Business services Sector Pharma, medical Sector Sold by CVC Capital and biotech Sold by and biotech Telecommunications Partners, Waddell & Reed Sold by CVC Capital Sold to Sysco Corporation, Sold by Advent Sold by North Bridge Financial, BlackRock, Partners USA International Venture Partners, Satya Norges Bank Sold to Helios Kliniken, Sold for ¤2.79bn Sold to:Acadia Healthcare Capital Sold to Company, USA Sold to SES, Luxembourg Corporation, USA Sold for ¤5.76bn Sold for ¤1.97bn Sold for ¤1.73bn Sold for ¤6.97bn

Corporate (dis)advantages of years,” he says. “And I don’t think it’s a peak, because if we simply more bureaucratic. You typically have many more It is this increased competition which is making the trade exit look at our pipeline of potential exits then there is a lot of people in the data room, and they can spend a lot of time on route increasingly desirable to private equity sellers. “I think industrial interest.” things that are clearly a consequence of internal politics.” corporate buyers have accepted that in order to be competitive, This bodes well for sellers – while a financial player might Linked to the bureaucracy is the time it may take for a they have to pay out some of their synergies in order to beat be weighing up a few acquisitions, a corporate buyer will often strategic player to act. “The difference between private equity financial sponsors,” Kühl explains. “Historically, we’ve seen be hungry for one particular asset and will stop at little to and trade buyers is that often the trade buyers need a little buyers saying: ‘We never pay more than X for an asset in this obtain it. “Strategic buyers are still influenced by underlying longer for their internal processes,” says Charles Currier, industry,’ and that’s been kind of a policy. But now they’re market sentiment,” says Raphael Grunschlag, managing partner and head of corporate at law firm CMS. “There are looking at cases in a much more business-like way, saying: ‘This director and head of European technology banking at William more people they need to clear deals with, they might have to makes sense – it’s accretive to our earnings per share and we Blair. “But if they need to compete [in their industry] and this get their board to approve it, and so on.” have synergies.’” particular asset will help, they will buy it.” David Silver, managing director and head of both European Polaris already makes around two thirds of its divestments Having said that, there are downsides to the corporate M&A and European , notes that the delay to trade, but Kühl believes that corporate interest in private buyer route. “[Trade sales] are almost always more could even be a deal breaker. “There are situations where a equity-held assets is increasing – at least in the Nordic region. troublesome,” says Kühl. “Even though you could assume that trade buyer can pay more, but private equity will win through “We’ve had a pick-up in industrial buyers over the past couple [corporate buyers] will know the industry and so on, they are because they can move quicker and they’re more deliverable,”

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P10-13_RD378.17.11.16_.indd 11 11/11/2016 15:36 features trade buyers trade buyers features

How to attract trade Although exiting a portfolio company to a trade buyer has its drawbacks, the positives can outweigh the negatives if the motivations of buyer and seller align. “When the deal makes sense for both parties, [a trade buyer] will typically be able to pay a price which is competitive,” says Polaris’s Jan Johan Kühl. But there are a few techniques which can help this process along the way. 1 Have a plan One thing we typically do before acquiring a business is think about who would be the most likely exit candidate,” says Kühl. “That’s the theoretical work.” In this way, he explains, it is easier to build relationships and work towards a profitable end when it comes to exit. 2. Start early The comparative sluggishness of corporate as opposed to financial buyers is a well-documented frustration to GPs. “You’ve got to factor in the timing,” says Charles Currier of there’s nothing worse CMS. Equistone’s Michael Bork adds: “Usually processes with “” strategic buyers start very early – maybe two or three years before a potential exit – to find out who might be interested.” than it being known

3. Transparency is key you’re trying to sell a “Often people just run the sale process in such a way that it’s hard for strategic buyers to engage meaningfully,” says David Silver of Baird. “It can be as simple as looking as if you’re business, and then failing open to a strategic buyer: making sure the trade buyers are aware of the business ahead of the process, having specific and going back to the sessions where you can talk about some of the softer areas around how they would like to work together and what the roles would be for the management team.” broader market 4. Be adaptable “Sometimes you can develop the business in a way that people find attractive, depending on the products and regions,” says Bork. “If that fits with the strategic ideas we have for the business then we can focus on that a little bit more than we would if we didn’t know about the strategic player’s preference.” 5. Always be ready “What we try to say [to a business’s management team] is that they need to be sleeping with their boots on,” says Kühl, so that if a trade buyer does approach outside of the auction process then they are ready to set the ball rolling. For Polaris, this involves steps such as ironing out any legal and financial issues, keeping all documents uploaded to an e-portal and training management in presentation techniques.

he says. Even so, the efforts which may have gone in to able to do things internally,” he says. “Then you don’t have the unwilling to meet the firm’s asking price for an asset but attracting the corporate won’t be wasted. An offer from a same worry about leaks and the like – there’s nothing worse bought a year later it in a fully structured auction – and for a strategic player “provides a good floor in an auction process than it being known you’re trying to sell a business, and then “substantially higher price”. “The fact that they’d had this and gives good deal certainty”, explains Kühl. failing and going back to the broader market.” sneak peek meant they were ready and willing to give all they As far as off-market sales to trade buyers go, Silver advises could pay for it when they eventually bought it,” Kühl says. To structure or not to structure caution. “There needs to be something pretty compelling for Aside from pricing and timing, there is one intrinsic In order to minimise the time it takes for a corporate to get you not to go down an auction process, because that’s a well- element of the business which has the potential to derail a serious, sellers will look to forge ties with them as soon as trodden path for maximising value and you know that you’ve trade buyer’s offer: the management team. If management has possible. “During the lifetime of an investment, you see a lot of canvased the market and obtained the best possible price,” been used to an equity-based incentive mechanism, going back other market participants – if not competitors – who are he says. to a corporate-style package may be unappealing – even if the interested,” says Bork. “We keep an eye on them and establish These conditions were clearly met for Polaris, who recently trade buyer is offering the best price. a relationship by meeting with them to talk about the business, sold vehicle repair company Car-O-Liner to NYSE-listed Snap- In that case, says Bork, Equistone would discuss the options its development and its future.” On in a $155m (€140.9m) off-market deal. Real Deals with all parties involved and work out a solution. “If we were This often means that the potential to sell will arise outside understands that, had the firm’s asking price not been met, just looking at an exit for our own advantage, that would not of a structured auction process – an opportunity which private they would have put the company up for auction next year. work,” he adds. “People would pretty quickly show me that this equity players are theoretically less likely to have, according to However, Polaris’s Kühl still believes there is value to was the wrong route. We need each other to run these Silver. “There tends to be a much broader advisory group initiating an off-market process, even if it falls short of processes and it’s very appropriate to find a solution which around a private equity firm, whereas certain corporates are completion. In one particular case, a potential buyer was covers all needs.”

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P10-13_RD378.17.11.16_.indd 12 11/11/2016 15:36 trade buyers features

€6.97bn the largest European trade exit so far this year, CVC Capital Partners’ sale of Formula 1 to Liberty Global

Trade sale trends Despite being a year characterised by uncertainty and political upheaval, 2016 has not been been unkind for European private equity exits to corporate buyers. By the end of October this year, according to Mergermarket data, there had been 510 exits of private equity-backed assets in Europe to corporate buyers. Although this suggests that the annual total will not reach 2015’s level of 658 trade exits, it is close to equalling 2014’s 533. As a proportion of all private equity exits, the number of assets being divested via the trade route has remained remarkably constant over the past six years. Ranging from 59 per cent of all exits in 2010 to 66 per cent in 2012, there has been little fluctuation. This year, trade sales may be close to the higher end of this range – as of the end of October, they accounted for 65 per cent of all private equity- backed exits. In terms of value, sales to corporate buyers this year have stolen an impressive portion of market share compared to last year. While trade constituted 49 per cent of the total value generated by private equity exits in 2015, by 31 October this year that number stood at 68 per cent, corresponding to ¤6.7bn. This is the highest percentage since 2012, when sales to trade accounted for 73 per cent of the value of all private equity exits. While the number of exits to trade has remained proportionally near enough constant over the past seven years, secondary buyouts have been gradually losing market share as an exit route strategy and now account for just 29 per cent of all exits by number. By value, they constituted just 22 per cent of all 2016’s exits as of 31 October 2016, the lowest in this seven-year period.

reduce the profits of the business. But then there’s the question of whether that’s really a bargain or whether you’re investing in a falling knife.” William Blair’s Grunschlag notes that any hope of grabbing bargains due to currency fluctuations might also be based on shaky logic. “[The drop in sterling] makes British assets seem cheaper,” he says. “But buyers should see that cash flow is also lower when they translate it back to their own currency.” Despite the pessimism, deals are clearly getting done. CMS, William Blair and Baird have all found themselves as busy as usual – although Grunschlag does mention the possibility that this could be an omen of quieter times to come. “One private equity fund client said to me that if they have assets they want to exit within the next 12 to 24 months and can bring [the sale] forward, they will,” he says. But as ever, one man’s trash is another man’s treasure. “I But for Kühl in the Nordics, an insistence by management thinking that there are now some good priced assets to be think [Brexit] could actually be a slight positive for us – the that the business must be sold to a is less had,” says CMS’s Currier. “There are undoubtedly targets that buyers from overseas who might want to enter Europe might common. “You don’t yet have in the Nordics, which you may potential buyers will have looked at in the past and said: ‘I like not consider the UK any more. They might instead consider have in France and the US and maybe in the UK, a group of the fundamentals of the business, but the pricing doesn’t look mainland Europe,” says Kühl. It remains to be seen whether CEOs who like private equity so much that they’re going from quite right.’ Maybe now they’re coming back again and saying: this is true, but either way Currier does not believe deal flow one firm to the next. Here, they are used to being in big ‘Well actually, the pricing kind of works for us.’” activity in the UK will suffer drastically. corporate structures and being CEO of a big division rather This was affirmed by CMS and Mergermarket’s European “I struggle to think that Brexit will have a clear positive than of an independent company is ok for many people.” M&A Outlook 2016 report, which surveyed the attitudes of impact on the M&A market,” he says. “But I think that the senior executives in European corporates and private equity underlying fundamentals, certainly in the UK, are pretty The Brexit effect houses pre- and post-Brexit vote. It revealed that 54 per cent of strong. I think a lot of people are saying: ‘Are we going to sit on However corporate buyers are choosing to incentivise respondents expected undervalued targets to be the main buy- our hands for two years, five years, seven years? Or are we just management teams, it is clear that they are playing side driver of M&A following the referendum, a rise of more going to get on with things?’ The vast majority have concluded competitively. One factor which may be causing them to up then ten percentage points compared to before. the latter.” their offers is Britain’s ongoing Brexit debacle and its potential However, Bork believes a rush of foreign investors seeking As private equity sellers look to offload their assets, it seems to depress prices – or at least give the illusion of lower prices bargains in Europe is unlikely. “If you have a business which is – for the time being at least – that corporate buyers still have due to currency arbitrage. very much dependent on supplies from outside the UK, that an appetite. Corporate buyers may not provide for the most “There’s lots of evidence of [corporate buyers in] the US might increase the costs of the business and result in higher wrinkle-free transaction, but in this year of ups and downs and China looking at the European market very closely, prices [for its products or services],” he explains. “It could they have certainly stumped up the cash.

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P10-13_RD378.17.11.16_.indd 13 11/11/2016 15:36 around europe Qualitas raises €60m to invest in European mid-market funds By Luciano Figari

t’s very rare for a GP to cross the floor and become an LP. Madrid- based Qualitas Equity Partners, however, has decided to do just that and has raised €60m for its first fund of funds. Qualitas founding partner Eric Halverson says that the idea came around 18 months ago when a group of institutional investors asked for help to invest in private equity outside Spain. “We decided that it was an interesting proposition and so we raised a fund of funds to suit them, basically to meet their needs,” he says. This is not the first time that Qualitas has expanded its range of activities. The firm was Icreated in 2003 as a Spanish buyout investor. Three years later it launched a fund focused on renewable energy in Spain, Italy and the US. And since 2013 it has completed a number of venture capital investments. Halverson believes that having experience on the direct investment side will give Qualitas an advantage as it makes its way in the world with an LP hat on. “Most fund-of- fund managers come from the asset management side so they are used to allocating assets. We come from the direct investment side, so we are used to evaluating teams,” he says. The typical fund selection approach of the market, he adds, is very much quantitatively focused, with numbers and track records Buyout house Qualitas Equity Partners is to try its playing a major role. “We are quantitatively driven but we also do some important hand at being an LP after raising its first fund of funds. qualitative analysis, which is essentially to interview the team as if we were hiring that team,” Halverson says. “When we go out to speak to a fund manager we basically employ between €2.5m and €5m in ten to 12 mid- competition, lower pricing multiples and debt Halverson explains. “But we also want to the same skills that we use to hire people for market vehicles across Europe. Up to a fifth of levels, as well as higher growth potential. ensure that they are going in the right our own funds.” the fund can be invested in secondary Qualitas will not invest as a limited partner direction and we might not be able to be as For Halverson the right fund managers portfolio acquisitions and co-investments. in Spain because it has direct activity as a unbiased in our judgement of them.” should have a strategy that is differentiated Qualitas expects to gain exposure to all the general partner, and therefore tensions Despite its relatively small size, Qualitas’ and a team with experience delivering that main western European currencies, with the between managers and owners could arise. debut fund of funds attracted more than 50 strategy. Once those boxes are ticked, Qualitas euro representing approximately 65 per cent. “We are owners in a fund and we partner with investors from Europe, the US and South assesses track record, internal decision- The fund of funds was marketed to Spanish the people that are the managers in the fund,” America. Most of the LPs in the vehicle are making processes and the reporting quality of and North American investors as a way of the fund manager. Last but not least, it looks achieving geographic diversification via the at the types of investors that the fund has European private equity mid-market, where attracted so far and its terms and conditions. many fund managers remain relatively unknown to the wider investor community. When we speak to a fund manager we The case for Europe Qualitas argues that the mid-market offers With €60m to deploy, Qualitas’ first fund of higher returns and less volatility than mega- basically employ the same skills that we funds will make average commitments of buyouts and venture capital thanks to less “” use to hire people for our own funds

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P14_15-RD378.17.11.16.Qualitas/Nazca.indd 14 11/11/2016 14:33 around europe

Spreading the seeds Spanish firm Nazca Capital has rekindled an old relationship, selling agricultural business Agromillora to Investcorp. By Luciano Figari

The rising global demand for from having €27m in revenues accelerated its penetration in knowing that our partners in the food requires continuous and €5.2m Ebitda in 2012 to Latin America and the US at the company and the management improvements in agricultural forecasted sales of €70m and same time. Portela expects the team wished to remain land productivity. Bahraini €20m Ebitda this year. The US to be Agromillora’s main shareholders, it was very investor Investcorp is seeking to company has eleven production market next year. important to be able to transmit capitalise on this trend and has facilities in nine countries and a previous knowledge of the acquired Agromillora from more than 1,300 employees. Relational deals investor that was going to Madrid-based private equity firm Nazca partner Ignacio Portela Portela says that Nazca was not substitute us, to talk first hand Nazca Capital. says that the growth of actively looking for an exit when about its reputation. That helped Founded in 1986 in Subirats, Agromillora was driven by a it started receiving interest from to build a relationship with the Barcelona, Agromillora number of factors. First, in-vitro third parties for Agromillora. family and with the team through produces plants that are sold to plants are gaining popularity Although it only held the the due diligence process that nurseries and growers around among agriculturists because business for three years, the generated a lot of trust.” the world. Instead of using they want plants with specific company had already exceeded Trust in the new investor was traditional propagation methods genetic properties like drought its five-year targets. indeed necessary, as Investcorp like seeds or cuttings, or disease resistance. To this end One of those interested Agromillora spreads plants Agromillora has created a global parties was Investcorp, who using in-vitro multiplication network of geneticists that Nazca Capital already knew well labs. By using this advanced develops new varieties for the from the Fritta deal. Fritta is a technique, the company turns company. Thanks to product Spanish producer of ceramics plant production into an almost diversification and further intermediates that Nazca bought industrial process that can be adoption of in-vitro plants as a in December 2013 and sold to planned and controlled. substitute for seeds and cuttings, Investcorp in January 2015. 1, 300 Although in-vitro Agromillora has been gaining “That’s why we have a very people employed by multiplication techniques have market share, Portela explains. fluid relationship with them,” Agromillora in nine been known for around 60 years, Another growth driver has Portela explains. “And in one of countries they are more commonly used been the expansion of super high the informal conversations that for ornamental plants and simple density farming, where we had with Investcorp in May wanted to secure a majority stake species such as banana and palm Agromillora has always had a or June they showed a strong in Agromillora. Therefore, in trees. However, Agromillora has particular focus. In super high interest in Agromillora, with a addition to Nazca’s 49 per cent companies and pension funds, but specialised in applying this density farms trees are grown serious preliminary analysis and stake, the management and there are family offices and wealthy individuals technique for olive, nut and fruit closer together and trimmed like valuation expectations that family investor sold a tiny too. The Qualitas team’s investment trees, gaining a solid position in bushes, enabling farmers to matched perfectly with our portion of their shares to accounted for five per cent of the fund. the market. squeeze in 900 olive trees per medium term return Investcorp and now the Bahraini So far around 70 per cent of the fund of The company was founded by acre instead of the traditional 50. expectations.” firm holds a controlling stake. funds has been committed to eight funds and two agricultural engineers who This process also allows the trees The fact that the management Agromillora becomes the three co-investments. The firm expects it to were backed by a wealthy to be harvested mechanically and the Catalonian family that fourth exit from Nazca’s third be fully committed either before the end of Catalonian family. In May 2013 rather than by hand. backed Agromillora more than a fund, which closed at €185m in the year or in Q1 2017. Nazca injected €20m of capital Additionally, Agromillora has decade ago wished to remain 2010. Following the acquisition As if its current collection of strategies in return for a 49 per cent increased its international shareholders added complexity of PET producer Caiba in July, it wasn’t enough, Halverson says that the firm is equity stake as Agromillora presence. With the to the transaction. is now fully invested. getting ready to launch a new fund which will looked to further its support of Nazca the However, knowing Investcorp Nazca reached a €250m first have a target size of around €100m and will international expansion. business has opened from a previous deal eased the close for its fourth fund in include a fund-of-funds and co-investment Since then the company subsidiaries in process. “We, as a private equity September. It expects to hold a vehicle. Qualitas’ appetite for expansion has more than tripled in Australia and the funds manager, are very final close at the €275m hard cap shows no signs of waning. size. Agromillora went Middle East, and relational,” he says. “In this case, before the end of the year.

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P14_15-RD378.17.11.16.Qualitas/Nazca.indd 15 11/11/2016 14:33 guest comment

What secular stagnation will mean for you

by Andros Payne

or a brief period during the 2009 global financial equity are one of few remaining asset classes offering a crisis, US productivity spiked as unemployment higher and more sustainable return. It’s therefore no pushed close to ten per cent. Since then, it has surprise that funds under management have ballooned hovered around zero with brief dips below the to more than $4trn, with $1.3trn of dry powder. The line. Larry Summers’ recent article in Foreign effect of secular stagnation is expected to accelerate FAffairs has brought a theory that was first developed by flows into private equity from sovereign wealth funds, Harvard economist Alfred Hansen in the 1930s back public and private pension funds and family offices into the mainstream to explain what is going on. Then, looking to meet their commitments. as now, secular stagnation drove a persistent lack of But, in the bigger picture, private equity is just a productivity growth, rising shadow unemployment small slice of the total asset management universe. In and political upheavals like we are currently order to reasonably cope with the tsunami of money witnessing in western democracies. For private equity, still coming, it will need to morph from the cottage secular stagnation will mean more money to deploy, industry it has been to an industrialised business – more pressure for returns, more risk and a coming likely painful for those who have enjoyed the unique transformation from within. privileges of a private niche in the past. In his TED talk, Northwestern’s sociologist and Integrating qualified investment professionals and economist Robert Gordon explains the problem. transferring hard-gained knowledge about active Industrialised nations are faced with four headwinds investing is indeed another challenge facing funds. which are depressing productivity growth for the long There is a shortage of people who bring the diverse term: high debt levels, constrained access to competencies needed in both transactional finance to education, reduced workforce participation and buy and sell correctly, and process-driven value growing wealth inequality. According to Gordon, these growth during the holding period. Selection, training, forces reduce the average historical rate of leadership and development in funds and portfolio productivity growth from 2.8 to 0.7 per cent per companies will all need to improve. annum. And when income from technology innovation Finally, pressure for returns will force private is concentrated with a few knowledge-workers at the equity investment into more complex and difficult likes of Google, Apple and Facebook, it won’t fill (higher risk) buyouts. Whether this takes the form of pockets or the growing productivity gap. en vogue Africa funds, lower mid-market or niche This has huge sociological and political theme funds, more work will be needed to buy, implications and poses both opportunity and risk for develop and sell tomorrow’s assets. And as all funds private equity. With lower productivity growth, add the operational capabilities to define strategy, standards of living will stagnate for the first time in optimise pricing and reduce procurement cost, the 250 years. This will require a painful reset of next wave of more complicated arbitrage on leadership expectations defined in a unique period of steady performance, behaviours and productivity will need to productivity improvement. be addressed. Brexit, and the rise of populists across the globe, is Funds are increasingly focusing on the inner part of this re-setting process. So too is the retirement workings of portfolio company organisations and funding bomb that most politicians still kick down the leadership, with the recent addition of specialised “HR road. The demographic problem of a baby-boomer operating partners” as a leading indicator of what is to bulge exiting the labour force with unrealistic come. However, unlike more tangible operational retirement expectations is compounded by low growth levers, the benefits of organisational interest rates in response to sluggish growth – what excellence are more difficult to quantify in the short Blackstone’s Tony James refers to as “the hidden crisis term. Most likely, the effect will only be noticed over in America that no one is talking about”. And growth time and with sustained, high valuation exits. Secular is not materialising. US output per hour worked stagnation is thereby stimulating increased increased just 0.5 per cent in 2014, decelerated to 0.3 competition and innovation in the funds industry. per cent in 2015 and is projected to be only 0.2 per Which players will step up to the challenge? cent up for 2016. Where will the money come from, and how to keep the social peace? Andros Payne is founder and managing partner of Alternative assets and actively managed private consultancy firm Humatica.

private equity will need to morph from “”cottage industry to an industrialised business

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P16-17_RD378.17.11.16]Convatec/Andros.indd 16 11/11/2016 14:35 Signs of life Nordic Capital’s £4.4bn float of medical technology business Convatec shows that IPOs are not off the table for the right candidates. By Darragh Riordan

he largest UK listing this year. The second largest Unomedical. This deal pushed Convatec into the continence and critical care ever UK private equity-backed float. The largest market, while the acquisition of 180 Medical in 2012 brought disposable ever European healthcare IPO. urological catheters into the company’s product portfolio. Nordic Capital’s float of healthcare business The firm also relocated Convatec’s corporate headquarters from New Jersey Convatec makes for impressive reading. A £4.4bn to the UK (with the ultimate parent company domiciled in Luxembourg). Last (€5bn) IPO deserves to generate headlines at the year the business reported sales of $1.65bn and adjusted Ebitda of $473.8m, up best of times – not to mind while a host of from $1.3bn and $400m respectively at the time of Nordic Capital’s acquisition. sponsor-backed floats failed to get away. During the course of The path less travelled October private equity’s It could come as some surprise given the volatility of the attention was drawn to IPO markets and the relative strength of healthcare M&A Misys, the Vista Equity Convatec IPO factfile activity that Nordic Capital opted for a float. However, Partners-backed software provider with pretentions of Shah says that the firm had full confidence that certain listing with a reported £4.5bn market cap. However, Gross proceeds characteristics of the Convatec business made it an ideal before the end of the month the company joined CCMP £1.47bn candidate for the public markets. TCapital Advisors-backed Pure Gym and Bain Capital’s TI “You have to know what your equity story is,” he says. Fluid Systems in cancelling its IPO. All the while, Nordic Initial market cap “This is a dollar-denominated, global, diversified Capital was making progress with its own float. £4.39bn healthcare company with no overexposure to any one The firm acquired Convatec in August 2008. Both the product. We saw some of the Brexit issues coming back timing and the scale of the deal were notable. In order to Major shareholders post-IPO into the market more recently, but if you are a long-only fund the $4.1bn transaction Nordic Capital called on US Nordic Capital (45.1%), Avista Capital fund, where do you put your money? You probably don’t sponsor (with whom it had Partners (19.5%) want to put it in a domestic-driven situation, you want it successfully joined forces for the landmark Nycomed in a diversified, global, dollar-denominated company. That deal) as an equity partner and managed to arrange a ten- Turnover played to our strengths. That was something we were very strong syndicate of lenders, just a month before Lehman $1.65bn clear on and it allowed us to navigate the markets when a Brothers collapsed. It was also the firm’s first direct deal lot of others were failing.” Shah does concede, however, in the US. Adjusted Ebitda that the pricing at the bottom of the indicative range was Then headquartered in New Jersey, Convatec was a $473.8m reflective of “the market being in a risk-averse place”. medical technology business owned by Bristol-Myers It was undoubtedly helpful, given the recent Squibb, which focused primarily on pharmaceuticals. “If Key staff weakening of the pound, that despite being headquartered your core business is pharmaceuticals then this wouldn’t Chief executive Paul Moraviec (ex- in Reading barely ten per cent of Convatec’s revenues are get on capital allocation discussions. It would get less Johnson & Johnson), chief financial generated in sterling. Furthermore, the company sells in attention than a pharma company or drug developer officer Nigel Clerkin (ex-Elan more than 100 countries and has forecast compound would,” explains Raj Shah, partner at NC Advisory (UK) Pharmaceuticals), chairman Sir annual growth across its four main divisions of between LLP, adviser to Nordic Capital funds and board member Christopher Gent (ex-Vodafone, three and six per cent, based largely on non-discretionary, of Convatec. “We also like the dynamics of a corporate GlaxoSmithKline) global trends. Amid such volatility, the company stands orphan. We have spent quite a lot of time on them and we out as a stable, mature asset, and that is a story that fund feel that we can assess those companies better and create Employees managers can buy into. more value than the parent necessarily could.” >9,000 The hard work is not over yet for Nordic Capital, Convatec operates in four segments: wound care, however. With the float solely comprising a $1.7bn ostomy care, infusion devices and continence and critical primary offering, the firm is yet to cash out and retains care. The essential nature of these markets made the significant skin in the game with an equity stake of company a very attractive proposition for Nordic Capital. “We like these around 45 per cent. Growth will continue to focus on gaining market share in because they are chronic care markets with a large installed base of patients Convatec’s four core divisions. Furthermore, a margin improvement programme using critical products – the demand is organic through disease prevalence and has been put in place with the aim of increasing margins by at least 300 basis treatment,” says Shah. points by 2020, while a turnaround of the company’s ostomy unit, which has The early work around Convatec was largely typical of a corporate carve-out lagged, is ongoing. – restructuring, clear accountability for each division and management Convatec should serve to show buyout houses across the board what stock incentivisation were all on the agenda. Yet the firm wasted no time in pursuing market investors can stomach during periods of high uncertainty. For Nordic more ambitious and immediate growth in the form of September 2008 bolt-on Capital, it could go down as one of the firm’s most impressive achievements.

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P16-17_RD378.17.11.16]Convatec/Andros.indd 17 11/11/2016 14:35 Advertorial

Q&A Geoff Cook Chief executive, Jersey Finance Jersey Finance’s chief executive Geoff Cook explains how the fund management industry is evolving and what international financial centres should be doing to meet these changing needs.

more than 13,000 people working in Has the fact that the Panama the finance sector in Jersey, which Papers have cast the spotlight accounts for more than a fifth of total on how IFCs operate, and employment on the Island. Jersey has that the BEPS programme is one of the largest number of finance Jersey offers a building momentum, industry professionals of any IFC. platform that is prompted managers to take a The fund administration and legal “” step back, reevaluate the IFC sectors are strong and well-equipped stable and open. It is jurisdictions they use and to service the needs of fund managers. possibly relocate? We have more than 2,000 people governed by English I think that is a fair assumption. If working in fund management and you are a fund manager you have to legal services alone and that number common law and is look at this and make sure you are is growing. close to London. comfortable with the jurisdictions you There is a new waterfront are using. There has been a lot of rom the perspective of development with accommodation Finally, as a well- relocation and managers have been someone involved in running and office space, so the infrastructure moving to IFCs that are stable, well- an international financial is in place to support further regulated and regulated and are in good standing centre (IFC), how do you see expansion. credible IFC, Jersey with tax authorities. Fthe fund management Following the financial crisis Jersey environment changing? To what extent do these offers good access to appointed McKinsey to look into the The OECD’s base erosion profit factors influence how fund risks facing Jersey’s financial services shifting (BEPS) initiative has changed managers decide on what markets around the industry, so the Island has been the tax landscape and substance has locations to choose when addressing these questions for a long become very important. Where a it comes to domiciling world through its time now and has developed a clear fund is based is becoming less of a their funds? private placement strategy to address fund manager technical question and more a Substance and certainty are crucial. needs. question of substance. A fund needs There are other important hallmarks regime Managers have taken note and to show that it has offices and boots for fund managers too. Political and Jersey has enjoyed solid growth in the on the ground to conduct the business tax stability is a big factor. We are number of alternative asset managers of the fund. A physical presence is lucky to have a steady parliament and using the jurisdiction. important. a tax system that has not changed a The NAV of assets under great deal since 1945. Jersey is tax administration for Jersey’s fund Where, then, does the BEPS neutral for funds and offers industry climbed to £228.4bn programme and increasing competitive personal tax rates for (€264.5bn) in the first quarter of 2016, focus on the question of professionals who want to work here. the second highest level since 2008. substance leave Jersey as A robust and appropriate regulatory Private equity, which was up by ten a jurisdiction? environment is also key, and we have per cent a year, and real estate, up 20 After Brexit and the ongoing shown that our system works and is per cent annually, underpinned this developments around BEPS, Jersey is proportionate. Jersey offers a strong performance. Jersey is in a good position. platform that is stable and open. It is also now the sixth largest center for With regards to Brexit, there is no governed by English common law and hedge funds. change to Jersey’s status, as it has is close to London. The private placement regime is bilateral treaties in place with EU Finally, as a well-regulated and clearly as popular as ever, offering member states so there is no need credible IFC, Jersey offers good managers stability and certainty. to seek re-approval or renegotiate access to markets around the world We are confident that we have put access. There is certainty for through its private placement regime. a very strong platform in place, but fund managers. All of these elements are important we are not complacent and always Regarding BEPS, Jersey is strong for managers deciding where they looking at ways to ensure that our on the substance point. There are should domicile their funds. proposition is strong.

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P18- RD 378 17.11.16.Jersey.indd 18 11/11/2016 14:36

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RD378_RD IPad AD_FullPg_F3.indd 1 11/11/2016 09:53 around europe

m €300can be invested in a single manager, capped at 25 per cent of a vehicle’s total investor commitments of investment the European Commissionbn €1.6and EIF hope to stimulate through the new VC fund of funds

More than Money

The capital that the European Commission and EIF have made available for venture investment in Europe will be crucial for kick-starting the industry, but it will take more than just cash to ensure that European scale-ups can flourish domestically rather than further their net1.68% pooled IRR delivered by European ambitions abroad. venture funds in the years from 1980 to In Scale-up UK: Growing Businesses. 2013 Growing our Economy, a report supported by and published by Oxford University’s Saïd Business School and Cambridge University’s Judge Business School, six recommendations to foster support for start-ups and scale-ups are put forward. The recommendations were made with a focus on scale-ups in the UK, but the measures apply to the wider European market too:

Increase the number of venture capital funds of sufficient scale to finance seek the cash they so desperately need. companies in scale-up phase The European Commission and European Increase the number of investors with Investment Fund hope to change that in-depth expertise and strong dynamic with the launch of a new venture international networks Bridging the capital fund of funds that has the potential to Support the development of a venture attract more than €1.6bn of investment into debt market, to support cheaper and European SMEs. more tax-efficient capital structures The vehicle will invest in a portfolio of Establish the London Stock Exchange as venture capital funds across the continent, a pan-European market for scale-ups venture gap with the commission committing up to €400m Develop new structures for creating as a cornerstone investor with a view to liquidity in private company shares securing at least three times that amount from Improve the quality of data on scale- The European Commission and European other LPs. It will have the scope to invest up to ups and their financing €300m in a single manager, but its investment Investment Fund hope that a new fund of funds will be capped at 25 per cent of a vehicle’s total The full report can be accessed at: www.home. can create the scale the continent’s venture commitments. The venture funds backed by barclays/news/2016/04/scale-up-UK.html the new vehicle will then invest in companies capital industry so desperately needs. ranging from space venture and tech start-ups to engineering firms. The commission has By Nicholas Neveling Where the domestic venture scene has called for managers to come forward and It is hoped that by building scale venture stuttered is not in the sourcing of of new manage vehicles under the new programme. funds in Europe, which raised €5.3bn in 2014, Rightly or wrongly, Europe’s venture capital companies, but in its ability to fund them as The key strategic aim of the initiative is to can close the gap with the US market, where community has had a pretty hard time of it they grow and hit “scale-up” phase. A “scale- build scale in Europe’s venture sector, open it investors committed €25bn to venture in 2014. during the last decade. up” – broadly defined as a company employing up to international institutional investors and “There’s far less venture capital in Europe According to an EVCA (now Invest Europe) ten people or more and growing turnover or create pools of capital that are sizeable enough than in the US, and funds don’t have the scale report published in 2014, the industry could employee numbers by 20 per cent a year – is to keep local champions at home. or geographic scope to grow companies from only deliver a net pooled IRR of 1.68 per cent capital intensive and requires deep pockets, “Public funding bodies, like the EU, can early stage to mid-cap and from mid-cap to in the vintage years from 1980 to 2013. but it is also where the big returns are made. act as a catalyst in making the private financial global players. The Pan-European VC Fund-of- However, the weak returns figures do not European venture funds, which average €65m markets work better,” Nenad Marovac, Invest Funds initiative tackles this problem head-on. tell the full story. Europe has, after all, been in size according to Invest Europe, just don’t Europe’s venture capital platform chairman It will lead to higher levels of investment in the birthplace of successful start-ups like have the firepower to support this stage of and DN Capital managing partner said. new generations of highly innovative European fashion marketplace Farfetch, peer-to-peer development (or absorb the minimum cheque “This pan-European public-private firms,” Carlos Moedas, the EU commissioner lending platform Funding Circle, music sizes that global investors can write for that partnership will broaden the narrow pool of for research, science and innovation, said. identification group Shazam, travel price matter). Many start-ups launched in Europe capital available to European venture fund Policy makers and venture fund managers comparator Skyscanner and money transfer have had no option but to head to the US, managers, boosting fund sizes and increasing will hope the new fund of funds can change service TransferWise. All of these businesses where less than half of venture funds are investment in the SMEs and start-ups that the narrative that has dogged venture in are now valued at more than €1bn. smaller than $100m according to Preqin, to need funding to grow.” Europe for far too long.

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P20- RD 378 17.11.16.EIF.indd 20 11/11/2016 14:37 Hosted by: Now in their 16th year, these awards are the oldest, most respected accolades bestowed on the private equity industry and those that advise it Nominations are now open for the advisor categories until 10 February Categories include: Regional/Specialist Adviser of the Year UK Corporate Finance House of the Year European Corporate Finance House of the Year Placement Agent of the Year Pan-European Legal Advisor of the Year Asset-Based Lender of the Year Fund Administrator of the Year Specialist Adviser of the Year Bank of the Year Specialist Lender of the Year New for this year… GPs can enter the Portfolio Management Team of the Year Award

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RD378_PEA2016_FullPg_F.indd 2 11/11/2016 09:52 deals in brief deals in brief

deals in brief

A round-up of deals from the past few weeks.

FINANCE & PROPERTY, GERMANY Based in Munich, Schustermann TARGET Welcome Hotels & Borenstein sells designer clothing >IN Terra Firma from a range of brands in the DACH

Cathay Capital and Bpifrance have SOFTWARE & IT SERVICES, FRANCE taken minority stakes in French TARGET MEGA INTERNATIONAL company AD Education. >IN Gimv AD Education currently CF EY comprises seven institutions and 11 L Paul Hastings campuses, of which one is in Italy, A PwC offering courses in fields including

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P22-23- RD 378 17.11.16_Dibs.indd 22 11/11/2016 14:39 deals in brief deals in brief

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 EV Environmental

HEALTH & WELL BEING, FRANCE OIL, GAS, ENERGY & UTILITIES, pharmaceutical industries as well as CONSUMER, FRANCE HEALTH, EDUCATION & PUBLIC SERVICES, TARGET PONROY SANTE UNITED KINGDOM veterinary and environmental TARGET MerciHenri.com SPAIN >IN TARGET TURBINE EFFICIENCY laboratory analysis. >IN Meilleurtax.com TARGET SARquavitae >IN Cathay Capital >IN Core Capital Synlab employs around 13,000 >IN Equistone Partners Europe >IN HomeVI staff and generates revenues of >IN PAI Partners 3i has backed French consumer Core Capital has acquired a circa €1.5bn, operating in more than Meilleurtaux.com, a French IN Vaaka Partners health, housing, car and motorcycle The business has been sold to Ponroy Sante manufactures and The investment is being made insurance. Founder Christophe HomeVi, a portfolio company of supplies a range of consumer from the firm’s second fund, which Vaaka Partners, the Finnish private Triquet will join the management of PAI Partners, and the transaction healthcare products including closed in September 2015 at £85m. equity firm, has taken a majority Meilleurtaux.com to lead its will generate proceeds of nearly cosmetics, food supplements and Headquartered in Lincoln, stake in family-owned waste property, casualty and health €140m for Palamon. baby care products. It has annual Turbine Efficiency offers management business Molok. insurance division. SARquavitae is the third largest revenues of around €170m. maintenance, repair and overhaul Molok, which focuses on the Meilleurtaux.com negotiated elderly care provider in Spain, with The company hopes to use the services for industrial gas turbines circular economy concept where €7.2bn of new mortgages on behalf 88 residential facilities and more new investment to build on its for customers in the power, oil and rubbish is considered as a resource of its clients in 2015 and recorded than 11,000 beds. KKR provided existing presence in Europe and gas, and industrial sectors. It rather than a cost factor, invented 2.8 million unique visits on its the company with a debt facility expand further into other markets, reported turnover of £8.7m in 2014. the “deep collection” system based website in September 2016. in December. particularly Asia. on hygienic and efficient Palamon backed the Barcelona- Former executive chair Arnaud underground containers. headquartered business in 2009. Ponroy and current chief executive RENEWABLE ENERGY, UNITED KINGDOM The business, founded in 1991, MANUFACTURING, FRANCE Since then turnover has increased Fabrice Cahierc will continue to TARGET Infinis generates turnover of circa €20m, TARGET Arc from €127m to €310m and Ebitda hold stakes in Ponroy Sante. >IN 3i Infrastructure and exports account for more than >IN Bahrain Mumtalakat Holding Company has tripled. IN CDC International Capital >IN Russian Direct Investment Fund INDUSTRIAL, GERMANY Terra Firma has sold the landfill gas TRANSPORT & LOGISTICS, GERMANY TARGET LEONI STUDER HARD division of energy business Infinis A consortium led by CDC TARGET Frauscher Sensor Technology >IN Ardian to 3i Infrastructure in a £185m International Capital, a subsidiary >IN Greenbriar Equity Group L McDermott Will & Emery (€205.4m) transaction. For information of France’s sovereign financial L Weil Gotshal & Manges Terra Firma initially secured a on every private institution Caisse des Dépôts, has Greenbriar Equity Group, a US A Warth & Klein partial exit of Infinis in 2013, invested up to €250m in glassware buyout firm specialised in >IN Ionisos floating 30 per cent of its stake in a equity firm’s manufacturer Arc. transportation investments, has listing which valued the business at portfolio, The consortium also includes acquired Austrian company Ardian’s French industrial £930m. However, after the share the Russian Direct Investment Frauscher Sensor Technology. sterilisation business Ionisos has price struggled, Guy Hands’ firm please visit: Fund and the Bahrain Mumtalakat Frauscher designs and bolted on German company Leoni took Infinis private once again in realdeals.eu.com/ Holding Company, the sovereign manufactures railway wheel Studer Hard. late 2015 with a £555m valuation. wealth funds of Russia and Bahrain detection and axle counting The acquisition extends Infinis’s landfill gas division has intelligence respectively. systems. Its products are used by Ionisos’s range of services and 121 operating sites and seven The agreement to invest up to railway operators in more than 50 geographical coverage. outsourced locations across the UK €250m over a 36-month period will countries. The company is based in Ardian acquired Ionisos from with a power generation capacity of be used to expand the French St. Marienkirchen and operates Agilitas in July through Ardian 300MW. The company will retain a manufacturer’s capacity in France, eight subsidiaries across five Expansion IV Fund, the firm’s latest portfolio of offshore wind assets Russia, China, the USA and the countries. small cap fund that closed at €1bn following the deal. Middle East. The first drawdown of New York-headquartered in June. Infinis began as a non-core INDUSTRIAL, GERMANY €50m will be completed on 20 Greenbriar invests exclusively in division of Waste Recycling Group, TARGET Slv October 2016. the transportation industry. It is which Terra Firma acquired in >IN Ardian currently deploying from its third HEALTH & WELL BEING, SPAIN 2003. The business was spun out

for a full report on all the above: realdeals.eu.com/deals

22 } realdeals 17 November 2016 realdeals.eu.com { 23

P22-23- RD 378 17.11.16_Dibs.indd 23 11/11/2016 14:39 people people people Ex-Advent consumer Mittelstand investor Afinum has its investment team as vice hired four new dealmakers. presidents. The firm has appointed Knoflach joins Investcorp veteran joins KKR Carsten Abdel Hadi from technology-focused (right) as a director. firm Silver Lake, where He joins from he worked for four Tim Franks will lead KKR’s EMEA Aurelius where he years. Prior to that, spent seven years, he was part of Merrill consumer and retail team from February. latterly as managing Lynch’s investment director in charge banking team in of mid-cap buyouts. Germany. Tim Franks, a former managing director at Advent He has also held Bennet previously International, has joined KKR. roles at Jefferies and spent three years in the KPMG. technology team of Franks left Advent earlier this year after a 17-year career at Afinum has also recently HgCapital in London, before the firm. He specialised in retail and consumer deals, rising to hired Philipp Otto, Christof which he worked at UK mid- Schlindwein and Elias Tuerk as market corporate finance boutique the position of managing director and head of European retail, investment managers. Augusta & Co and , consumer and leisure. Deals he worked on include Fat Face, Otto joined from Deutsche primarily in the technology M&A Private Equity after beginning his team in London and Dubai. Poundland and DFS. career at Boston Consulting Between 2010 and 2013 Franks also launched Advent’s Group. Schlindwein was hired Bala Krishnan has joined directly from BCG, while Tuerk as an New York office and helped build up its North American arrived from . investment director. technology practice. The appointments come as He will focus on new platform Afinum prepares to launch a investments in software, Reports following Franks’ departure suggested his next step successor to its 2013 vintage technology-enabled services, may have been in smaller deals, possibly setting up his own fund. buyout fund, for which it secured business information and media. €280m. The firm, which now has Krishnan was previously with As of February Franks will lead KKR’s EMEA consumer and 15 dealmakers, will begin raising First Capital, where he worked for retail team. He will also sit on the European private equity next year. ten years with a focus on the the TMT sector. Deals he worked on investment committee. Pantheon has appointed John included Metronet, Valueworks, Burgess and John Singer as non- ecommera and Salmon. Before his executive directors. time at First Capital he was with Burgess co-founded and served Advent Ventures. as managing partner at BC Krishnan is a chartered Partners. His career also includes accountant, qualifying at KPMG. time in senior roles at F&C Ventures, Electra Partners dealmaker Zoe and Boston Consulting Group. Clements (left) has left the firm Singer co-founded Advent to join Palatine Private Equity. International and served as chair Clements was an investment of its European operations, director at Electra, where as a member of its she worked on deals global executive including Photobox committee, and as a and Daler-Rowney. special partner. He Prior to that she has also been worked at LGV managing director Capital and in the of Granville Europe leveraged finance and chair of EVCA. department at RBS. He was inducted into She joins Palatine’s Real Deals’ Private London office as a partner Equity Hall of Fame at the with a focus on investments Private Equity Awards in 2014. that will have a positive social and “I am delighted that both John environmental impact. Burgess and John Singer have Last month Electra Private agreed to join the board of Equity confirmed that it would [Pantheon] and I believe that the terminate its investment company will benefit greatly from agreement with Electra Partners. their wealth of knowledge and experience,” said Tom Bartlam, Danish ATP has chair of Pantheon. “Both have appointed Christian Hyldahl as strong track records of investing in its new chief executive officer. global private equity and Hyldahl is currently head of understand first-hand the dynamics Nordea Asset Management. The of managing such assets through 51-year-old will take up his new multiple economic cycles.” role on 1 January. Burgess and Singer will begin Hyldahl replaces Carsten their new roles at the end of Stendevad, who is returning to November. the US for family reasons. He stepped down in August after three Investcorp has appointed Georg years as chief executive, during Knoflach and Julian Bennet to which time he strengthened the

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P24-25_RD378.17.11.16_People.indd 24 11/11/2016 14:40 people people people

fund’s in-house Benelux region. He relationship with our banking Krohnstad joined the firm last industrials practice. investment team arrives from Terra partners, Pillarstone will be able to year after a spell with Pareto Jamie Bruce was previously a and increased its Firma, where he offer a unique combination of fresh Securities. He has been involved partner at commercial advisory focus on direct served a year-long capital and industry expertise that in the recent Hydrawell and firm COBA. He also held roles at investments. secondment at they need to help them recover Presserv deals. PwC and MCG, and has advised on portfolio company and grow,” said Davison. Kildahl has been with Norvestor more than 100 private equity The Abraaj Group Wyevale Garden since 2014 and works with the transactions. has appointed Mark Centres as head of Pollen Street Capital has Roadworks, Marine Aluminium Bruce will sit on AMR’s Bourgeois (right) as corporate finance and appointed Magnus Christensson and PG Flow Solutions portfolio executive board. partner, global head of investor strategy. as partner and head of fundraising companies. engagement and chief executive Torsten Waack van Wasen and investor relations. Norvestor has also made three Swedish firmEast Capital officer of Abraaj North America. has been appointed chief operating Before taking on this role new hires. Jonas Kaldahl and Explorer is set to add a new board Bourgeois will join Abraaj’s officer. He joins from Alvarez and Christensson worked for nearly Peter Hedberg will join in member. management executive committee Marsal where he was managing five years at TPG Capital as head January as senior associate and The firm has nominatedGöran and will be an observer on the director and European co-head of of funding for Europe. Before that, associate, respectively. Kaldahl Bronner to join the board, which global investment committee. retail and e-commerce. He has he was managing director and head arrives from Arkwright while will expand from four members As global head of investor held senior roles at retailers of Europe at Jeffries’ private equity Hedberg joins from SEB Corporate to five. engagement for Abraaj, Bourgeois including Intersport, Kaufhof fundraising advisory division and Finance. Marie Fossli Nordheim Bronnner has more than 30 will spearhead the group’s global and Neckermann. has also worked at Atlantic-Pacific will start next month as a senior years’ experience in financial fundraising efforts and client Arne Heinrich joins Alteri as Capital, NM Rothschild and in accountant. services. He served as chief facing strategies. an associate. He previously worked strategy consulting at Bain and Meanwhile, chief financial financial officer and chief risk With more than 25 years of as a private equity associate at Indevo. controller Jens Borge-Andersen officer of Swedbank. He also experience in the alternative Gores Group. Pollen Street held a first close is set to leave the firm. He will take founded Tanglin Asset investments industry, Bourgeois Alteri was launched in 2014 by of its third fund in March, from up a CFO role at a newly Management and held several joins Abraaj from Atlantic-Pacific former GA-Europe man Gavin which it has already made a established . roles at SEB. Capital where he served as George. It is backed by Apollo number of investments. president and chief executive Global Management. RCapital has added Alastair Dunedin portfolio company officer. Babington Group, the RJD Dean to its team. Hawksford has appointed a new Prior to joining Atlantic-Pacific, KKR has hired a 30-year veteran of Partners-backed apprenticeships Dean joins as investment chief executive. Bourgeois was global head of the shipping industry to its and skills training business, has manager from Deloitte, where he The funds business has hired distribution and chief executive Pillarstone platform. appointed a new non-executive qualified as a chartered accountant Michel van Leeuwen. He joins officer of the Americas for Credit Jens Martin Jensen most chairman. and worked in the valuations, from regulatory services provider Suisse Asset Management. recently served as chief executive Andrew Hall takes up the transaction services and audit Cordium, which Sovereign Capital He has also held senior roles in of Frontline Management, a position. He is currently chief teams. sold to European Capital in 2014. and UBS Private division of one of the largest executive of examinations board He will operate in the London Van Leeuwen has also worked as a Funds Group. tanker companies in the world. He AQA. He has also been a non- market and work on sourcing managing director at Microsoft previously held roles at AP Moller executive director at awarding new deals. and previously held roles at Alternative assets manager Maersk and Island Shipbrokers. body JCQ and previously served as Misys, State Street Bank Altamar Capital Partners has KKR backed Pillarstone, led by chief executive of curriculum Eurazeo has and Algorithmics. hired Monica Martinez (right) as former RBS and Bridgepoint man business Strategic Resource appointed a new chief Dunedin backed managing director of the global John Davison, to target non-core Management and engineering operating officer to Hawksford in 2008. client solutions team to lead the and underperforming assets held company Eliza Tinsley Group. its Sommet international expansion of the firm. by European banks last year. In RJD acquired Babington from Education portfolio Investec has made Martinez will increase the April Pillarstone agreed a Bridges Ventures in April, the company. four appointments company’s efforts in deal with Italian listed second deal from its third fund. Fabien Fresnal to its fund finance Latin America as well shipping group joins the business division. as lead different Premuda. Law firmEversheds has after more than 20 Nick Rusling (left) initiatives in Europe “Shipping appointed Andy Phillips to lead years in the hotel, joins from Barclays’ debt in parallel with businesses in its private equity efforts in the restaurant and higher finance team, where he was Altamar’s efforts in Europe, and the north west. education sectors. Most a director. During his the United States, banks that lend to Phillips will join Eversheds’ recently he has been time at Barclays he where it has recently them, need solutions Manchester office early next year working as a managed the sales opened an office in that can help them from Pinsent Masons, where he consultant for process of a book of New York. address today’s spent eight years. He focused on various companies, debt to Ares. Martinez has more than challenging market private equity work and was including a school Alan 20 yeas experience in asset conditions. By drawing on Jens’ promoted to partner in 2015. in Jordan and the Macdonald (left) management. Since 2000 she has longstanding experience and our Recent deals Phillips has Jacques Gourmet joins fund finance’s held different senior positions at worked on include Equistone luxury restaurant legal and risk team JP Morgan Asset Management in Partners Europe’s acquisition of chain in the US. from Debevoise London, first as head of central Apogee and NorthEdge Capital’s Sommet Education Plimpton. He has more than banks and sovereign funds in investment in ITC Luxury Travel. comprises the Glion seven years’ experience Europe and Latin America and For the latest Institute of Higher with a particular focus most recently as head of Norvestor has made a series of Education and Les on leveraged and International institutional sales updates in promotions. Roches Global investment grade and product strategy. European Karl Svozilik moves up to Hospitality financing. She has also worked at the partner. He has been with the firm Education, two of Ian Wiese (left) alternative investment firm Ivy private equity, for eight years and worked on deals the world’s top and Oliver Asset Management in London and please visit: including Life Europe, Nomor and three higher Bartholomew join in the investment strategy team at Phonero, which was exited this education in from Investec’s BBVA in Madrid. realdeals. month. He previously worked at hospitality institutes. Johannesburg office and eu.com/news Evli Bank Corporate Finance. security and covenant Retail turnaround firmAlteri Henning Krohnstad has been Strategy consultancy AMR management team respectively. Investors has made three hires. promoted to investment manager, International has appointed a Investec’s fund finance team is Arnold Vos joins as head of the while Martin Kildahl becomes new managing director to lead the now 19-stong and has completed firm’s investment activities in the senior associate. firm’s private equity and more than 100 transactions.

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P24-25_RD378.17.11.16_People.indd 25 11/11/2016 14:41 People vulture New direction for Level 20 evel 20, the not-for- profit organisation that The not-for-profit organisation aims to increase the for women in European private number of senior women in European equity has a new chair, a private equity, last week announced the appointment formalised structure and Lof a new chair. 3i head of IR Jennifer Dunstan, currently the plans for new projects. organisation’s secretary, will take By Hannah Langworth over from incumbent Hanneke Smits at the beginning of 2017. Dunstan outlined her aims for her tenure at a reception held by Level 20 last week. Chief among these is to begin work on a research project to generate data on women in private equity, which is currently being commissioned by the organisation. “We’re very conscious that in order to demonstrate not only what needs to be done and what can be done but also how we’ve looked at addressing issues and whether any improvement has been made, we need to have a data set. This will provide some guidance to the industry around what we can be doing differently and better to improve things,” Dunstan said. Dunstan also commented that she hopes to expand the organisation’s mentoring scheme, which connects mid-level women in private equity with female and male senior industry professionals. The scheme began with 23 mentor/ mentee pairs and in its recently Level 20 chair Jennifer Dunstan, left, and chief executive Jeryl Andrew launched second cycle has grown to include around 45 pairs. shift in the management of the from Helena Morrissey as chief the mentoring scheme, these by setting diversity targets for new Level 20’s new chief executive organisation, launched just over a executive officer of include educational and networking hires and embarking on recruitment Jeryl Andrew, appointed last month, year ago, towards a more formalised Newton Investment events for members, initiatives, such as trying to reduce also spoke at the event about the structure akin to that of private Management, will visits to business unconscious bias. organisation’s future. “The Level 20 equity and venture capital industry remain involved schools to talk to Paying tribute to her 11 founders have done a remarkable bodies. As at the BVCA and Invest with the students about co-founders, Smits said: “It really job in launching this initiative to Europe, chairs will now be organisation. opportunities in has been a rewarding journey. inspire more women to join and appointed for year-long tenures. Speaking at the private equity, and We’ve come a long way together to succeed in private equity. I’m The organisation also now has a six- reception, Smits work with work towards a common goal.” excited now about taking it to the strong steering committee in highlighted Level industry charity New chair Dunstan also thanked next stage and, with the founders, addition to its board of founders 20’s Impetus-PEF. her co-founders, and Smits in executing on the plans for the and has established clearly defined achievements She added that particular. “She has left a very large coming year.” mandates for its key officers. since its she has seen pair of shoes for me to step into, Level 20’s new senior Level 20’s outgoing chair founding. As well firms respond to and I hope I can do as good a job as appointments are part of a wider Hanneke Smits, who will take over as the creation of Level 20’s work she has done.”

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P26_27_RD378.17.11.16.Level20.indd 26 11/11/2016 16:07 People vulture

issue 378 / 17 November 2016

the Editor Nicholas Neveling vulture Deputy editor Darragh Riordan Shed a tear The Vulture was saddened to read that Senior reporter Hannah Langworth most of the asset class’s hard-working Reporter Luciano Figari dealmakers will not receive salary increases next year. According to a Preqin survey 57 per Reporter Lucy White cent of firms will not give their staff a bump Creative director Nick Dixon in 2017. Six per cent of firms will go one step Design Keval Joshi further and cut wages. The old bird’s heart goes out to buyout Head of production Karen Gardner executives everywhere. So hard to scramble Managing director Steven Randell together a living these days. Associate publisher Ram Kumar Advertising manager Your ink tells Nick Assheton your story Subscription sales manager Steve Walsh Following on from coverage in our last issue on RJD’s acquisition of tattoo supplier Events director Amy Carroll Barber, the Vulture noticed an interesting Head of events Chloe Leighton twitter exchange between PwC retail guru and Finance director Sarah Woollett regular Real Deals commentator Kien Tan and consumer journalist and TV producer Harry Caspian Media Limited Wallop. In response to Tan’s observation that Unit G4, Harbour Yard, Chelsea tattoos seem to be all the rage in the private Harbour, London SW10 0XD equity industry, Wallop warned that future Tel +44 (0)20 7045 7500 employers may not look kindly on permanent body art. The PwC director couldn’t hide his Real Deals is available on disappointment: “There go my plans for my subscription for £1,350/¤1,865 a year. midlife crisis.” A barracking Never mind Kien. You can always do it the To subscribe to Real Deals old-fashioned private equity way by getting a Call +44 (0)20 7045 7615 Donald Trump’s election as US president was not new leather jacket and buying a sports car. Email subscribe especially well-received by the private equity industry, @realdeals.eu.com with many Silicon Valley firms vociferously criticising the Trump campaign. No going back Real Deals is published by Caspian Media. All rights reserved. The views expressed by Tom Barrack, the founder of buyout house Colony Capital, contributors and correspondents are their own. Reproduction in whole or in part without however, is one exception and set to chair the President- written permission is strictly prohibited. Colour transparencies, manuscripts or disks submitted elect’s inauguration committee. to the magazine are sent at the owner’s risk; Barrack and Trump are old friends and Barrack (not neither the company nor its agents accept any responsibility for loss or damage. Unsolicited Obama) was one of the very few private equity executives to material should be accompanied by a stamped addressed envelope. Printed by Headley actively support Trump’s candidacy. Brothers. Repro by Zebra. ISSN 2049-6567. The Vulture is curious, however, as to what Barrack’s thoughts are on Trump’s campaign pledge to eliminate tax breaks for carried interest? The old bird will be watching attentively. realdeals Making Connections print / online / App With a truly global network, deep sector knowledge and trusted M&A expertise, Baird’s Global Investment Banking team helps clients access buyers around the world. privAte equity DelivereD Let us take your businesses where you want them to go. Visit bairdeurope.com.

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P26_27_RD378.17.11.16.Level20.indd 27 11/11/2016 16:07 DB Private Equity is delighted to announce the Final Close of: German Access Fund, L.P. Private Equity Deutschland, GmbH & Co.KG ~€260 million

A fund programme formed to build a diversified portfolio of private equity owned companies, primarily in the German “Mittelstand”, via co-investments alongside private equity sponsors and investments in small and mid-cap partnerships.

September 2016 www.dbpe.com

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