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Egeria has acquired Meyer Menü following the succession of the current majority shareholder and member of the founding family, Thomas Meyer. 

Founded in 1963 by the Meyer family, Meyer Menü produces lunch meals in its commercial kitchens and delivers them to senior households, child daycare facilities, schools and corporate clients through its in-house vehicle fleet and drivers.

The two co-CEOs, Marcel Hoffmann and Christian Seidel, will reinvest alongside Egeria.

Over the years, the company has expanded its geographical reach to six industrial kitchen sites and 20 additional distribution hubs across Germany. 

Established in 1997, Egeria is an independent investment company focused on midsized companies in the DACH region and the Netherlands. 

With Egeria’s support, Meyer Menü will look to further increase its presence in existing regions and selectively expand into new regions.

Egeria currently has investments in 22 companies in Germany, the Netherlands and the US. The firm’s portfolio companies generate combined revenues of more than €3bn and employ approximately 12,500 people.

Categories: Deals Sectors Retail, Consumer & Leisure Geographies DACH

TAGS: Egeria Germany

Stellum Capital and Inveready Asset Management have acquired 25% of LEV 2050.

It is the seventh investment from the Stellum Food&Tech I fund, while Inveready invested from its Inveready Biotech IV vehicle.

Founded in 2010 and based in Navarre, Spain, LEV 2050 specialises in the development of micro-organisms that facilitate the optimisation of production processes for agrifood companies. 

It has 20 employees, half of whom work in R&D, and the company’s main source of income currently comes from the wine sector.

Directed by David Martínez and Pablo Echart, Stellum Food&Tech I predominantly takes minority stakes in small and medium-sized food companies throughout the entire value chain, as well as in technologies and production processes associated with them. The vehicle is currently investing and is also in the final phase of fundraising.

LEV 2050 said the entry of Stellum Capital and Inveready will allow the portfolio company to address its next stage of growth with partners that know the management of companies specialised in its sector.

Stellum’s portfolio currently includes Uvesco (a Guipuzcoan retail company that operates the BM and Super Amara supermarket brands), Envaplaster (a Navarrese company specialised in sustainable food packaging), Syra Coffee (a speciality coffee company based in Barcelona), Comercial Hostelera (an industrial kitchen design, installation and maintenance company), Biogrub (a manufacturer of insect protein) and Natac Group (a company specialised in the production of natural ingredients and extracts). 

ADVISERS

Buyside
Rocío Cruces Torres (legal)
PwC

Sellside
ADV Lawyers (legal)

Categories: Deals Sectors Manufacturing Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Adv Lawyers Agrifood Pwc Rocío Cruces Torres Spain Stellum Capital, Inveready Asset Management

Ardian, Alantra and Artá Capital have sold their stake in Monbake to CVC for an undisclosed sum.

Monbake is a frozen bakery producer in Spain and was created in February 2018, when Ardian bought the companies Berlys and Bellsolá.

According to a statement, Ardian in its six-year holding period helped Monbake consolidate its position as one of the three main producers and distributors of frozen pastry at a national level.

CVC will support the company's global expansion strategy and focus on employment, quality, innovation and strengthening the company’s relationships with customers in more than 30 countries where it currently operates.

Other investments by CVC in the consumer and retail sector include Breitling, Lipton Teas and Infusions, and Panzani. 

ADVISERS:

CVC
Allen & Overy (legal)

Categories: Deals Exits Sectors Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Alantra Allen & Overy Ardian Cvc Capital Partners

ECI-backed Moneypenny has expanded to the US with the acquisition of Sunshine Communications Services.

Sunshine is a provider of bilingual (English and Spanish) call management solutions to businesses of all sizes. The company is based in Florida and was founded in 1975.

Moneypenny’s US operation is headquartered in Atlanta and the company employs more than 1,000 people globally, delivering virtual receptionist and phone answering services, live chat, switchboard, fully outsourced customer service teams and a host of AI and technology-enabled services handling more than 20 million calls and chats annually for multiple businesses, from sole traders to multinational corporations.

ECI invested in Moneypenny in 2018 and has since helped the UK-based telecommunications business in completing three overseas acquisitions. Some 35% of Moneypenny’s revenue is now international.

Categories: Deals Buy-and-build Sectors TMT Geographies UK & Ireland ROW

TAGS: Eci Partners

London-headquartered private equity firm PX3 Partners has acquired Com Laude Group from Vespa Capital and the company's founders. 

Headquartered in the UK, Com Laude is a tech-enabled business services company that manages internet domain name portfolios, monitors digital brand infringement, and ensures a secure online brand presence for large corporates. 

The deal has been made from PX3’s inaugural fund, the firm said in a statement. According to a source, the vehicle is currently fundraising. 

According to PX3, the firm will employ its 'connected acceleration' value creation model to further institutionalise the company, enhance its sales capabilities, invest in new services and facilitate add-on acquisitions. 

Vespa Capital invested in the company in 2017 and supported the company in the acquisition of Edinburgh-based Demys in 2018, in addition to doubling the domains under management, net revenue and profitability.

PX3 was founded in 2021 by Petter Johnsson, Gianpiero Lenza and Sébastien Mazella di Bosco. 

ADVISERS:

Aon (insurance)
Castlegreen Partners and Houlihan Lokey (corporate finance)
Debevoise & Plimpton (tax)
Grant Thornton (accounting)
KPMG (ESG)
Marlborough Partners (debt financing)
Pinsent Masons (legal)
Roland Berger and Teneo (commercial due diligence)

Categories: Deals Sectors Business Services TMT Geographies UK & Ireland

TAGS: Aon Castlegreen Partners Debevoise Grant Thornton Houlihan Lokey Kpmg Marlborough Partners Pinsent Masons Px3 Partners Roland Berger Teneo

According to the Central Bank of Ireland (CBI), the number of Ireland-domiciled funds, including sub-funds, grew from 8,372 at the end of 2021 to 8,870 at the end of Q4 2023. 

While the numbers are broadly positive, progress has been sluggish, with Ireland still ranking below the more expensive Luxembourg and Cayman Islands jurisdictions when it comes to GPs’ choice to domicile their funds. But Ireland is making serious efforts to increase its market share. 

According to Maples Group’s co-head, Eimear O'Dwyer, fund managers that choose Ireland do so because of its “open, transparent and well-regulated investment environment, strong emphasis on investor protection, and responsive business culture”. 

She continues: “In addition, Ireland's status as the only English-speaking member of the Eurozone (in addition to having a common legal system and jurisprudence) makes it an intuitive place for US and UK managers to locate EU fund operations.”

Conor O’Callaghan, head of AIFM Ireland at Alter Domus, corroborates: “With expertise across the fund servicing spectrum of open-ended liquid fund experience, as well as growing private asset experience, Ireland is well positioned. A suitable tax regime for Ireland-domiciled funds and an extensive global network of double tax treaties are also standout features.”

The modest uplift in the Irish funds landscape in recent years stems largely from regulatory progress and, in particular, Ireland’s Investment Limited Partnerships (Amendment) Act (ILP), which came into force in 2020. But the act has also attracted some criticism.

Ireland's status as the only English-speaking member of the Eurozone (in addition to having a common legal system and jurisprudence) makes it an intuitive place for US and UK managers to locate EU fund operations
Eimear O'Dwyer, Maples Group

A positive difference?

“The ILP provides a simple, purpose-built partnership structure that the industry should find helpful, especially given the common law base of Irish, UK and US law where much of the asset management community originates,” observes Tom Alabaster, head of funds practice (EMEA) at Ropes & Gray.

However, the ILP has had a reasonably slow uptick despite its potential usefulness. “Some of this reflects early teething issues with the structure but also the widespread familiarity with Luxembourg’s SCSp and reluctance to move away from these established structures, in which several asset managers have put large-scale investments (including establishing large teams),” explains Alabaster. 

The law firm has also seen a reluctance to move away from Luxembourg in a softer fundraising environment. It appears that fund managers are hesitant when it comes to presenting something new to investors that might present a further question or rationale for not proceeding with the investment. 

Emma Keane, director at Highvern, concurs that the ILP has taken longer than expected to gain the traction needed to firmly establish Ireland as a jurisdiction for a partnership structure.

She adds: “As the ILP is a relatively new structure, awareness among investors and fund managers might still be limited. Many stakeholders may not fully understand its advantages or how it compares to other investment vehicles. The ILP, being a partnership without a separate legal personality, can be perceived as a more complex structure than other vehicles, and some investors and managers may prefer a simpler structure. While the ILP has been modernised, regulatory requirements and compliance processes still need to be considered. Navigating these requirements can be a deterrent for some market participants.”

However, experts also argue that the ILP is a “reasonably rightly regulated” partnership structure authorised by the CBI. Where an ILP is authorised as a Qualifying Investor Alternative Investor Fund (QIAIF), it is subject to a limited number of investment restrictions.

While the ILP has been modernised, regulatory requirements and compliance processes still need to be considered. Navigating these requirements can be a deterrent for some market participants
Emma Keane, Highvern

In Alabaster’s view, while certain investors take additional comfort from the regulated nature of the ILP, fund sponsors of certain strategies (such as private credit) have favoured establishing their funds in jurisdictions that are not subject to additional regulatory rules on direct lending.

In addition, the first ILP formation processes took a good amount of time to be authorised by the CBI and in some cases more time than it would have taken to form a similar Luxembourg structure. The CBI asked more diligence and familiarity questions than the CSSF would have done on a similar structure. 

According to Ropes & Gray, the regulator is making sure it familiarises itself with private fund structures and how they work – something Luxembourg’s CSSF has been doing for many years.

“More recently, these CBI approval processes have been much more efficient and prompt. Technically, the ILP can be established following a 24-hour approval process by the CBI. Oftentimes, the GP fitness and probate process for a new sponsor can be as short as four to six weeks. However, this would not include the time to establish an Irish AIFM or onboard with a third-party AIFM, which we understand would bring the overall timeline to launch closer to eight to 12 weeks, which is generally quicker than Luxembourg.”

Leap of faith 

One private capital provider to have set up shop in recent months in Ireland by using the ILP is Exponent Private Equity.  

Chief operating officer Craig Vickery explains the firm’s rationale: “When planning for our current fundraise, it was a relatively easy decision to establish the AIFM in Ireland since we were focused on having an EU-registered AIFM – and to open an office in Dublin. Having registered the AIFM in Ireland, it made sense for Exponent to explore Ireland-registered AIF options for the new fund.”  

Despite the limited use of the ILP vehicle in the private equity market, the updates to the ILP legislation in late 2020 meant that it was an “obvious” option for Exponent to consider. The advice that Exponent received was clear that using an ILP would be comparable to the England-registered private fund LP.  “Specifically, it was evident that an ILP would operate in a manner consistent with the prior funds and would also benefit from the familiarity of a common law jurisdiction,” says Vickery.

Jacqueline Flynn, operations director at the firm’s Ireland office, adds that the key attractions of the ILP include the similarities of the vehicle and legal system to the English private fund LP, access to talent in Ireland, and the cultural similarities that Ireland offers to the UK and US. 

Ready to compete

Despite regulatory progress, there has not been a large number of funds flocking to Ireland, with most preferring to stick with Luxembourg. 

An overarching theme is that domicile choice is primarily driven by investor preference and familiarity. Ireland has traditionally been a hub for open-ended products, while closed-ended products have tended to be structured through Luxembourg. 

The hope now is that the ILP will gain traction during the coming years and make Ireland a credible alternative in the private equity market to the duchy. But a lot will need to be done to ensure this.

Ireland’s regulatory environment has a strong reputation for investor protection. However, to make the most of its codes and regulatory regime, Ireland needs to be proactive as a jurisdiction and respond expeditiously to changing markets, stresses Highvern’s Keane.

Ireland is the third-largest fund and asset management jurisdiction globally and with this comes a responsibility to not only protect the sector but to also improve it.

Looking forward, Keane anticipates Ireland will need a more flexible structure similar to a Luxembourg RAIF, which although not subject to regulator product approval, is subject to AIFMD. “I believe that a product like this would attract investor appetite, which dictates the jurisdiction rather than fund manager preference in a lot of cases.”

Private markets participants also admit that a part of the reason why the ILP has been quite slow to take off is because the industry has yet to see a big institutional investment manager launch an ILP – once this happens, others will follow suit. 

There is an appetite to domicile funds in Ireland, but the product toolkit also needs to stand up to other jurisdictions
Conor O’Callaghan, Alter Domus

From a tax perspective, the reform of the Irish holding company regime, to be introduced in January 2025, is appreciated and is expected to remove differences with other jurisdictions, making it more attractive for private equity funds that typically will use a holdco structure. 

From a political perspective, Ireland’s Department of Finance is conducting a 2030 funds sector review in an attempt to make the region more attractive and has identified private asset growth as a key opportunity. 

Alter Domus, which administers funds, believes that up until now, one of Ireland’s pitfalls was that it did not have the product toolkits equivalent to other jurisdictions. But now, the playing field is beginning to level out.

“There is an appetite to domicile funds in Ireland, but the product toolkit also needs to stand up to other jurisdictions. For instance, changes to the holding company regime to make it comparable to Luxembourg or the UK are extremely welcomed. These are some of the things that have restricted Ireland’s growth in the last couple of years,” notes O’Callaghan.

“Ireland is positioning itself to take advantage of the global increase in private assets, as opposed to winning market share versus other jurisdictions,” he concludes.

Categories: Insights Geographies UK & Ireland

TAGS: Alter Domus Exponent Highvern Ireland Maples Group Ropes & Gray

Innova Capital has acquired a “significant” minority stake in Dimark Manufacture through its Innova/7 fund.

Established in 1994 and headquartered in Złotkowo, Poland, Dimark specialises in designing, manufacturing and servicing baggage handling system installations. 

Innova Capital is a PE firm from Poland, investing in midsized companies operating in Central and Eastern Europe.

Innova Capital will assist Diark’s founders, Dymitr Kopras and Błażej Nowakowski, with further product innovation, facilitating the development of production facilities and enhancing international sales efforts.

The GP said the portfolio company's geographic expansion efforts are directed towards Asia-Pacific and Latin America, capitalising on the “exponential growth” of air traffic within these areas.

Since its inception in 1994, Innova Capital has invested close to €1.4bn in almost 70 companies across 10 countries in the region.

Andrzej Pietrzak, partner at Innova Capital, managed the transaction.

Categories: Deals Sectors Retail, Consumer & Leisure Geographies Central & Eastern Europe

TAGS: Innova Capital Poland

Alternatives asset manager Golding Capital Partners has promoted head of secondaries Richard Wilmes to partner, based in Munich.

Wilmes has been with Golding for 15 years and built up the secondaries team from 2012. The economics graduate previously worked at Bank of America Merrill Lynch.

While 5% of Golding’s total investments were made in the secondaries sector in 2022, this went up to 13% in 2023, which Golding said is due to favourable developments in the secondary markets, which it believes are set to continue in 2024.

“As a team, we focus on the further development of our secondary market strategies, especially in the small- and mid-cap segment,” said Wilmes.

Golding’s current secondaries fund has already almost reached the total size of its predecessor of about €280m and is expected to grow further to €500m as planned, according to the firm.

Golding currently has a team of more than 200 professionals across its offices in Munich, Luxembourg, Milan, Tokyo and Zurich.

Categories: People LP & GP moves Geographies DACH

TAGS: Germany Golding Capital Partners Secondaries

ThinCats has launched a £300m fund to support UK-based midsized SMEs. 

The fund will specifically target businesses across the Northwest, Midlands, London and the Southeast. 

ThinCats is focusing on businesses with Ebitda of at least £1m, which it will support through cashflow loans. It will to deploy the capital from its offices in London, Manchester and Birmingham.

The British lender explained that midsized SMEs often struggle to receive support from traditional lenders because of their low concentration of physical assets to act as security.

Mike Hackett, chief commercial officer at ThinCats, said in a statement that the current market landscape is becoming more stable, as inflation continues to fall and the Bank of England signals that interest rates may come down later this year.

As a consequence of this, the investment professional is witnessing an increase in acquisitions, management buyouts, EOTs and capital restructurings.

“Alternative lenders like ourselves alongside challenger banks and private debt funds are increasingly providing the necessary funding for ambitious, high-growth businesses, especially in the regions,” he said.

“Working closely with regional business finance communities, we aim to support many more businesses looking to gain access to flexible debt capital to support their growth objectives,” Hackett added. 

Experian Market IQ’s 2023 M&A Report found that ThinCats funded 41 deals last year, coming second behind HSBC, which funded 56 deals.

ThinCats is an alternative lender dedicated to funding SMEs with business loans from £1m up to £15m. ThinCats has since inception enabled SMEs to borrow more than £1.7bn.

Categories: Funds Mid [€200M - €1B] Sectors Business Services Construction & Infrastructure Energy & Environment Engineering Finance & Insurance Healthcare & Education Manufacturing Real Estate Retail, Consumer & Leisure TMT Geographies UK & Ireland

TAGS: Liquidity Private Debt Thincats Uk

Omni Partners has bolstered its team with the appointment of Wayne Story and Phill Rowland as partners. 

The appointments follow Omni’s recent rebranding efforts. 

Story brings 40 years of experience, of which the last 15 have been spent as a CEO leading multiple PE-backed businesses, including Civica, Equiniti and Equatex. 

Recently, he was appointed the chair of Vivup, an Omni-backed wellbeing and employee benefits provider.

Phill Rowland joins Omni with more than 30 years of experience in finance, and was most recently the CFO of Civica. 

London-based Omni is a lower midmarket private equity firm. Last week, the GP sold its majority stake in Vivup, notching a strong return.

Categories: People LP & GP moves Geographies UK & Ireland

TAGS: Omni Partners

Whiterock has raised £75m for its maiden growth capital investment fund.

Focusing on Northern Ireland, the vehicle aims to address the need for growth funding in the local market.

The growth capital fund will eye investments of £1-5m for minority stakes.

Whiterock has been operating in Northern Ireland since 2012 and has raised more than £150m across four funds.

The firm is predominantly a debt funding provider to SMEs and is now branching out into equity. 

British Business Bank has committed £45m to the fund through its Enterprise Capital Funds programme, and the remaining £30m has come from local family offices and high-net-worth individuals, Whiterock said in a statement.

The fund will be bolstered by the appointment of several external consultants and sector experts to provide technical knowledge and experience.

Whiterock expects the fund to back 15-20 companies during a five-year investment period.

ADVISERS:

Mills Selig (legal)
Hogan Lovells (legal)

Categories: Funds Small [€200M or less] Geographies UK & Ireland

TAGS: Hogan Lovells Mills Selig Northern Ireland Whiterock

Literacy Capital PLC has acquired a “significant” minority stake in Live Business Group.

Founded in 2015 and based in West London, Live Business Group is an international entertainment supplier to the travel, tourism and leisure industry, specifically for holiday resorts or cruise ships. The company’s capabilities cover concept design, digital media content, West-End style production shows and live entertainment activities.

The transaction is Literacy's 23rd platform investment since it was founded in 2017 with £54m of capital. 

Literacy was subsequently listed on the London Stock Exchange in June 2021 and has an “evergreen” fund structure.

The investment from Literacy Capital will support Live Business Group's growth plans, with a focus on the quality of the portco’s service offering. 

Both co-founders, Mark Dixon and Dan Lock, will continue in their current roles at the forefront of the business's activities.

Categories: Deals Sectors Retail, Consumer & Leisure Geographies UK & Ireland

TAGS: Literacy Capital London Uk

N4 Partners has completed a further seven-figure investment into Opulus Financial to become the majority shareholder of the business. 

The Glasgow-based investment firm originally invested in the business in January 2022 for an initial 45% stake, which has now been increased to 98%, a spokesperson for N4 told Real Deals.

Opulus is a Scotland-based specialist accounting, tax and audit firm, established through a series of acquisitions.

The deal sees N4’s Allan Dowie become CEO as the firm continues its growth plans for expansion across the country and planned investment to increase headcount by more than 15% in the coming months.

According to the firm, its value creation plans for the business include the implementation of a buy-and-build strategy and a renewed focus on the SME and entrepreneurial market in Scotland, in addition to investment in tech and office space, the spokesperson added.

Employing a staff of more than 170, Opulus currently has offices in Glasgow, Edinburgh, Kilmarnock, East Kilbride, Motherwell, Saltcoats, Oban and Manchester. 

The company earned revenue of £14m in its most recent financial year.

Categories: Deals €200M or less Sectors Business Services Geographies UK & Ireland

TAGS: N4 Partners Scotland

Equistone Partners Europe-backed Andra Tech Group has acquired Lucassen Group. 

Founded in 1989 and headquartered in Sittard, the Netherlands, Lucassen focuses on manufacturing high-precision components for customers in the semiconductor, analytical and optics sectors, among others.

Established in 1973, Andra Tech Group has developed into a leading group of manufacturers of high-tech precision components and sub-modules.

The acquisition aims to strengthen Andra Tech Group’s geographical position with a particular focus on the Dutch market, while continuing to expand its technology portfolio in the field of high-precision manufacturing. 

With the acquisition of Lucassen, Andra Tech Group currently employs more than 700 people and has expanded its customer base across the semiconductor, high-tech, mobility, food processing, medical, packaging and printing industries. 

The deal represents the fourth acquisition since Equistone acquired a majority stake in Andra Tech Group in March 2021. 

Since then, Andra Tech Group acquired metalware producer Mayer Feintechnik in December 2022, metal processing specialist DKH Metaalbewerking in February 2023, and metal processing firm Lemmens Metaalbewerking in December 2023. 

Selling shareholder and managing director Daniël Gulikers will continue to lead Lucassen within the Andra Tech Group, the GP said in a statement. 

Equistone funds primarily invest in businesses with enterprise values of €50-500m. The firm is currently investing its sixth fund, which held a final closing at its €2.8bn hard-cap in March 2018. 

Equistone Partners Europe-backed Buko Traffic & Safety has also recently completed a bolt-on, acquiring Road Traffic Solutions.

ADVISERS

Equistone
PwC (financial and tax)
Vesper (legal)

Categories: Deals €200M or less Sectors Engineering Manufacturing Geographies Central & Eastern Europe DACH

TAGS: Netherlands Pwc Vesper Infrastructure Partners

Reed Smith has appointed Ilana Smadja as partner. 

Smadja is joining the financial industry group and is based in its Paris office.

The financial industry group is Reed’s arm that aims to provide solutions to transactional, distressed, dispute and regulatory issues that arise throughout the lifecycle of transactions involving financial institutions and investors.

Smadja’s tasks include a focus on leveraged finance and restructuring transactions, representing corporate borrowers, private equity sponsors and financial institutions. 

She joins from law firm Weil Gotshal & Manges, where she worked for almost 12 years. Starting as an associate in 2012, she was promoted to counsel in 2021. 

Reed Smith opened in Paris in 2005 and currently comprises 70 lawyers, including 21 partners.

Categories: People Advisory moves Geographies France & Benelux

TAGS: France Reed Smith Weil Gotshal & Manges

Continuation funds remained a prominent feature of the private funds industry in 2023, with GP-led transaction volumes topping $52bn, representing the second-highest year on record, according to the latest edition of Houlihan Lokey’s private equity outlook report.

GP-led deals globally reached their peak in 2021, with volumes topping $68bn, but fell to $50bn a year later.

The trend comes as sponsors try to utilise creative strategies to optimise portfolios and create liquidity in an environment where traditional exits are more challenging.

According to the investment bank, sponsors looked to continuation funds and other cross-fund transactions to drive returns and distributions for investors last year amid declines in IPO volume, M&A volume and private equity exits.

The makeup of the continuation fund market continues to evolve to meet the goals of GPs, LPs and new investors. 

Throughout 2023, there was an increase in multi-asset continuation funds relative to single assets, as LPs sought liquidity and buyers looked to mitigate concentration concerns. 

According to the report, increasingly complex structures, including multi-fund, multi-asset continuation funds, and the use of deferred payments and performance-based earnouts, are being used to bridge valuation differences.

The investment bank also saw an uptick in cross-fund transactions and expects this trend will continue increasing throughout 2024, given current industry and market dynamics.

Cross-fund transactions generally occur between funds of the same sponsor and may not involve new third-party investors. 

Such deals include the merger of portfolio companies held in different funds, the sale of portfolio companies from one fund to another fund of the same sponsor, acquisitions of third-party targets by portfolio companies in which equity capital is provided by a subsequent fund, carve-outs or divestitures of assets from existing portfolio companies, or fund seeding in which existing investments are contributed to a new fund vehicle before an external capital raise.

“This can offer distinct benefits for a sponsor like allowing a newly raised fund the ability to deploy capital quickly into a high-conviction opportunity, unlocking potential synergies between portfolio companies, or transferring companies/assets to other vehicles within the fund family that may have better strategical alignment,” notes the report.

Categories: Insights Expert Commentaries Funds Deals Exits Geographies UK & Ireland

TAGS: Continuation Funds Houlihan Lokey

London-based early-stage venture capital firm Ascension has raised £17m in the first close of its new institutional impact fund.

Ascension Fund III (AFIII) will back founders leveraging technology to build more resilient societies. The vehicle is targeting £50m intending to hold a final close next year. 

The vehicle started raising capital 18 months ago, a spokesperson told Real Deals

The first close of AFIII has seen commitments from existing as well as new investors, and has been anchored by Big Society Capital. The geographical focus of the fund will include the UK, Europe and North America.

Other investors include social enterprise Places for People, Esmee Fairbairn, and several family offices and high-net-worth individuals. Ascension-backed founders, notably Wagestream and Percent, have also invested in the fund. 

Emma Steele, partner at Ascension, said the fund sits at the intersection of major tech trends such as AI/ML, digital health, future of work, fintech, energy decentralisation and decarbonisation, reinforcing the funds' ambition of achieving venture-level returns while delivering deep social impact. 

AFIII’s predecessors, the Fair By Design fund and the Good Food fund, have backed startups including Wagestream, Tembo, Plend (building financial resilience) and Switchee (reducing fuel poverty), with Urban Legend and Better Nature both tackling obesity from Ascension’s Good Food fund. 

Ascension manages two tax-efficient vehicles as well as institutional funds.

Since 2015, the VC has invested in more than 175 startups and recorded 12 exits. The firm currently manages £90m-plus in assets.

Categories: Funds Small [€200M or less] Venture Geographies UK & Ireland ROW

TAGS: Ascension Impact Investing

Due to higher-quality living conditions and longer life expectancy in the UK, the number of people aged over 65 has been rising since 2011, with The Health Foundation predicting the number of people aged 85-plus will reach 2.6 million during the next 25 years. 

Along with this, factors such as automatic pension enrolment and better financial literacy mean people are planning for later life more strategically than ever before, ensuring they have enough money saved to begin their retirement.

This has resulted in a growing pool of defined contribution (DC) pensions and the creation of a £2.7trn wealth management market consisting of shareholdings, investment funds, net cash, private and occupational DC pension instruments. 

Given this impressive growth across the wealth management industry, private equity has been quick to act and make the most of higher returns. 

Untapped wealth 

After the introduction of new Consumer Duty rules in July 2023, many smaller wealth management firms faced increased compliance costs and oversight, pushing many owners to sell their businesses.

With owners either selling up or retiring, it became apparent that private equity firms preferred wealth management firms with robust management teams in place, who could seamlessly manage the transition, making the process as easy as possible for staff and existing clients.

Houlihan Lokey has felt the impact of this uptick in PE activity, which has seen the investment bank advising several companies through their M&A journey. 

In the last four years, we have seen first-hand how PE can help wealth management firms to grow at pace

During the last few years, we’ve advised on several high-profile transactions, including Wren Sterling on its sale to Lightyear, and Ascot Lloyd on its sale to Nordic Capital. Most recently, our team was at the forefront of the deal that saw Charlesbank Capital Partners acquire Perspective Financial Group from CBPE Capital. 

In the last four years, we have seen first-hand how PE can help wealth management firms to grow at pace. For example, following PE intervention, Perspective grew from £2.6bn to £8.0bn AUM, really demonstrating the sector’s ability for huge growth when working in tandem with PE.

Opportunities abound 

With plenty of opportunities to invest in firms of differing size, the overall market is growing, which is supported by long-term structural tailwinds such as an ageing population, higher life expectancy, further penetration of financial advice and an increase in the number of employees paying into DC pensions.

That and the fact that the wealth management sector has proven to be very resilient, despite rising interest rates, is attractive to PE firms that are looking to acquire business and secure a strong profit.

Furthermore, there is a structural shift at play, with independent wealth management firms growing as a result of having less bureaucracy than bigger banks and insurers. 

Alignment is key 

Despite the positive trajectory of the wealth management sector recently, it is not without its strategic considerations. As people-based businesses, wealth management firms must be managed like any other professional services companies. The focus on hiring and retention of advisers is important, ensuring consistency for clients.

Additionally, equity markets can be volatile – fees are often tied to client’s portfolios, which are tied to the markets. However, history would suggest that market downturns are temporary and clients are best placed sitting on their hands and waiting for the markets to recover.

Given its relative stability, the wealth management sector has become an attractive sector for driving returns, further encouraging PE activity

This was particularly prevalent during the Covid-19 pandemic, in which many sectors halted almost overnight, before eventually returning to normal, with some even posting better figures post-pandemic. As a result, wealth managers are resilient when it comes to client outflows. Given its relative stability, the wealth management sector has become an attractive sector for driving returns, further encouraging PE activity. 

Through the involvement of PE firms, wealth management businesses can also overcome volatile and restrictive tailwinds by receiving injections of essential capital into the business, placing firms in the best position to tackle unforeseen circumstances further down the line.

Evolving space 

During the coming years, I expect to see well-performing wealth managers moving up the PE size spectrum, as seen in CBPE’s acquisition of Perspective in January 2020, then expanding the business before it was sold to Charlesbank, propelling the business to new levels of growth. M&A activity in the sector will increase further, continuing to show signs of strong growth and resilience, with more wealth management firms seeking PE investment as a means of achieving substantial growth. 

On the other hand, I also expect to see consolidation among the mid-tier wealth management firms, which will provide opportunities for PE investors to unlock opportunities for wealth management businesses.

Categories: Insights Expert Commentaries

TAGS: Cbpe Capital Charlesbank Capital Partners Houlihan Lokey Nordic Capital

Schroders Capital has appointed Ingo Heinen as global head of business development and product.

Heinen was previously head of marketing and client relations, EMEA at Intermediate Capital Group (ICG), based in the firm’s London office. There, he led the fundraising team across EMEA and was responsible for raising capital across private and liquid credit, private equity, real estate and infrastructure.

Before ICG, Heinen spent 10 years at BlackRock, where he built and led the fundraising team for the alternative investments business in EMEA.

During the preceding decade, Heinen worked in derivatives structuring, product development and fund-linked sales at RBS, Nomura and Merrill Lynch.

In this newly-created role, Heinen will use his sales and product development background to spearhead Schroders Capital’s private markets fundraising efforts, engaging with clients worldwide.

During 2023, Schroders Capital generated $11.6bn of fundraising across its suite of private market capabilities.

Categories: People LP & GP moves Geographies UK & Ireland

TAGS: Blackrock Icg Schroders Capital Uk

TA Associates has become the lead investor in Carlyle-backed SER. 

Founded in 1984 and headquartered in Bonn, Germany, SER is an intelligent content automation software vendor in the enterprise content management market.

Carlyle, which had $426bn in assets under management as of 31 December 2023, acquired a majority stake in the portfolio company in 2018 through its €657m Carlyle Europe Technology Partners growth fund.

Under Carlyle’s ownership, SER built out its senior management team, shifted to a subscription-first business model, expanded its product offering and entered new markets including the US, the UK, Continental Europe and the Middle East, through organic investment and M&A.

Today, SER has more than 600 employees across 20 offices in 11 countries. 

TA is a global private equity firm investing across five target industries: technology, healthcare, financial services, consumer and business services.

The new investor said as the demand for AI-powered technologies continues, it believes SER has a “meaningful opportunity” to support organisations in their digital transformation journey, harnessing the portco’s Doxis platform to streamline document processing and content management needs.

TA will work with Carlyle to accelerate SER’s international expansion, invest in AI innovation and enhance the company’s product offering.

Baird was the exclusive sell-side M&A adviser to Carlyle.

Categories: Deals Exits Sectors Business Services TMT Geographies DACH

TAGS: Carlyle Group Germany Ta Associates

Portuguese PE firm Vallis Capital Partners has exited Castelbel to Bourn Rock Investments Group, bagging MOIC of 7.5x.

Castelbel is a Portuguese company producing soaps and other fragranced luxury products, such as candles, drawer liners and sachets, fragrance diffusers and room sprays, fragranced hand creams, shower gels and body lotions.

The business owns the Castelbel and Portus Cale brands, and currently exports about 75% of its production to more than 60 countries, including the US and the UK. 

In 2016, Vallis acquired a majority stake in Castelbel through its Vallis Sustainable Investments I fund, which invests in Iberian SMEs.

During the firm’s ownership, Castelbel strengthened its governance model and implemented an international growth plan, while at the same time investing in increasing its production capacity by moving to new manufacturing facilities in Castelo da Maia. Consequently, its turnover more than doubled during the holding period.

The Bourn Rock Investments Group (BRI) is a Portuguese corporate investment group, focused on creating and consolidating Blueotter Group, a Portugal-based operator in the recycling and global management of non-hazardous waste.

Castelbel is the first diversification of the group's investment activity, as it aims to diversify risk and seek synergies in talent and sustainability. With the acquisition, BRI Group expects to have a turnover of approximately €90m in 2024, 800 employees and 11 industrial units in Portugal.

Vallis Capital Partners currently has assets under management in excess of €200m.

Categories: Deals Exits Sectors Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Bourn Rock Investments Group Vallis Capital Partners

After holding the company for only 15 months, Omni Partners has sold its majority stake in Vivup.

Established in 2005, Vivup is a UK-based employee benefits provider specialising in health and wellbeing, offering a customisable employee engagement platform integrating benefits, wellbeing programs, discounts, savings, and recognition and reward services.

The sale to Boston-based Great Hill Partners delivered an 11x return and an IRR of 400%, partner and MD Elissa von Broembsen-Kluever tells Real Deals, adding that while she can’t disclose the terms, the offer from Great Hill Partners was “very attractive”.

One of the things that we liked about the employee benefits sector at the time of the Vivup acquisition was its highly fragmented nature

Elaborating on the deal origination, she adds: “One of the things that we liked about the employee benefits sector at the time of the Vivup acquisition was its highly fragmented nature, since it offered the opportunity to create a clear market leader with specific benefit offerings, making the organic and inorganic growth proposition even more interesting.”

Omni, which invested in Vivup in December 2022, implemented its value creation plan last year but did not plan to exit so soon, reveals Broembsen-Kluever. 

The lower midmarket PE firm also received some expressions of interest from other players in the industry last year but did not consider them seriously, because, in its view, there were several exciting growth initiatives underway at Vivup and “so much more” it could accomplish.

In December, however, Omni received an unsolicited bid from Great Hill Partners. Broembsen-Kluever explains: “The firm had gained a lot of experience in the sector from its investment in Rewards Gateway and other companies in the employee benefits space, which prompted us to start looking at the possibility of selling critically.”

Value creation 

Vivup had Ebitda of £3.7m at the time of Omni’s investment in December 2022, which the GP helped more than double to c.£8m in a relatively short period. 

At the time of its investment, Omni’s 100-day plan focused on identifying the gaps that could have a concrete impact on the professionalisation of the business and the improvement of the bottom line. 

The PE firm, therefore, helped the company in prioritising earnings quality and driving organic growth. 

During our 15-month holding period, Vivup more than doubled its headcount to 160 while ensuring this did not cause a drag on its overall profitability

Broembsen-Kluever notes that the GP also supported the company in understanding its underlying revenue mix. “Vivup has historically served the public sector but we recognised that it would be very attractive if it could gain additional credibility in the private sector. During our 15-month holding period, Vivup more than doubled its headcount to 160 while ensuring this did not cause a drag on its overall profitability," Broembsen-Kluever tells Real Deals

Overall, Omni’s value creation levers resulted in a 44% CAGR expansion of Vivup’s organic revenue, an increase in the number of clients by nearly 8x and the completion of two acquisitions.

Following the sale, US-based Great Hill Partners has merged Vivup with its existing portfolio company Perkbox, a global benefits and reward platform, to enable the combined entity to scale its go-to-market capabilities, innovate its product offering, and accelerate organic and inorganic growth opportunities. 

Omni will maintain a minority stake in the new business and retain a seat on the board, because it believes the tailwinds that compelled it to make the initial investment still exist. The firm believes there is “a lot of runway” left in terms of profit generation.

Categories: Deals Deals in Focus Exits Sectors Business Services Geographies UK & Ireland ROW

TAGS: Great Hill Partners Omni Partners

World Fund, a Berlin-based climatetech venture capital firm, has closed its maiden vehicle on €300m.

According to the firm, the vehicle is the largest first-time fund in European climate VC history.

The fund received commitments from the European Investment Fund (EIF), KfW Capital and VP Capital. 

In addition, World Fund also onboarded LPs that invested in an inaugural VC fund for the first time, including Environment Agency's pension fund, Erste Group (Plavi) and the Wiltshire Pension Fund, disproving the notion that pension funds do not invest in the asset class.

World Fund believes this will set a precedent and ultimately help the entire VC and climate sector.

State-owned investment bank BPI France has also committed to World Fund I, making it the first first-time non-French VC fund the bank has invested in.

Established in 2021, World Fund has backed startups including Planet A Foods, Cylib, IQM Quantum Computers, Space Forge, CustomCells, Juicy Marbles and Farmless.

The VC seeks investments in energy, food and agriculture, manufacturing, buildings and mobility at both early and growth stages.

Categories: Funds Mid [€200M - €1B] Venture Geographies DACH

TAGS: Bpi France Climate Investment Climatetech European Investment Fund World Fund

Pantheon has announced that Kathryn Leaf will become its new chief executive officer, succeeding Paul Ward. 

Leaf, who is based in California, has spent 25 years as a private markets investor, including 15 years at Pantheon. She is currently co-head of investment and global head of real assets, as well as a member of the firm’s executive committee and partnership board. 

Since becoming a partner in 2012, Leaf has led the development of the firm’s infrastructure platform and has overseen its growth to more than $20bn in discretionary assets under management.

The transition, which comes into effect in January next year, sees London-based Ward taking on the position of executive chairman.

He will step down following a 20-year career at Pantheon, having joined as a vice-president in the private equity secondaries team in 2003.

Additionally, Jeff Miller, who has served as co-head of investment alongside Leaf since 2022, will become chief investment officer.

Categories: People LP & GP moves Geographies UK & Ireland ROW

TAGS: Pantheon

Hg has invested in CUBE alongside the portco’s founder and CEO Ben Richmond.

Founded in 2011 and headquartered in the UK, CUBE is an automated regulatory intelligence) and regulatory change management technology business. It has operations across Europe, North America, Asia and Australia.

Hg is an investor in European and transatlantic software and services businesses. With a European network and strong presence across North America, Hg’s 400 employees and $65bn in funds under management support a portfolio of more than 50 businesses, worth more than $130bn in aggregate enterprise value.

The GP said $6.5bn has been invested in the regulatory, compliance and financial technology sectors alone, and it seeks to invest in technology companies that are transforming their industries.

Hg said it has been impressed by CUBE’s approach to regulatory intelligence and change management, and the strong demand for its solutions among regulated firms across the globe.

The investor added that it has spent the last two years focusing on this sector and said it’s clear that CUBE is highly differentiated in its ability to deliver.

CUBE said quality and governance of AI are at the forefront of customers’ agendas and the business will continue to invest significantly in this regard.

The portco will draw on Hg's experience in scaling software businesses, strategic guidance and operational support, as it aims to enhance its product offering and expand its global footprint through both organic growth and acquisitions where synergies exist for CUBE’s regulatory platform.

Categories: Deals Sectors Business Services TMT Geographies UK & Ireland ROW

TAGS: Artificial Intelligence Hg

Munich-based Quantum Capital Partners (QCP) has sold Leichtmetall, a German producer of high-strength recycled aluminium, in a trade sale. 

Leichtmetall Aluminium Giesserei Hannover uses renewable energy to produce up to 30,000 tonnes of aluminium billets with diameters of up to 1,150 millimetres per year, while engaging in proprietary inductive melting technology, liquid metal treatment and casting processes.

The business has been sold to Emirates Global Aluminium (EGA) for an undisclosed amount.

Leichtmetall has customers across Europe, particularly in Germany, Italy and France. 

QCP acquired the company in 2014. During the 10-year holding period, Leichtmetall increased its staff by 50%, tripled its revenues and increased operating profits by 1,500%, the firm said in a statement.

The deal represents EGA’s first major acquisition since it was formed through the merger of Dubai Aluminium and Emirates Aluminium a decade ago. 

In 2023, EGA sold 2.75m tonnes of cast metal and has more than 400 customers in over 50 countries. 

ADVISERS

Houlihan Lokey

Categories: Deals Exits Sectors Manufacturing Geographies DACH ROW

TAGS: Houlihan Lokey Quantum Capital Partners

US-based Institutional Venture Partners (IVP) has raised $1.6bn for its 18th fund.

IVP targets companies operating in enterprise infra, application SaaS, fintech, digital health and consumer. The VC invests in "AI pioneers" that have demonstrated organic growth and a "sharp" executive team.

The vehicle follows the venture capital firm’s expansion into Europe last year.

The fund’s geographic focus will include Europe and the US. IVP already has investments in European companies including Wise, DeepL and Grammarly, and is aiming to double down on investments in the continent following the launch of its London office. 

Since its establishment in 1980, IVP has backed companies including Netflix, Klarna, Slack, Twitter and Grammarly, and executed more than 130 IPOs.

In 2021, the firm raised $1.8bn for its 17th fund.

Categories: Funds Large [€1B+] Venture Geographies UK & Ireland France & Benelux Southern Europe Central & Eastern Europe Nordics DACH ROW

TAGS: Institutional Venture Partners Uk Us

Inflexion has appointed Martin Preuss as a partner and head of DACH.

In his new role, Preuss will lead Inflexion’s investments in Germany, Austria, and Switzerland, and build a dedicated team in Frankfurt, strengthening the private equity firm’s international presence. 

Formerly with Intermediate Capital Group (ICG), Preuss brings close to 20 years of experience.

His previous stints also include KKR, where he oversaw the DACH region and Citi’s investment banking division in London.

Inflexion’s current investments in the DACH region include Proteros Biostructures, a Germany-based contract research organisation; and DSS+, a Switzerland-headquartered operations consultancy focused on the environment, health and safety. 

The midmarket firm, which is celebrating its 25th anniversary this year, recently appointed Humphrey Baker from Graphite Capital as a partner to lead technology investments for Inflexion’s Enterprise Fund. 

Categories: People LP & GP moves Geographies DACH

TAGS: Inflexion

RD: Shawbrook has expanded its regional presence in the UK, with new hires in the North and Thames Valley to support the bank’s existing financial sponsor coverage across the Midlands, Northwest and London. What are the strategic drivers behind this regional expansion?

Jennifer Murray: Our private equity team has been growing steadily, and building a regional network is part of that growth plan. 

Deepak has been based in Birmingham since inception and has grown our presence in the Midlands as well as covering the established Manchester market – and we have completed several transactions across the patch. This evolution is the next step to expand our local footprint further and strengthen our bandwidth across the Northeast, Northwest and Scottish markets. 

Jack Longden will lead our coverage across the Thames Valley. Rhys Morgan will work alongside Deepak to cover the Manchester market but will also cover the Northeast, which historically has been less active but has come to life in recent years. There are around a dozen private equity firms that have opened up offices in the Northeast and there is a surge of activity in tech and renewables in the region, as well as a deepening pool of strong founder-led companies. It is a really exciting market where we see great potential. And being from Sunderland myself, I have long been keen to have a base in the region.

We see the combination of a broad product offering and a regional network, with boots on the ground, as a valuable point of differentiation
Jennifer Murray, Shawbrook

Growing our coverage team complements the other prong of our growth strategy, which is to broaden our offering with a wide range of products to support companies not just on a transactional basis but through the full business lifecycle.

We see the combination of a broad product offering and a regional network, with boots on the ground, as a valuable point of differentiation.

RD: Why not just support the regions from a London hub, with directors travelling when required as deals emerge?

Deepak Parekh: If you compare the approach to corporate finance and dealmaking in London to our approach in the regions, you will find that the regions are much more relationship-led and less transactional. The longevity of relationships and networks formed outside of the cut-and-thrust of transactions are fundamental to building a successful franchise in the regions.

The importance of local contacts can’t be overemphasised and there is a real sense of community spirit.

I, for example, run a charity (The Diwali Foundation) outside of work and it has been quite amazing to see how people across the regional corporate finance community have supported that. We have had firms run fundraising activities to support the charity, which was also made the charity partner for the Rainmaker Dinner, an awards ceremony for the Midlands corporate finance community. This is just one example of the community spirit that underpins dealmaking across the regions.

We are convinced that having that local connection with sponsors and businesses is essential for building relationships in advance of deals coming to market. Investing in the community is important and helps to nurture deal origination, as opposed to a more transactional market where you wait for the books to land.

There's a sense of friendship and mutual support, and I feel that is something you can only foster if you have teams outside of just London
Deepakh Parekh, Shawbrook

I've spent around 20 years of my career working in the regions and there is no doubt that relationships go beyond just deals. There's a sense of friendship and mutual support, and I feel that is something you can only foster if you have teams outside of just London.

Murray: We have always covered the regions but as we grow, we are pushing the green button and demonstrating our commitment to regional markets by adding to our team, putting more boots on the ground and deepening our regional coverage even further. 

RD: Circling back to the point raised about the regional focus complementing the strategy on product development, could you explain how those two elements interlink and support it each other?

Parekh: It is all about focusing on the client. Financial sponsors will have offices and dedicated teams covering the regions and we want to mirror their strategies and be there to support them.

Broadening the product set and investing in regional coverage is also about putting the infrastructure in place to support the long-term growth of our private equity practice. Since we started the financial sponsor coverage team, we have been in build-up mode, funded some really strong credits and worked on 50 deals with a wide range of bluechip midmarket sponsors. 

For us, this is the right time to keep investing in the team and make sure that we can continue on that growth trajectory.

Murray: The ability to provide a broad product offering with regional expertise is what differentiates our offering. 

As mentioned, it is all about being client-centric. We are not a lender that can only support you in certain markets with a very narrow, rigid product set. Our teams support businesses across a broad range of sectors and we can be very flexible on structure.

We can fund a mature, buyout-backed business with a unitranche structure, but we can also work with sponsors that may want to dip down into something that is tech-led or pre-profit with venture debt or recurring revenue finance. For a less mature business, we can bring an asset-based lending (ABL) solution to the table. 

We are in a position to do the right thing for the business at the right time. A business or sponsor might come to us with a structure in mind but that may not be the best option. We can draw in expertise from our private equity, ABL or healthcare teams to curate a structure that is best suited to each situation. 

Shawbrook is now at the size where the corporate loan book is over £1bn of facilities, with the private equity book at around £500m. The sector and product knowledge we can provide is pretty substantial. We have all these resources at the client’s disposal, and we can draw on them to pull together a solution that we think is the best fit.

For ambitious management teams, it is about being flexible and bespoke, rather than imposing a capital structure onto a company. 

We can take a more holistic view and add some value for advisers and sponsors when shaping deals
Jennifer Murray, Shawbrook

Parekh: A regional model with people on the ground means clients in the regions have direct access to all of this expertise through a relationship with a regional contact. We pride ourselves on being joined up. 

It is also worth pointing out that, as a lender, you are much more likely to have the opportunity to play a leading role in a transaction when you have touchpoints with the advisers on the ground. Post-completion, it is often valuable for the client that the relationship is partly managed via a local and accessible point of contact too. We believe that gives us a true competitive advantage: combining the speed and deliverability of a fund with the touchpoints and relationship focus of a bank. 

If we receive an approach from an adviser with a particular niche, or a sponsor that may be considering a variety of options, we can add some value to the deal process and suggest alternatives and options. Not many lenders can do that.

Murray: The question we constantly ask ourselves is: how can we add value for our customers? The product set, flexibility and regional coverage all play into that.

If we can contribute to local corporate finance communities and be integrated into them, we'll see deals earlier, have more of an impact and add more value for our clients. 

Equally, on the product side, rather than just drawing up term sheets, we can take a more holistic view and add some value for advisers and sponsors when shaping deals.

Finally, we want to have the ability to work with credit for the long term and support it through every stage of its development. We can be there from the beginning, with a venture debt or recurring revenue finance facility, all the way through to when the business matures with a unitranche provision. You can follow a business as it develops when you have all the arrows in the quiver.

Categories: Insights Expert Commentaries

TAGS: Shawbrook

ESG is one of the most talked-about three letter acronyms in private equity. Putting its status as the industry’s buzzword aside, ESG due diligence has been born out of risk management and should be considered along with other operational, liquidity or capital risks.

Here, due diligence software provider Dasseti explores the key reasons why ESG should always be front of mind for investors and managers alike.

ESG metrics are routinely requested 

LPs and GPs are taking ESG factors seriously in 2024. ESG metrics are not just something that concerns SFDR Article 8 or 9 funds – almost every GP is now being asked to provide metrics not only around their own operations but for portfolio companies too.

Dasseti has recorded a 10 times increase in the number of ESG-related questionnaires being distributed from its global LP base in the past 18 months. 

There has also been increased demand from LPs for a solution that can see right through the GP, to the funds and entities or portfolio companies beyond. 

What is driving demand for ESG data? 

The factors driving the demand for ESG data vary, with many LPs integrating sustainability into their investment approach to manage both risks and drive value. 

Dasseti’s head of ESG, Billy Cotter, says: “Even as ESG regulations are nascent in some regions, anticipated regulatory pressures feature highly. Many LPs and fund-of-funds want to get ahead of the curve and start collecting baseline data that they can use when the regulatory need arises. This is then passed along to the GPs, who need to collect the data from their portcos.”

How does technology stack up? 

There has been a significant increase in the number of managed and consultancy services in the ESG and sustainability space in the past few years. ESG and sustainability research firm Verdantix forecasts that the ESG consultancy market will reach $48bn (€44bn) worldwide by 2028.  

However, the manual data collection burden involved in providing ESG consultancy services can be significant, often resulting in overinflated price points for less than optimal service levels.  

Technology is at the intersection of private equity and ESG and can be transformational for the whole sector, including ESG managed service and consultancy firms. 

There is a wide range of tools and systems that can enhance the collection, aggregation, management and reporting of ESG data and metrics, often at a manageable cost. When assessing the technology platforms required, firms across the private equity sector should look for the following capabilities:

1. Data collection and aggregation

By automating the collection of ESG metrics, firms can minimise manual entry errors and enhance accuracy. Centralised data platforms often allow the aggregation of data from diverse sources and provide a holistic view of ESG metrics across portfolios.

2. Data quality and standardisation 

In-built data validation tools can improve the accuracy and completeness of ESG data.  

By standardising incoming data to align with increasingly popular industry specific reporting frameworks such as the ESG Data Convergence Initiative or Sustainable Finance Disclosure Regulation, it becomes much easier to benchmark performance and comply with regulatory requirements. 

However, collecting and aggregating first-party data directly from the source means firms are future-proofed if reporting frameworks or regulations change, or if stakeholders start to coalesce around a different pillar of metrics.

Evan Crowley, senior product specialist at Dasseti, says: “We have seen this happen with climate-related disclosures, which are now pretty much standard for the industry, but also more recently have started to see moves to collect more supply chain data. It is important to have the flexibility in a tech solution to be able to respond to those changing requirements quickly and easily.” 

3. Data analysis and reporting

In its 2023 global market size and forecast report, Verdantix projected that financial services firms will significantly increase spend on ESG reporting and data management software, growing at a CAGR of 32% to reach $470m in 2027.

Advanced analytics capabilities provided by some ESG platforms allow for deep insights, identifying trends and assessing the impact of investments. Reporting that meets the specific needs of stakeholders, including regulatory bodies and investors, is in hot demand. 

4. Benchmarking and performance tracking 

For many LPs and fund-of-funds, tracking impact over time is a core driver for collecting and analysing ESG metrics. Software tools that provide benchmarking to compare performance against industry peers or indices, or time series data to allow continuous monitoring of ESG goals, are crucial.

The GP story

Evan Crowley outlines how one GP in the US is using technology to address ESG data collection and reporting challenges. 

“We have been working with a GP that is a leader in sustainable investment within the energy sector. Around 18 months ago, the GP was facing the dual challenges of manual ESG data collection and stringent regulatory demands, and embarked on a journey to transform its ESG reporting and data management processes. 

“We offered a solution that streamlined data collection through customisable questionnaires but also enhanced the user experience for portfolio companies – driving up response rates and subsequently improving the data quality.” 

Takeaway: Since most GPs are starting from different places in their ESG data journey, operate across different sectors and have completely different reporting requirements, flexibility is the number one priority when looking for solutions to support GPs’ ESG data collection and management efforts. 

The PE fund-of-funds story

Billy Cotter discusses the challenges facing a large private equity fund of funds business in Europe.

“This firm’s ESG team was looking for a solution to manage its ESG data collection and reporting challenges. It operates funds that are regulated under the SFDR, with a requirement to report on fund-level indicators, including Mandatory Principal Adverse Impacts (PAIs) and Optional Key Sustainability Indicators (KSIs), deriving data from their portfolio companies and funds.

“They also need to gather sector-specific impact KPIs from companies within their Article 9 funds for internal sustainability reporting. All data must be fed into their internal platform via API in a standardised format, requiring multiple testing phases for final approval. Additionally, fund-of-funds must now collect asset-level data from external GPs to validate fund-level data, which is an industry-wide requirement.

“The teams were grappling with varying fund-level metrics and needed a customised approach to data collection. There is no one-size-fits-all questionnaire, and data must be tailored to the specific fund holding the issuer. The firm found that some issuers were not providing data at all, largely due to the lack of direct engagement and overly broad questionnaires. 

“Dasseti presented a tech-enabled solution that would garner better engagement and direct data collection, which capitalised on strong existing relationships with issuers. The proactive engagement with issuers and customised approach to data collection have been well received.” 

Takeaway: Fund-of-funds and LPs have similar challenges in meeting reported KPIs and managing significant amounts of data, which can quickly become complex and cumbersome. A solution that can extract and aggregate data at multiple levels has proven to be invaluable when scalability and granularity are high on the requirements list.

This content was produced in association with Dasseti - click here to find out more about Dasseti on our Drawdown Service Provider Profile

Categories: Insights Expert Commentaries

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Establishing a centralised point of contact and a single source of truth is critical for portfolio monitoring and reporting, says Pratap Narayan Singh, senior director and head of private markets at Acuity Knowledge Partners.

RD: What is your view of the current portfolio monitoring and reporting landscape across the private markets industry?

Pratap Narayan Singh: In our latest private markets study, we discovered that private equity and venture capital firms are spending about one-fifth of their time on portfolio monitoring. Portfolio monitoring is an essential component of overall fund operations, driven largely by demanding investors. 

The level of tech sophistication employed by private equity firms varies significantly. About a quarter of firms are using third-party tools, while another 25% have developed tools in-house. The remainder continue to rely on Excel spreadsheets.

Many not-so-tech-savvy firms are devoting an increasing amount of time to portfolio monitoring and reporting instead of their core competencies – deal origination, due diligence and value creation. There is, therefore, a clear need for technology to promote efficiency. But technology adoption in this space is a work in progress. 

There are a multitude of challenges tied to data, as well as reluctance on the part of internal stakeholders. In addition, PE and VC firms face increasing complexity in the deployment of tools. To illustrate this, more than 75% of respondents to our 2024 private markets study, spread across regions and designations, stated they use multiple tools and systems in their operations. More than 70% would welcome a one-system tool to streamline operations, as complex and disjointed systems, in their view, brought inefficiency.

RD: What is likely to drive greater tech adoption going forward?

Singh: There is increased pressure from investors and regulators when it comes to portfolio monitoring. The new private fund adviser rules adopted by the SEC in August 2023 mandate greater transparency with respect to audit and reporting. There is a clear understanding that as private markets continue to grow exponentially, there will be greater scrutiny and expectations on accounting practices. 

Technology has an important role to play in helping private market firms remain compliant with regulations, particularly as their operations become more complex. Firms are increasingly dealing with multiple assets, spanning private equity, growth capital, private credit, real estate and infrastructure. A firm investing in hundreds of companies across several investment strategies will likely find it extremely challenging to manually monitor everything. The spreadsheet-based model will fall short of expectations of all stakeholders across fund reporting and monitoring. 

RD: What are the bottlenecks or challenges that private equity firms face when it comes to embracing technology?

Singh: One of the biggest challenges preventing private market firms from embracing tech solutions is diverse preferences of teams and individuals, making it difficult from a change management perspective. 

Everyone prefers their own systems, which can lead to a lack of cohesion across an organisation. In our survey, 86% respondents stated that their organisation uses multiple software or tools. In addition to the challenge surrounding the deployment of different data management methods by diverse teams, there may be reluctance, in general, to adopt new technologies. 

Furthermore, investment teams may be rigid in their choice of data management techniques, involving bespoke spreadsheets, making it hard to convince them about a better alternative.

There is also a lack of not only collaboration among leadership but also consensus on technology initiatives. Often the IT department pushes for investments in technology, suggesting the purchase of a third-party tool or the development of an in-house tool. But there is not necessarily enough focus on ensuring that the tool works for those who will use it across asset classes. 

Finally, choosing the right technology or product can be a big challenge, given that the market is flooded with portfolio monitoring products that claim to do it all. However, many third-party technology platforms are off-the-shelf solutions, while every private equity firm is unique. It is critical to ensure the best requirements-to-product fit, because if you make the wrong choice, you may spend two to three years on implementation and maintenance before realising that you need to pivot to new software. 

Moreover, constant data updates and validation for accuracy can be critical to the success of the technology/software implemented. In the past, firms have made material and long-term investments in multi-asset-class systems that they abandoned later, primarily because they failed to update data regularly. Given the challenges inherent in multiple systems, it is no surprise that 70% of respondents are open to adopting an integrated one-system tool.

One of the biggest challenges that private equity firms face is integrating multiple tools such as CRM, accounting, monitoring, reporting and ESG tools. How can managers integrate different data points to provide a single window of truth for both LPs and GPs?

It comes back to the practice whereby teams within private equity firms – such as accounting and administration, and portfolio monitoring – have historically followed their individual preferences driven by asset classes. You can find four to five data systems being used by different teams, which of course means there is no single source of truth. As a result, the lack of data management and coordination are the primary reasons for dissonance on existing systems as per half the respondents in the survey, followed by the preference for manual efforts, which multiply with multiple processes, compounding the challenges. 

Data needs to be consistent, starting with CRM systems, and then linked to investment systems, portfolio monitoring, accounting and reporting, including external reporting tools being used. But this is rarely the case. To get there, you need to either develop a single centralised system or create a bespoke system, connecting the systems with APIs or other technologies, while ensuring a single, centralised point of contact.

We serve as that centralised point of contact for private equity firms implementing new portfolio monitoring technologies. We can either collaborate with third parties (such as iLevel) or deploy our in-house product – FolioSure. Our technology team then works with the accounting and administration teams to install APIs so that all reporting originates from a central source, not a myriad of systems.

We term such initiatives as ‘data transformation projects’ – a process that many private equity firms are going through. Some have already made great strides on this journey. Others continue to struggle to create a centralised, single source of truth for the entire firm that can form the basis of both internal and external reporting.

RD: What is your opinion on generative AI adoption in private markets and what areas are particularly ripe for disruption?

Singh: Private equity firms are starting to cautiously adopt generative AI solutions. Most are using them to explore ways to improve efficiency in portfolio companies, while a few seek to drive value across the investment lifecycle. However, GenAI comes with a set of challenges that need to be addressed by experienced technology and information security professionals to successfully embrace and unlock the potential of this technology.

In portfolio monitoring, the first step involves the collection of validation data, which is then fed into a portfolio monitoring system. Extracting this data from board packs, reports and Excel-based models is time-consuming and complex, but AI can deliver significant efficiencies. Once the data is in place, analytics can be applied to support portfolio performance benchmarking, enabling firms to generate insights based on AI that they can incorporate into their decision-making.

RD: There is a perception that technology adoption takes time to deliver real benefits. What is a realistic timeline when it comes to successful implementations that deliver positive outcomes?

Singh: Innovation, whether it involves AI or other types of technology, will realistically take two to three years to reap rewards. Consider a global private markets asset manager looking to customise existing technology, which it uses in one asset class, for a different asset class. First, the firm will need to work with internal teams to decide how to access the fund and portfolio company data needed to glean the desired insights. Then, it will take at least a year to bed in the product, adapting it to meet individual preferences.

It is important to remember that technology adoption is a journey; it is not something that is ever complete, given the constant emergence of new disruptive technologies and the need for regular software upgrades. For example, generative AI has gained significant traction during the past 18 months but there is no clear path to implementation – it is a work in progress. 

Thus, it is important to stay updated with the latest technology available and keep exploring data transformation projects while continually keeping a tab on the quality of data and expected output. Constant tweaks and course corrections are required to reach a level of consistency and efficiency that can eventually have a tangible impact on your bottom line. 

RD: What is the latest trend in portfolio monitoring and the technology that supports it?

Singh: Increasingly, portfolio monitoring will also factor in the incorporation of ESG metrics. As per the survey mentioned above, only one-third of respondents suggested that they had mature ESG policies. The incidence of portfolio tracking is rising – three years ago, companies were in kick-off mode to track the ESG parameters of their portfolio companies. 

About 7% and 10% of firms were tracking 10-20% and 21-30% of their portfolio, respectively, in 2023. The share has now moved northwards to 16% and 13%, respectively. Considerable work needs to be done in this area around data collection; but in a very short time, the ability to sell assets and the ability to raise funds will be contingent on getting this right.

To meet all the requirements surrounding LP scrutiny and new levels of regulatory oversight, it is critical that private equity firms establish a centralised point of contact and a single source of truth across teams and investment strategies.

It is paramount to do so now because the stakes have never been higher. Firms are already being hit with multimillion-dollar fines for failure to comply with regulations, which are only becoming more stringent. The professionals in the sector are very well aware of this – in all three editions of our survey, more than 90% of respondents believed regulations would become more stringent. 

We believe investing in technology and engaging with strategic partners is key to managing the increasing expectations of investors and regulators.

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Proactive cyber risk management is essential to preserving value across the investment lifecycle, says KYND chief executive and founder Andy Thomas.

RD: What does KYND do, and what value do you bring to private equity firms?

Andy Thomas: Firstly, it is important to note that we are not a cybersecurity business. We are cyber risk management experts. We do this on a non-penetration basis, essentially outward-looking in, so gaining cyber risk insights from KYND is simple and quick. 

We began our journey by focusing on the insurance market back in 2018. Insurance companies at that time were starting to suffer significant losses associated with increased ransomware attacks, and we were able to help better inform their decision making around who they were willing to insure. 

We see the risk of cyber losses concentrating in numerous industries and will continue to expand our industry footprint. Recently, we have been drawn into the private equity world, as private equity firms have begun facing the same issues as insurance companies five years ago. As cyberattacks continue to rise in frequency and sophistication, they want to understand the cyber risk profile of portfolio companies and target companies, as what was once a peripheral concern has become mainstream.

Cybersecurity is a very complex area and we see it as our role to ease that complexity for a non-specialist audience, enabling people to prioritise those risks directly connected to attacks, rather than worrying about every potential risk that exists. 

RD: What role does cyber risk management play in the due diligence phase, in particular?

Thomas: There can be a significant degree of tech due diligence carried out on investments; firms that are really looking to get under the bonnet to see how things are done. A necessary component of that involves insight into cybersecurity governance within the business. Instant, easy-to-understand exposure visibility such as KYND’s enables private equity firms to easily confirm external cyber risk profiles and internal cyber risk processes in a light-touch manner, as opposed to an expensive consultant-led due diligence exercise. 

We provide tailored, focused reports that highlight priority issues that have been identified within the tech infrastructure of a business. We also explore the target company’s internal processes and cyber maturity using a simple questionnaire that helps private equity firms quickly get to the nub of the matter. Again, thanks to the close cooperation with our insurance clients, we’ve learned a lot in terms of how they evaluate a company’s internal and external cyber posture.

RD: How should private equity firms then integrate cyber risk management into the asset management or value creation phase?

Thomas: I recently had a conversation with a private equity firm that suffered a cyber incident almost immediately post-transaction, and it is important to be aware that this is one of the highest-risk periods in any investment. If a portfolio company suffers a disruptive cyberattack, it leads to increased expense, reputational damage and lost focus on meeting business objectives. The business is distracted by the acquisition process and so its exposure, post-deal, may be significant. 

During due diligence, it’s important for firms to prioritise actions for those early days after the deal is completed and then continually monitor the portfolio company thereafter to ensure they stay ahead of the dynamic cyber threat landscape. We enable both by allowing the private equity firm to quickly gain instant insight into the risk profile and risk maturity of each business, as well as help portfolio organisations to address existing and new vulnerabilities before cybercriminals exploit them. 

This cooperation has proven successful as private equity firms do not want to become the IT department of their portfolio companies. Rather, they want to be able to monitor, support and nudge firms that appear in need of improvement because cyber incidents are undoubtedly a real disruption to any business.

In 2023, one of our global asset management clients published a whitepaper that revealed that cyber incidents have a material and lasting impact on opex, capex and SG&A costs. Being burdened with those increased costs for an extended period of time can have a significant impact on value. These are the tangible impacts of an incident, and don’t even count the brand or reputational risk to impacted firms.

RD: How can you gauge the cybersecurity culture of a business and why is that so important?

Thomas: It matters because the more mature a company’s cybersecurity culture is, the better positioned it will be to respond to any incident, and the more likely it will be to put everything in place to ensure that everyone connected to the business understands cyber risk exposure. 

This could include having the right cyber training in place to ensure cyber risk is front of mind for everyone in the business, such as simulated phishing exercises and sensitivity to data security and confidentiality. That culture has to permeate the entire company and safe behaviour has to be infused into corporate culture. It is no longer sufficient for only senior management to be aware of the risks. 

We find that one of the best indicators of a company’s cyber culture can be seen in how they respond when we tell them that they are exposed to a critical vulnerability in their infrastructure. If a company recognises the benefits of having more good-guy-eyes on the business in order to spot vulnerabilities that the bad guys could exploit, that is generally a good sign. Conversely, if an organisation cannot be contacted, or is resistant to what we have to tell them, that is typically a sign of a poor cybersecurity culture and a lack of cyber maturity.

In addition, with an ever-changing attack surface, new vulnerabilities arise constantly; therefore continuous risk monitoring of portfolio companies has now become integral for private equity portfolio management processes. 

Obtaining ongoing visibility into organisations’ risk profiles not only enables them to proactively oversee digital risk across portfolios but also fosters engagement with the organisations, as witnessed by our clients.

RD: How can private equity firms support their portfolio companies when it comes to accessing cyber insurance?

Thomas: In a digital-first and interconnected era, cyber insurance is no longer a luxury, but a vital component of an effective cyber risk management programme for businesses of all types and sizes. But obtaining and keeping this much-needed coverage is not that simple. 

With our background, we understand what insurers are looking to focus on, and therefore the cybersecurity standards that private equity firms have to ensure are in place within their portfolio companies for them to be insurable. We are able to assist with that process, helping businesses ensure they can access the right insurance at the right cost. 

RD: How important is cyber risk management to the exit process?

Thomas: While the cyber risk profile of a company may not directly and immediately impact its value, it will certainly impact the ease of sale. The cyber risk landscape is ever-evolving, and organisations must continually adapt to it to avoid reputational, financial, or legal repercussions. 

When we are monitoring portfolio companies on a continual basis, we produce a set of reports that are designed for the board of that business, which show how the risk profile of an organisation has evolved over time and how it compares to its peers. 

When it comes to preparing a company for exit, these same reports can be used to demonstrate the cyber resilience of the business to prospective buyers, complementing their due diligence efforts. Maintaining a close eye on cyber readiness can also help to resolve any major issues that could threaten to undermine the exit process. If a company suffers an incident the week before closing a deal, that could derail the transaction. Heightened risk awareness during these key periods can be extremely valuable. 

RD: How is the regulatory environment evolving when it comes to cybersecurity and how do firms need to respond?

Thomas: The Digital Operational Resilience Act, or DORA, in the EU, will have implications for private equity firms. It is not entirely clear what form that impact will take as of yet, but the consensus is that private equity firms will need to evidence that they have active oversight of the cybersecurity and risk posture of the businesses they invest in, and that they are doing everything they can be reasonably expected to do in order to protect their investors’ money. 

It certainly seems as though this will be the minimum required from this regulation, and having active cyber risk governance and monitoring of portfolio companies in place would therefore be a major plus.

RD: How should firms approach resourcing their cyber risk management function as a firm, and within portfolio companies, including through partnerships with experts?

Thomas: No private equity firm wants to step in and take over the cybersecurity function from a portfolio company’s own IT team. They simply do not have the bandwidth. I would also add that none of the private equity clients that we speak with would be willing to instruct their portfolio companies to install software within their networks. 

Instead, the ethos seems to be ‘trust but verify’. You must trust your portfolio companies to do what is right and what they say they will do, but then monitor to make sure that that is the case. 

Equally, portfolio companies are likely to have their own existing relationships with experts and it is neither the job of the private equity firm, or us at KYND, to replace those relationships. Instead, we are here to provide guidance and monitoring, helping those businesses prioritise and aiding them in using the resources and expertise that they already have at their disposal wisely. 

We do not identify issues and then offer to fix them. That is not our business model. We provide insights that IT departments and their services providers can use to quickly identify issues that we have flagged, enabling them to ultimately fix them themselves and become more resilient.

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Technology has an integral role to play as private markets adapt to the needs and expectations of retail investors and HNWIs, according to Yann Magnan, CEO and co-founder of 73 Strings, a global fintech shaping the future of how illiquid assets are analysed, valued and monitored; and Jonathan Balkin, co-founder and executive director of Lionpoint, a global operational transformation consulting firm.

RD: How must private markets evolve and adapt to address the requirements of retail investors and HNWIs?

Jonathan Balkin: Private markets have historically catered to large, institutional investors, so the industry will need to evolve to address the needs of retail and HNWI investors. 

Enabling accessibility for such investors will require lower investment minimums, simplified processes and user-friendly platforms, which have been a challenge historically. Technology can assist by providing intuitive online platforms that allow investors to research, analyse and invest in private market opportunities with ease. From an operational perspective, firms need technology solutions and operating models that can scale from supporting hundreds to thousands, or perhaps tens of thousands, of investors. 

The digitalisation of a GP’s valuation capabilities will also be an important area to solve. Existing private market investors are used to receiving information much less frequently than the retail and HNWI profile, therefore a monumental shift in the pace of deriving valuations is imminent. The future reporting requirements of new investor classes will not be sustainable without utilising technology. 

Yann Magnan: When GPs start addressing retail investors and HNWIs themselves, there will be multiple consequences in terms of distribution, but also in terms of processes. The common understanding is that this new source of capital for the alternatives industry will be reluctant to invest en masse, unless they have more visibility as to if and when they can redeem their investments. 

Open-ended, evergreen funds are quite often referred to. That will also have multiple consequences in terms of reporting towards this new category of investors, including more frequent valuations, from quarterly to monthly, or even different valuation methodologies. These valuations will also change in nature, from mostly a reporting topic to a topic that will have direct cash/performance impact. I believe that only a great collaboration between best-in-class technology and valuation consultants will be able to scale to address this significant increase in demand. 

RD: To what extent will information and transparency be a requirement to attract retail investors and HNWIs into private markets investing?

Magnan: The higher the transparency, the higher the likelihood of attracting retail investors and HNWIs towards alternatives. It is a question of trust, in the same way that public markets have been thriving on higher transparency and more in-depth reporting. 

Balkin: Retail investors and HNWIs will require more transparency and information from GPs to be effective investors in private markets. This is a shift from the way things have been done before, as larger institutional LPs often have the ability to interact with investment professionals at the GP, which will become increasingly difficult with a higher volume of investors. 

Retail and HNWIs will rely on comprehensive information to make informed investment decisions. They need access to data regarding investment opportunities, potential risks, expected returns and the underlying fundamentals of private companies or assets. Without sufficient information, investors may be hesitant to commit capital to illiquid and opaque investments typical of the private markets. 

RD: How has technology improved transparency in the investment landscape and how will it continue to do so? 

Magnan: Technology will be instrumental in helping collect data efficiently and in high volumes. Until reporting for private companies is standardised – which may or may not happen – there will be a need to create consistency across data and a portfolio. This is where technology, and in particular AI, will help significantly by providing better and faster analysis to encourage prompt investment decisions. 

Balkin: Technology has been a critical foundation for GPs to improve transparency in the investment landscape. It has allowed firms to establish the ‘facts’ of the business via valid sources that can be reported to current and prospective LPs, regulatory agencies, investment teams and firm leadership. For GPs continuing their innovation journey, the ability to automate business processes that have historically been manual and performed ‘offline’ has been an important trend we have witnessed. 

We’re seeing technology-driven data analytics and artificial intelligence tools as a key area of exploration for the purposes of analysing large datasets to identify trends, patterns and anomalies, and to continue automating inefficient business processes. These tools can help investors assess the quality of financial information, detect outliers and make more informed investment decisions. AI-powered algorithms can also automate the analysis of banker investment memos, credit agreements, regulatory filings or market research reports, providing investors with valuable insights and enhancing transparency. 

RD: What real-time data, market analysis and performance metrics should be accessible to retail investors and HNWIs? 

Magnan: I believe that besides getting valuations for their investments, retail investors and HNWIs will need to be informed of how the business and financial instruments they have invested in are performing, both on their own and compared to their peers. 

That means that GPs addressing retail investors’ and HNWIs’ interests must consistently collect and structure as many data points as possible to address these demands. This is something that 73 Strings have been focusing on for some time, and where we are seeing significant traction and growth. 

Balkin: We have seen this become a focus area for GPs, as large institutional investors have become more sophisticated and the need for real-time data has expanded. Instead of a quarterly report that represents the previous state of the portfolio, that information is increasingly required to be up to date and readily available. 

Whether it is the company financials, economic indicators, risk and exposure factors or benchmarking data showing peer funds’ performance, the shift to establishing this as a mature capability will be required. 

RD: How will technology streamline the investment process and how can semi-automated platforms, such as 73 Strings, assist GPs with portfolio management and valuation?

Magnan: Digital transformation is going to be a priority for most alternative asset managers. For example, at 73 Strings, our technology streamlines the entire valuation process of an alternative asset, equipping the GP with a technology that delivers valuations more efficiently and with greater consistency. 

With largely automated auditing and reviewing capabilities, the third-party valuation providers and auditors who remain key to the process can derive their conclusions for GPs faster. The automated data collection technology that 73 Strings has developed is also a significant enabler in running an efficient process as it aids the collection, structuring and tracking of the relevant data points and their data sources. 

Balkin: We see technology streamlining the investment process at all stages of its lifecycle, from the initial onboarding of investors and evaluation of investment opportunities to tracking dealflow in a pipeline management solution, to collecting financial data from portfolio companies and automating valuations. We have deployed 73 Strings’ technology to GPs and the resulting efficiency gains around portfolio monitoring activities and valuations have been significant.

RD: How do advancements in emerging technologies shape the future of alternative investing? 

Magnan: I am a firm believer that AI has transformational potential in the alternative industry. AI can help – and is already helping – to automate routine tasks, reporting and the structuring of data. 

It is also worth considering that the alternative investment industry is technical and the development and training of relevant algorithms will require specific resources and specific competencies. Additionally, the security of data, how it is used and its availability must be managed with care.

Balkin: Alternative and private fund managers have historically employed largely manual and inefficient business processes that could suffice for a small investor base and relatively low volume of assets and transactions. 

However, as volumes and competition increase, the opportunities to leverage technological innovations, such as AI, have become increasingly attractive. 

We have seen an initial focus on the investment diligence process as investment professionals are often reviewing a high volume of investment opportunities, with data, reports and documents requiring time-intensive analysis. 

AI has been able to accelerate that analysis through identification of key data from presentations and reports while correlating findings with market research data. Additionally, as a key challenge for GPs is collecting, organising and analysing financial data from portfolio companies, AI has been able to step in and automate the way in which data is ingested into platforms such as we’ve seen with 73 Strings.

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In 2023, ChatGPT marked the biggest release in technology since Google. Since then, GenAI has seeped its way into industries across the globe, compelling businesses to think innovatively about their product offering as well as their internal operations. The same goes for the private equity market.

But given that private equity is traditionally a less technology-driven space, Frister Haveman, co-founder and co-CEO of Gain.pro, explores the impact AI has had on the market thus far. Haveman, along with co-founder Nicola Ebmeyer, built the private market intelligence platform by combining the best of AI technology with expert analysts. 

Haveman shares insights drawn from his own experience in private equity and consulting, as well as interactions with clients who are actively implementing GenAI in their operations.

RD: Do you think we are in an AI bubble?

Frister Haveman: I have been working in private equity for seven years and the adoption of technology within that timeframe has increased significantly. 

I think we are certainly in an AI investment bubble, but I am also bullish on AI. I am comparing it to the beginning of the 2000s when we had a dotcom bubble and then the dotcom crash. Back then, people wrongly thought the internet hype was over; I think the same is going on with AI. 

While there is a lot of hype and likely overinvestment, I think there is significant future potential with AI. The technological breakthrough is real and the magnitude of its impact is huge. Specifically as an investor, you need to be cautious – widely investing in a bubble market can be a risky endeavour. But overall, I think we are going to see genuine innovation from AI of the kind that we have not seen in decades.

RD: How do you think AI will impact private equity in the next few years?

Haveman: It is important to separate between the internal operations of a private equity firm and its investment opportunities and portfolio. I see a few distinctions on the investment side.

Private equity investors are already diligent in checking the impact of the operations of the companies they invest in. They are thoroughly scanning such companies for any risks and opportunities. With AI, this will only accelerate. As the impact of AI becomes bigger on the general economy, it will touch on all the investment opportunities that present themselves. On the one hand, investors will want to invest into this trend but on the other, they will be keen to avoid companies that will be negatively impacted or disrupted by it.

When it comes to the internal operations of a private equity firm, I personally do not feel we are about to see major disruption of the core of investing. I just do not think that the key function of private equity as a capital allocator and an active owner of private assets will be dramatically changed. 

However, the impact on the ‘engine room’ of doing deals is likely quite major and transformational. Throughout the stages of fundraising, sourcing, transaction execution, portfolio work and exits, there are efficiency-gaining improvements to be made. Like any professional service, there are several opportunities to streamline processes and improve efficiency by simply leveraging the technology that is out there. While we may not be on the cusp of being disrupted by AI, you can certainly use it to develop a competitive edge.

RD: How has PE deal sourcing changed over the years and how will it change further with AI? 

Haveman: If you look back 30 years, people found companies by leveraging their network or literally driving through an industrial area and writing down the names of the companies they wanted to reach out to. That process has progressed as markets have professionalised and early technology, such as structured databases, has
been introduced. 

Now we are at the stage where, with AI, intelligence platforms can offer a holistic view of the market. What the best private equity firms are doing is combining this technology with a strong understanding of their sweetspot to prioritise opportunities that are exactly right for them. This way, they streamline their deal-sourcing process and, as a result, source better deals faster than ever before.

But as the markets get increasingly transparent with this technology, they also become more competitive.

RD: How do firms differentiate themselves in today’s transparent market?

Haveman: If finding a company is no longer differentiating, your differentiation must come from what you bring to the table. To stand out, it is important to allocate as many resources as possible into differentiation. You can do this by freeing up your teams through automating manual work.

Perhaps paradoxically, in the age of AI, the right strategic response may be to double down on the distinctly human parts of the deal work such as building trusted relationships. However, this can only be done with significant automation of other processes. 

RD: On the portfolio operations side, what are some best practices you recommend investors take when communicating with their management teams about implementing AI?

Haveman: I think that depends on what role you take as an investor. Do you see yourself driving change and educating your portfolio companies, or as the party that looks at financing the balance sheet and having a constructive board dialogue, taking a hands-off approach
with operations?

If you are looking to be more hands on, you need to upskill technically within your own firm first before helping your portfolio companies navigate a digital transformation, whether that is about AI or otherwise. If you do not understand GenAI, how are you going to help your portfolio companies?

RD: What role do humans play alongside AI in private equity operations and should we fear AI?

Haveman: GenAI is useful for research and analysis in our space, but it in no way threatens the core of human creativity in the construction of deals. I see it more as an augmentation tool more than anything else. Humans also play an important role in validating the output of technology. Not everything produced by AI can be fully trusted just yet.

Ultimately, you can automate certain jobs, which allows humans to focus on more value-adding tasks – those that AI cannot do. 

RD: What are some unique ways you’ve seen PE firms leverage AI?

Haveman: I think AI is still at a quite early stage. There are firms out there that have built their own platforms or advanced integrations of third-party data into their own systems, but I have yet to see a firm holistically apply this throughout their entire processes. 

I believe some large firms are paying quite a bit of learning money from wanting to be a first mover. Taking the ‘buy’ route in build-or-buy can certainly be a valid strategy still. The best firms are leveraging third-party platforms to absorb data on the outside world and then focusing their efforts on integrating that with the unique and proprietary data they sit on. 

There are some very strong examples of that, both on the investment side and with advisers. In general, you also see that VCs are ahead of the game relative to private equity. There is a lot to be learned from them that private equity firms can smartly apply now.

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Kim Carter from LKCM Headwater and Passthrough’s Ben Doran explain how collaboration is key for a successful partnership.

Since its first partnership more than two decades ago, the team at Texas-based private equity firm LKCM Headwater has understood that businesses do not make businesses better, people do.

Fast forward to 2024, the firm has raised six partnerships plus co-investment partnerships totaling $2.6bn of capital commitments. LKCM Headwater’s core philosophy is to add value through the expertise of its ecosystem of hands-on, strategic investors to transform businesses to be more sustainable, higher cashflowing, and more resilient over the long term. To do so, building strong relationships with their investors is critical.

“Our focus is alignment and partnering with portfolio company management teams to provide relationships, resources and capital to scale and build businesses that best serve our customers,” says Kim Carter, partner and CFO at LKCM Headwater. “Our limited partners are very engaged in our efforts. They source new opportunities, sit on boards, serve as operating partners, and bring expertise from having operated and built their own business. I can pick up the phone and call our limited partners with relevant domain expertise to work with our team to help unlock value across our businesses.”

Customised approach

Introduced by a limited partner, Passthrough provided a customised approach to LKCM Headwater that allowed the firm to scale the fundraising process for its lean team and simplify it for the LPs. Carter wanted a solution that meant she could expand the firm’s fundraising efforts without relying on more people doing more manual work.

“What Passthrough unlocked for us in digitalising our onboarding process parallels what we do with our operating companies,” says Carter. “We look for businesses where we believe we have a competitive edge and can create more value. Bryan King, the founding LKCM Headwater partner, believes in an operational, roll-up-your-sleeves approach that often requires an investment in technology, software and systems. This creates a J-curve to get operating leverage to create a step-change to a more profitable, scalable business.” 

Continuing to tailor the onboarding process through individualised messaging and customised ways of sharing information was key for LKCM Headwater to maintain and build connections with investors. The Passthrough team had the same collaborative approach and was quick to test and implement changes that allowed LKCM Headwater to best serve its clients. 

Carter attributes a significant part of the ease and success of their raise to the Passthrough team.

“There was always a response back from the team saying, ‘Yes, we can do this,’ or ‘We’ve seen this before. While you are suggesting this, I would also recommend you consider options A, B and C.’” 

Constantly improving

Ben Doran, co-founder and COO at Passthrough, says feedback from customers such as LKCM is a crucial part of constantly improving the product. “We always want to understand how customers are using the platform in order to make it even more useful for them,” he says. “By getting a real-time look into how Kim and her team wanted to work with their investors, we know exactly what we needed to build to get them there, which means the next customer gets that benefit too.”

Security was also a critical factor during the diligence process led by Sarah Topham and the IT team at LKCM. “We needed to give our limited partners the confidence their data is protected,” Carter says. “Passthrough provides a way to log in with a secure link without having to maintain passwords that could be hacked. This was one of the benefits that our IT and security teams identified when they did their diligence, and one that our limited partners really appreciated. We collect and store very sensitive data, so having confidence that Passthrough took security and privacy seriously was imperative.”

Ultimately, the success of implementing any investor-facing solution comes down to what the LKCM Headwater limited partners think of it.

“Our limited partners were impressed,” says Carter. “Passthrough simplified and made the process easier for them. The ability to start and stop filling their sub-documents as they needed, having all their information saved and sharing their documents with additional family members, CPAs or additional users on a single platform was something most of them had not seen before. It put control in their hands in a way that even those who were less tech savvy could easily benefit.”

Key Facts

As of early 2024, LKCM Headwater Investments has $26.3bn AUM, a team of 99 including 66 investment and other professionals, 27 CFAs, eight CPAs, four CFPs and 35 employees with MBAs, and is independently owned and operated by its employees. 

It has over $2.6bn invested in more than 40 platform companies and has generated 5.7x MOIC from its exited investments since 2000.
 

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AI-based deal-sourcing tools can automate market mapping and company research, giving firms the time they need for higher-value activities. Ruth Eagle is head of origination at CBPE, a client of deal-sourcing platform Sourcescrub.

RD: To what extent are private equity firms embracing technology when it comes to deal origination today?

Ruth Eagle: I have been working in private equity for seven years and the adoption of technology within that timeframe has increased significantly. 

When I first started out in the market, the industry had access to a handful of data sources but origination was largely a manual process. Origination teams would trawl the internet looking for potential targets, stitching together maps in a long-winded and not particularly sophisticated manner. 

Fast forward to today, I think most midmarket firms have recognised that they need to be a lot more tech-forward when approaching origination. At the same time, platforms like Sourcescrub have emerged, allowing sponsors to be more sophisticated in the way that they identify investment opportunities. For us, engaging with Sourcescrub has helped to dramatically cut down on the time spent mapping markets, automating away many of the most laborious and manual tasks. 

As a result, many private equity firms today are now embracing technology in the origination function and elsewhere within the organisation. Adoption has also been driven by an increasingly competitive market – and technology can be a great differentiator. 

RD: Do you view true artificial intelligence as a game changer when it comes to deal sourcing? 

Eagle: There has been a lot of talk about artificial intelligence in recent years but very often, when people have used the terms AI or machine learning, they have actually been referring to something less sophisticated. It has only really been in the past 18 months to two years that we have witnessed a significant jump forward. 

Private equity firms are now able to use AI and machine learning models in a genuinely transformative way.

For example, we are currently using AI platforms to help us screen and profile businesses more efficiently. Instead of manually pulling together information to triage businesses, we are now using a generative AI programme to do the same job in half the time. Additionally, we have employed machine learning to map markets by identifying companies based on specific inputs.

Machine learning and AI will be a game-changer during the next couple of years and I expect to see more tools emerging that can be applied to deal origination. This is a journey, and the industry is still very much at the start.

RD: What are the first steps that any private equity firm thinking about embarking on this journey needs to be thinking about?

Eagle: Our strategy was to start by ensuring that all our underlying data was high quality and well structured. If you point AI or machine learning models at inaccurate data you will get inaccurate results, which will not improve over time. Once you have ensured the accuracy and quality of your data, only then will you be in a position to realise AI gains.

There are also some quick wins that can be achieved by using tools such as ChatGPT or Microsoft Copilot, which can make swift work of cutting out unnecessary manual tasks. 

Sourcescrub has implemented a secure GPT model in the platform that acts as a co-pilot for sourcing activities. There are also firms that are using machine-learning algorithms to help predict which businesses may be of most interest. For certain investment strategies these can be a quick and efficient way to get up the AI curve.

RD: As the number of potential technology partners continues to proliferate, how should private equity firms decide who to work with? What questions should they be asking?

Eagle: As mentioned just now, data accuracy is the most important factor for us; how is that data generated and where does it come from? If you delve into the core data model and discover that the data they are using is not accurate in the first place, then applying machine learning or artificial intelligence onto those data models is only going to produce the wrong outputs. 

This is one of the reasons we have chosen to work with Sourcescrub, and recently made the decision to use its data as a core part of our data warehouse initiative.

Focusing on the foundations – where the data comes from and how it is joined together – is absolutely critical.

You also need to think about how technology partners fit into your work processes. What gap are they filling and how will they improve your workflow? One of the reasons we chose to work with SourceScrub is that its solution was a great fit for some of the processes that we were performing manually and integrated easily with our CRM to help us join the dots.

RD: In addition to ensuring that the underlying data is sound, what other potential risks are involved in employing artificial intelligence in the origination function and how can these best be mitigated?

Eagle: One of the challenges that we have encountered stems from the fact that our investment strategy is broad. There are predictive models in the market that are designed to surface the most interesting targets for a given fund. We are considering carefully how to apply such models in a way that fits our broad investment strategy.

It is important to ensure that any technological tool and partner you are engaging with is a good fit for your strategy. Do not make the mistake of thinking that just because it involves artificial intelligence or machine learning that it is automatically going to solve all your origination problems. 

RD: How do you see the use of artificial intelligence in deal sourcing evolving going forward and what other functions within private equity do you see as ripe for transformation?

Eagle: I think that AI and machine learning models are going to become a lot more accessible and a lot easier to implement, particularly as tech giants such as Microsoft continue to introduce AI into their software. 

In terms of other parts of the business that can be enhanced with the use of artificial intelligence and machine learning, our portfolio team is seeing great results when it comes to improving the way that our businesses are managing and using their own data. There are significant gains to be made and that is something that we are also actively investigating.

RD: Where would you say we are currently in the AI ‘hype cycle’: peak hype, trough of disillusion, or slope of enlightenment?

Eagle: I think the industry is only at the start of the adoption curve. We are now starting to see tools emerging that are genuinely useful and that are actually producing positive results. 

During the past three to four years, there has been a lot of talk about AI, but practical implementation and use on a day-to-day basis have been far more limited. Now, however, we are on the cusp of seeing what AI can really do when it comes to improving our efficiency and enhancing origination functions. 

There is still a long way to go. We are still discovering which tools are the right fit for which strategies and what will ultimately enable us to reduce the time spent on manual tasks, but I believe that these tools could be transformational. 

It is important to note that we are not talking about automating away the origination team. It is about giving us back time that can then be spent on higher value activities such as forging relationships with businesses, conducting diligence or developing off-market deals.

This content was produced in association with Sourcescrub - click here to find out more about Sourcescrub on our Drawdown Service Provider Profile

Categories: Insights Expert Commentaries

TAGS: Cbpe Capital

Yair Erez and David Poole, partners at Stanley Capital, discuss how the firm is using a combination of proprietary and third-party technology to accelerate target identification and expedite deal conversion.

RD: How does your firm incorporate technology into the deal origination process? 

Yair Erez: Essentially, we aim to be a digital business, rather than a private equity firm applying digital. We think that this needs to be a cultural design element, not an accident, so we want digital to be at the heart of everything we do – and that includes permeating throughout our origination process. 

Most importantly, we have defined digital as the technology we deploy to help enable our portfolio companies. This includes five ecosystems of automation and two main AI technologies (as opposed to an undefined concept).

Our digital edge in origination starts with our research process. We rely on highly intensive research-led origination, starting with deep dives into sectors and the publication of comprehensive research before we invest. Without technology, this would be sub-economic. Through application of a range of technologies, including proprietary products, we have created faster and more repeatable discovery, synthesis and publication. 

Put simply, our time to target identification is faster, and our quality of insight and foresight stronger, which drives our target discovery to be six to 12 months or more ahead of the market and our conversion ratios of lead-to-execution substantially ahead
of peers.  

RD: What systems specifically are you using? Are these off-the-shelf or built in-house?

David Poole: We have a confidential digital development product plan, using typical off-the-shelf private equity products together with our own bespoke enterprise architecture and tools. 

As an example, we have built a powerful in-house origination and value creation engine, Insight, which helps in originating potential investment targets, identifying relative value opportunities and providing a repeatable approach to value creation.

Insight applies the BERT and PaLM family of LLM models, which creates M&A landscapes, from proprietary and published sources, almost instantaneously. The results include clustering of targets, statistical KPI-led differences between clusters of companies in that landscape. This allows us to drill down quickly into sectors, subsectors and identify relevant investment targets.

Our digital-first approach post-origination is in effect a large systems integration and business architecture team that uses RPA, low code/no code, process mining, IDP, business process management, conversational and generative AI to re-engineer business processes. We use best-in-class third-party software in all of these technologies and implement that to facilitate revenue growth, margin expansion and competitive edge into our portfolio companies. This implementation is bespoke to the business and its operational needs. 

RD: When did you start implementing these systems, and what drove this internally? 

Erez: We have invested in digital products since inception in 2019. We think you cannot be a strong healthcare or resource efficiency GP without understanding how digital can make healthcare more efficient while also maintaining or improving patient care. A strong resource efficiency investor must have a clear idea of how digital can be deployed to save energy and the earth’s resources.

Our founding partners have led the strategy to date and initial execution of the digital-first strategy. This has been written  into the partnership agreement and now I, as head of transformation, along with David Poole, the head of SCP Digital, are leading the further development of Stanley’s IP and helping to standardise this approach.

The key steps have included the foundational partnership with UK-based software company Mathlabs to build Insight, through to today’s complete portfolio digital transformation capability built around our own SCP Digital platform that has a 120-person team doing hyper-automation, generative and conversational AI, and enterprise digital transformation projects, combined with our partnerships with technology vendors. 

RD: What was the biggest challenge you faced when it came to the original implementation, and what are some of your ongoing challenges in managing that technology on a daily basis? 

Poole: Our original digital strategy for portfolio transformation was focused on product partnerships led by a small digital team in-house. This model did not have enough connectivity to the market, which was moving faster than a PE-firm’s in-house team could track and relied on external implementation skills in a market with a real talent gap that led to inconsistent delivery and time-to-value of projects.

The formation of SCP Digital addressed this design weakness, giving us access to consistent and repeatable transformation SCP processes that de-risk and increase the return and time-to-value of projects. The connectivity to the market is solved by SCP Digital serving third parties as well as the SCP portfolio to drive wider applied learnings and market connectivity to innovation. 

This is an emerging area and we will continue to enhance our proposition – across our overall architecture, products and services. 

The continual challenge will be to stay at or ahead of the overall market, judging ourselves against the leading applications of technology, not our peers in private equity and their adoption.

RD: What are some of the highlights in terms of success you have had since adopting this approach?

Poole: Qinecsa, an SCP portfolio company in pharmacovigilance technology and services, leveraged our insight and other products to identify and execute five bolt-on acquisitions in less than 18 months.

Key to this execution was the use of Insight, which enabled us to identify each investment ahead of making the initial platform investment. This meant a well planned and seamlessly executed buy-and-build programme was possible. All of the initial conversations for the bolt-ons, bar the last one, were actioned during the first three months of the first platform investment being completed.

Across our platform, through application of a digital mindset, our performance KPIs across pace of origination, conversion of leads to deals, portfolio value acceleration and deployment rate of capital for a small team have all been substantially ahead of peer benchmarks.

RD: What pain points have you been able to eliminate or mitigate? 

Poole: Our use of technology has mitigated multiple typical pain points in the deal origination process.

For a start, our digital origination and transformation capabilities look totally differentiated to our competitors, immediately creating a competitive advantage intended to give us an edge when it comes to communication with sellers and management teams in processes. We undertake subsector landscape research promptly, recognising opportunities in minutes as opposed to months, which provides maximum visibility on the target market, and we review higher quality and more relevant opportunities. This sharpens SCP’s focus from an early stage onto only the investments that we want and have a right to win, and avoids wasting time on businesses outside our investment strategy. 

All of this leads to a higher conversion rate on opportunities, which is a key differentiator for us.

RD: Does your use of technology extend to the value creation process? What systems do you use for that? 

Erez: SCP Digital leads the digital diligence and value creation plan creation and execution of targets.

We bring SCP Digital with us from the first meetings with a target. With this in-house capability we can underwrite a value creation plan during diligence and immediately execute post-acquisition using our stack or repeatable templates and processes. We do not have to wait for augmentation of CTO or digital teams, target design or vendor selection processes that could take 12 to 24 months.

The first step is to understand how a business works and then map out its business processes. We can do that with our innovative process-mining software. Once mapped, we use the data to understand which technologies would be appropriate to redesign or improve the associated business processes.

Examples of the template tools include productivity and process mining, digital assistants, data structuring, intelligent decisioning, workflow orchestration and robotic process automation, which have been successfully implemented at our existing portfolio companies.

RD: Likewise, do you have any highlights and challenges that stand out in that value creation area when it comes to technology? 

Erez: At Qinecsa for example, SCP Digital has identified and is leading implementation of value creation opportunities through automation savings that could increase Ebitda by almost 100% in an already high-margin business. 

We implemented process-mining software in the business for six months to fully understand how parts of the business functioned. This identified large cost-saving initiatives through implantation of automation software such as email orchestration and using generative AI to allow touchless processing of adverse events in Qinecsa’s end sector of pharmacovigilance. 

RD: Do you think LPs look at the use of technology during the value creation process as a differentiating factor for a PE firm?

Erez: While most GPs claim that they use technology to deliver value creation, we believe LPs look for genuine differentiators when assessing GPs. 

SCP has a proven capability to drive actual earnings improvement, and therefore tangible value, through highly replicable digital, AI and automation solutions. This is a real digital track record.

Categories: Insights Expert Commentaries

TAGS: Stanley Capital Partners

A bespoke solution was key for ECI’s deal origination process according to Suzanne Pike, partner and head of origination at the firm.

RD: How does your firm incorporate technology into the deal origination process?

Suzanne Pike: We use Amplifind, which is a prorietary AI platform for lead sourcing and prioritisation. At the heart of Amplifind is a machine learning tool that takes and processes data that we have entered into Salesforce about the many thousands of businesses with which we are, or have been, in contact with as potential investee companies. 

It looks at areas including company financials, ownership information and keyword metrics, and then produces a prioritised list of opportunities. Each month, one of my team reviews the shortlist on the Amplifind platform and we have a meeting to review each that has been positively selected. This process then flags new lead opportunities in Salesforce for us.

The other way that it helps us is through the automated profiling of companies in which we are interested. We used to have to ask the analysts in our team to produce these profiles, using data from Companies House, LinkedIn, business websites, Google searches and other sources. Now all of that can be done with the click of a button.

 Amplifind uses AI to generate rich descriptions of what a company does and how it is currently performing. This means that our analysts are freed up for more in-depth research because Amplifind has taken care of the simpler tasks.

So while it started out as a lead-sourcing tool, it has grown in terms of remit and has effectively become the backbone of our origination research process.

RD: Was Amplifind bought off the shelf or built in-house?

Pike: Amplifind was created completely in-house and is bespoke to us, as the ML models are trained on proprietary data and the UI is designed with our specific business processes in mind, but we did get some help. We used a firm of data analysts and engineers to productionise our prototype in Microsoft Azure and we have intentionally used standardised code in the UI to make the product relatively low risk and flexible from a technological perspective.

We did not want to use an expensive third-party platform that would not actually give us any edge over the competition. In that case we would be making our business fit the technology, rather than making the technology fit our business.

RD: When did you start implementing Amplifind, and what drove you to do so?

Pike: We created the first Amplifind models in 2020 and then embedded the prioritisiation tool in our core processes from 2021.

One driver was that there is so much data out there now that it is not physically possible for humans to get through it all. Using a system like Amplifind ensures that our human skills are deployed to the right business. Another related driver was that, in a competitive market, we were finding we needed to identify leads and meet management teams of target companies earlier and earlier. 

That meant that although we had gradually moved up in deal size, the potential universe of relevant growth businesses to trawl through had significantly increased. On average, we engage with a business for five and a half years before investing, and sometimes as much as a decade.

RD: What were the biggest challenges you faced when you first implemented Amplifind, and what are your current challenges?

Pike: We are in the process of exploring a possible partnership with a university applied AI department to look at how we might best leverage our proprietary language-based data. An area that has been harder to crack, however, is the availability of third-party language-based data and good quality keywords. 

We have a subsector-driven approach to origination so the better the keyword data we can extract, the better indication we will have of whether a business is a good fit for us.

However, the nature of the challenges has changed radically in just the last few months. Our business goals regarding technology are still the same; to use technology to enhance the origination work we do as humans and to support value creation in our existing portfolio companies. What has changed is that the barriers to accessing data are falling away. There are more and more off-the-shelf AI tools available too. 

Everybody has been talking about ChatGPT since its launch but, even since then, the growth in the number of new technologies providing quick wins for a business like ours has been phenomenal. The main challenge now is not getting carried away with the technology and staying focused on what we are trying to achieve. The danger is that technology just creates a lot of extra complication in our business processes, which is not what we want.

RD: What are some of the successes you have had since starting to use Amplifind? What pain points have you been able to eliminate or mitigate? 

Pike: Ideally, we would be able to point to all the deals we have completed that came to us through Amplifind. But in reality there will always be multiple touch points along the way to an investment. Our goal is to talk to a potential portfolio company before anyone else, but we understand that advisers will get involved later and the process of originating and winning a deal will be multifaceted.

However, I can say that we have reduced the time spent reviewing potential leads by more than 80% and we have seen an eight-fold improvement in terms of converting companies reviewed into leads on Salesforce, when compared with our previous traditional Companies House searches. This is because with Amplifind we can now look at a wider range of businesses in less time. 

More than 40% of our pipeline is now sourced from the Amplifind platform. That ratio will increase because we have had Amplifind in place now for almost three years but we typically identify and meet target businesses more than five years ahead of a deal.

RD: In what ways does your use of Amplifind extend to the value creation process?

Pike: We use Amplifind to assess potential bolt-ons and portfolio companies’ M&A strategy in general. 

Going further, we would like to give the management teams at our portfolio companies direct access to Amplifind so that they can use it to monitor potential targets as well.

RD: Do you have any highlights that stand out in the value creation area when it comes to technology?

Pike: We have found that people are using Amplifind in interesting and unexpected ways. 

If we are working hard on a potential deal and we know who our competition is, then we always want to check how investments they have previously made in the industry are performing. Before Amplifind, doing so was hard and would involve a lot of digging around in company accounts. But now we have the ability to automatically profile any business in the UK with one click of a button in Amplifind, this information is available instantly. It is just a marginal gain but, once added to the many other marginal and major gains we get from Amplifind, the effect is powerful.

RD: Do you think LPs see the use of technology during origination and value creation as a differentiating factor for a private equity firm?

Pike: We ran a number of demonstrations of Amplifind for LPs during our last fundraise and had very positive responses. 

Investors want a track record – nothing trumps that. They also look forward, however, wanting to know that a private equity firm is not just a group of individual deal-doers but a business with a coherent, repeatable model. Effective technology really helps to show that you have good central management and robust processes. 

We are going to continue to invest in technology such as Amplifind because we feel that technology will be an even bigger topic next time we fundraise.

Categories: Insights Expert Commentaries

TAGS: Eci Partners

NorthEdge’s Lucie Mills and James Hales discuss how the mid-cap GP is using technology to support deal origination, identify potential deal targets and enrich various interactions.

RD: How is NorthEdge incorporating technology into the front- and middle-office functions of deal origination, deal execution, portfolio management and value creation?

James Hales: Deal origination in the midmarket is incredibly competitive and everyone is always chasing the same ball. Every manager is working to find assets off-market or go into adviser-led processes with some kind of advantage. Several managers are now using software to help deal teams to identify potential deal targets by sector and size.

We have worked on developing our own AI and machine learning tool for about seven years now. We first worked with Peak, an AI consultancy in Manchester, to get the platform off the ground, and now we are working with Alliance Manchester Business School to develop the technology further. We work closely with Richard Allmendinger, a professor of applied AI.

Fundamentally, we are trying to develop a tool that uses a variety of financial metrics and selection criteria to catch businesses with high potential early, in a more sophisticated way, so that we can build relationships with relevant businesses that we may invest in.

Lucie Mills: We have also built a platform for our portfolio community called Nexus. It is a proprietary product that we built ourselves, exclusively for our portfolio company management teams. Portfolio company chief executives, chief financial officers, sales leaders, marketing leaders and technology leaders all use it, and it also interfaces with our operating partners network. 

Nexus has been a really efficient way to bring relevant groups of people together across the portfolio to share knowledge and information and facilitate networking. The technology is there to make resources and contacts available to portfolio company teams without overwhelming them. Nexus is a ready-made content hub – covering everything from pricing strategies and recruitment to customer engagement and supply chains – that portfolio companies can draw from whenever they require it.

As James highlighted, a general point of principle for us when using technology is that it is there to complement the relationship-focused part of our work. 

We are not trying to replicate everything we do, but rather harness technology to give us more insight, help us get to things quicker and support the building of relationships with potential deal targets and portfolio companies. 

James Hales: When speaking to a management team, a tool like Nexus provides a clear demonstration of how we can add value. Lots of managers talk about value creation but don’t have anything tangible to evidence that. With a platform like Nexus, we do. It is a massive unique selling point.

One area where Nexus has been especially helpful is around ESG. Management teams have been far more challenging around ESG, so the ability to be able to showcase Nexus to them, where they’ve got access to all our ESG reports as specific examples of how we help companies to add value using ESG is very powerful.

The reality is that there are many suitors out there for management teams to choose from, so being able to point to specific examples of what we can offer is a key point of differentiation.

RD: As you have developed your own proprietary technology, what have you learned with respect to making sure the technology is doing what it is supposed to?

Lucie Mills: Let me answer that in terms of how we use technology to support portfolio management across the firm.

The key principle is to keep things as simple as possible. We have made a conscious decision that we want to keep everything on one platform. There are so many excellent technologies and tools available, and it would be great to be able to use them all, but it is important to keep the technology interface with our portfolio companies clear and simple. 

When capturing data and financials from portfolio companies, we don’t ask for more data than we need, and we are totally clear on why we are asking for information and what we do with the information they share with us.

We have one system that all the information flows into. It is a repository for all the ESG, financial and value creation metrics. We use portfolio management software from Cobalt to facilitate that.

RD: Why has holding data in one place been such a priority?

Mills: There has been a focus across the firm on achieving real data integrity. Bear in mind that we have invested in 44 companies over an 11-year period from four funds. Making sure that we are on top of all that data, and focusing on data integrity, is the only way that we can then leverage technology. 

We could have started leveraging technology two or three years ago but we wanted to make sure that we’re not just using technology for the sake of it, but rather drawing insights from the technology. That all comes down to data quality, which has been a massive focus for us.

Data visualisation and data automation will be the next big priority areas for us, with those capabilities layering over our CRM – we use Microsoft Dynamics – and Cobalt systems to make the technology really dynamic. These programmes do have data visualisation capability but we are working towards the formation of a single lens that sits across all of the systems. 

As a dealmaker or business leader, I don’t want to have to go into four systems to source my information. I want to go to one place and see it all. So that’s why we want to spend more time on that visualisation piece and put everything in one place, making it easier to look at and easier to compare and contrast.

The end goal is to put information about our business into the fingertips of everybody in the business. That can help an investment team when they’re looking at a track record in a sector or a geography or a deal. It can help when we are going fundraising and speaking to investors. It can help when we’re just answering general queries or looking at deployment rates. 

Rather than someone having to run around and gather up figures from various sources, everyone will have access to all of the data and will be able to self-serve. That is very exciting.

Categories: Insights Expert Commentaries

TAGS: Northedge

Philippe Laval, chief technology officer at Jolt Capital, discusses its proprietary software platform Ninja, and reflects on the highs and lows of bringing the system to life.

RD: How does your firm incorporate technology into the deal origination process? Are your systems off-the-shelf or built in-house?

Philippe Laval: We have developed our own software tools in our own system to find interesting investment opportunities for Jolt. Every day, partners use this system – which we call Ninja – to get suggestions of companies they could reach out to, or to find out more about a company that they have heard about elsewhere – for example, who its competitors are.

Ninja also indexes all our office emails, so we can share all our knowledge and insights firmwide in an easy and secure way.

While Ninja is our own system, it is like an umbrella. Every time we find a new service that could be useful – for example, the new open AI tools that are emerging – we integrate them into Ninja. 

RD: When did you start implementing Ninja, and what drove you to do so? 

Laval: We started developing Ninja in 2017 and had two key reasons for developing the system. Firstly, we wanted to know how deep the market in growing technology companies was in Europe, and whether it was deep enough that targeting only companies in this category could be a viable investment strategy for us; Ninja gave us a way to conduct a census.

Second, it was the way to scale our business. We felt that there were two ways to attempt to grow. One would be to hire a large amount of junior staff members, send them to a lot of commercial shows and pitch meetings, and have them report back to us. The alternative would be to use technology to give partners direct access to the markets in which they were interested in investing. 

We said from the beginning that we would take the latter option because we did not want too many layers of people between a potential portfolio company and those who make investment decisions.

Cost was not a motivation initially. To create Ninja, we needed to hire a full-time chief technology officer and software developers, and buy data, so at the beginning it was a significant financial investment. Now that we have scaled the project however, cost has become a third reason for having Ninja. The system has become cheaper than having people doing an analogous job would be. 

In addition, with Ninja we have built value inside Jolt and created something that we can continue to use in the future, whereas human knowledge and skills can be lost when people move on. As entrepreneurs, we wanted to build a real company, not just an investment vehicle, and Ninja has become part of that.

RD: What were the biggest challenges you faced when you first implemented Ninja, and what are your current challenges?

Laval: The first challenge at the beginning was understanding what kind of analytical system could be built. The European geographical area we were looking at is very fragmented, perhaps 20 countries speaking many different languages and each with their own different national register for companies. 

Then there was the question of what makes a good investment for us. Can we identify a fixed set of characteristics for a business that Jolt should invest in? The answer is no. 

Next was the challenge of adoption. Every partner was committed to using the system but it was so different to the tools that they were used to using. To be honest, at that stage Ninja was still developing but it had to be used otherwise it would never be a great system. Everyone was very supportive, so in the end it worked.

Now that the system is working better, the challenges are different. The data problem is solved. We now have access to information about almost four million companies and know how to get the information we need about them. Adoption is almost completely solved. People at the firm are so used to Ninja now that it is almost as much a part of their daily working life as email. We were also lucky that our managing partner said nobody should look at non-Ninja companies.

After six years of using Ninja, we have a huge corpus of companies – almost 30,000 – that have been tagged as ‘interesting’ or ‘not interesting’ by every investment partner, so we can use our deep-learning system to tell us how aligned any other company is with Jolt and our goals.

Now we have the challenge of continuing to innovate, in particular to bring something even more useful to the partners: analysis at an ecosystem level. That could mean taking the names of, say, two companies in an industry and having the system build a competition map around them. If you were looking at companies working with drones used in agricultural technology for example, the system might break this field down into subsectors, such as precision agriculture, drone construction, sustainability for drones, and so on, and then show you companies in each one. This is what we are striving for but it is difficult.

The other ongoing challenge is finding good software developers. It is not that easy to get good potential employees to work for an investment firm because they would often rather be at a technology giant like Google or
a startup. 

Then there is the problem of scaling what we already have. Analysing millions of companies is not the same as dealing with 200,000, and we want to keep the system fast and not too expensive. Finally, we would like to move up another level and analyse other GPs as well as companies’ to find out who invests where and how much.

RD: What are some of the successes you have had since starting to use Ninja? What pain points have you been able to eliminate or mitigate?

Laval: When Ninja started and was suggesting a company to a partner, they would decline 80% of the time. Now, it is the opposite. I would say that now about two-thirds of our dealflow is generated by Ninja, and our last four investments all came from the system.

The system will suggest a company to an investor, who will then complete some pre-deal diligence, using the system as a single point of truth to share information. Months will then pass between this first suggestion and an investment, and it becomes a question of human interaction with the founding entrepreneur as we build a common investment case, so the process is the best of both worlds. 

The idea is to give a superpower to the investor at Jolt so they can be more efficient at doing their real job, which is to connect with an entrepreneur, understand their business model and work towards an investment.

RD: In what ways does your use of Ninja extend to the value creation process?

Laval: We use Ninja to look for bolt-on acquisitions, and a little to assess exit potential. We also give our portfolio company executives access to the system, so that they can search for bolt-ons or competitive intelligence themselves.

RD: Do you have any highlights that stand out in that value creation area when it comes to technology?

Laval: I can think of two of our portfolio companies, both of which were suggested to us by Ninja a few years ago, that are now using Ninja to find acquisitions. One of them, a biotech company, is doing as many as two bolt-ons a year.

RD: Do you think LPs see the use of technology during origination and value creation as a differentiating factor for a private equity firm? 

Laval: We have just closed a €100m extension to our fourth fund and we are already starting to raise fund five. Every meeting with an LP or potential LP included a Ninja demonstration. Most of the time they went on to ask for access, which we are happy to grant. 

Ninja also features a lot in our LP marketing in other ways. Every week we publish data, a business map, or something else potentially useful to our LP network that we have drawn directly from the system.

Categories: Insights Expert Commentaries

TAGS: Jolt Capital

It is time to embrace the opportunities that come with the technology industry’s shortcomings, according to Bettina Denis, head of sustainability at Revaia

The technology industry during the past decade has been a key factor in reshaping both the society and economy of Europe. The sector has created nine million tech jobs and generated $800bn (€740bn), revolutionising sectors such as education and healthcare. 

Projections suggest demand for an additional 11 million tech specialists by 2030. The industry is rapidly innovating and has the potential to lead the charge towards sustainability. By embracing sustainable principles, it can demonstrate the intertwined nature of sustainability and financial performance. 

Despite these expectations, there are issues that need addressing. Notably, the diversity of the technology industry requires attention and, on the environmental front, its carbon emissions could triple by 2050 without intervention.

Facing challenges 

In the tech world, carbon footprint assessment is the most prioritised sustainable initiative, with 59% of seed to series-D and beyond having completed a carbon footprint analysis – a positive step. Equally positive is that the further down the maturity scale we look, where the larger companies with higher carbon emissions sit, the higher this%age rises, reaching 87% in series-D+ companies.

However, all is not rosy, as tech companies seem to overlook significant Scope 3 emissions, one of the highest contributors to carbon footprint. Scope 3 emissions account for all indirect emissions in a company’s value chain, including both upstream and downstream activities, and notably procurement. Currently, just over a third (36%) of companies have implemented a responsible procurement charter. 

Diversity is an area of concern – especially female representation. As it stands, just 26% of the tech workforce is female. As companies mature, there is also a risk of losing focus on ESG actions from previous financing rounds. Between seed and series-D, female representation at the board level has been shown to decrease from 37%
to 27%. 

Diversity charters often sit below environmental desires, but it is vitally important that we consider both to the same significance. 

Turning the dial 

However, there are reasons for optimism. Tech companies are beginning to understand their ESG responsibilities, and investors are beginning to take sustainability seriously. In 2021, $18.2bn was invested in European startups pursuing environmentally aligned business models. 

VC firms are beginning to see that sustainability has to be ingrained in everything they do, and all investments must adhere to ESG rules, or they quickly see investors putting money elsewhere. In a challenging fundraising environment, this is the last thing that GPs need. 

We are seeing an increasing trend of VCs, in the due diligence phase of investment, ensuring that companies have defined measurable social and environmental indicators, which can be followed in the long term. These KPIs can relate to business practices such as transparency, employee retention and work policies, as well as the company’s business model such as education, partnerships and employment.

This, alongside the appointment of an ESG leader, which has proven to help increase diversity from 38% to 46% according to our latest ESG Benchmark Survey, means that companies can have a clear roadmap and in-house toolbox, improving sustainability performance and ensuring that the tech industry becomes the driving force towards a more sustainable future.

Note: All data referenced is from Revaia’s 2023 Tech ESG Benchmark Survey

Categories: Insights Expert Commentaries

TAGS: Revaia

David Floyd, vice-president at global investment firm Permira, talks to Real Deals about how the business is harnessing advanced analytics to drive competitive advantage in its funds’ portfolio companies, and outlines how Permira is using AI tools internally to support investment teams.

RD: How is Permira using data and analytics to support value creation in the portfolio?

David Floyd: Permira established an advanced analytics team within the value creation team about five years ago, with its primary function being to identify ways to use technology to help management teams to drive value creation at the portfolio company level.

We strive to find the most impactful use cases for data and AI in portfolio companies, show companies what they can do with their data and then demonstrate proof of concept to the management team. We will get involved in some forecasting if there’s a clear bottom-line opportunity, but top-line growth is the main priority.

We do not mandate that all portfolio companies use the same software or follow the same implementation blueprint. The aim is to help each company find the right tool and right process for the right situation. There are, however, recurring themes that we have observed and we regularly see advanced analytics utilised to drive improvements in pricing, customer churn and personalisation. 

We also have a significant focus on knowledge sharing. If you take the example of AI, we have built a community of more than 260 senior stakeholders across our portfolio who can collaborate through various forums, roundtables and a new digital engagement platform.

This is proving a very fertile community and helps our portfolio companies stay up to date on the latest – and rapidly evolving – regulatory environment relating to AI. It also allows these companies to take part in topical training sessions, deepen partnerships with vendors and develop collaborative exercises between portfolio companies. 

At the same time, the portfolio companies have been continually experimenting and sharing knowledge about various GenAI tools – such as Enterprise ChatGPT, GitHub Copilot, AWS CodeWhisperer – to find ways to improve productivity. 

RD: How are you approaching the topic of AI more specifically in the portfolio?

Floyd: Broadly speaking, our strategy is to work with and encourage our portfolio to experiment with GenAI applications and, as part of that, leverage the portfolio as a distributed laboratory to rapidly prototype solutions and then share the learnings within the portfolio. As part of this, we are encouraging all companies to ring-fence teams to ensure a focused approach.

There is currently an average of three GenAI development projects currently live in each portfolio company – more than 200 in total – with new initiatives being identified continually, either by dedicated R&D teams from within business functions or through company ‘hackathons’. In a tech portfolio, this average figure can be as high as 10. 

RD: With regards to your work on the firm’s internal technology capability, what is the focus and what are you hoping to achieve?

Floyd: During the last 12 to 18 months, one of the major areas of focus has been to work closely with our CTO to look at how Permira can drive performance advantage for the firm and the Permira funds from generative and predictive AI. We have explored everything from deal origination, due diligence and value creation through to portfolio management, financial reporting and ESG compliance.

We have built an internal platform for running AI tools securely across all of our internal data. The platform delivers similar output to what you would expect from a tool such as Microsoft Copilot, but we decided to do the build in-house so that we could learn about the technology as fast as possible, deploy it quickly and not be tied into any one vendor. Developing the platform internally has also helped us to deal with the information security challenges that come with deploying this kind of technology, which are significant for any private equity manager. 

The platform is called Gaia; it is live and working. The initiative started as an experiment to see if we could use Generative AI effectively, and we are now in the production phase. We have seen teams across the whole organisation use it. 

It is still early days but initial indications suggest that every individual using the platform saves between 5% and 11% of their time every week. The exploration and testing of ways to use the technology to automate more simple tasks, as well as handle autonomous workflows, is an ongoing process.

We have also developed a second tool in-house – Prism – which produces a visual and predictive readout of a company’s customer churn ‘health’, as well as its upselling and downselling performance. Pulling together that information supports a much more informed management conversation.

In addition to the platforms that we have developed ourselves, we have also explored a few complementary third-party technology options. Hebbia, Glean, and Dataiku are the tools we are most familiar with – Hebbia and Glean serve as AI-powered enterprise search tools, similar to Gaia and M365 CoPilot, while Dataiku operates as a broader platform for deploying AI/ML models in automated workflows.

It should also be said that as part of all of this work, we have worked closely with our legal department to ensure that all AI tools operate mindful of relevant compliance frameworks and procedures.

So, if I am on a deal team and I log in to one of the tools, how can they support me through the deal process? 

Tools like Gaia assist dealmakers with finding and synthesising relevant documents at speed. A piece of analysis that would have been a huge undertaking because of the time it would take to assemble the relevant documentation can now be done in a couple of hours. It might also help to compile a quantitative picture of a company or opportunity out of the mass of available commentary and qualitative data. 

These are common applications for generative AI. The AI finds the needle in the haystack and uses natural language processing-style analytics to pull out something structured from something unstructured.

Tools such as Prism provide deep insights into a company’s revenue flows and areas of risk or opportunity early in the diligence process, to support evaluation and to provide value to management teams.

We also have a proof of concept for using AI to not only identify top-performing companies in particular sectors, but also to recognise characteristics that may not be immediately obvious but can predict growth and outperformance. 

RD: Are there any particular highlights or success stories from your team’s work that stand out?

Floyd: Personalisation has been a powerful lever. Customers increasingly expect a personalised service from brands; this is especially true at the luxury end of the market. More than half the growth (and high tens of millions of euros per year in direct-to-consumer revenue) at one of our luxury goods portfolio companies, for example, has been due to the personalisation programme that we put in place.

Improving customer retention in the portfolio has been another highlight. Increasing retention by 5% can lead to a company’s profits growing by anywhere between 25% and 95%. It has been interesting to observe how translatable this model is, and the success of the model is what led to the development of Prism.

Finally, pricing is an interesting area and can yield exceptional results when done well. One of our portfolio companies saw gains in the tens of millions of euros after using technology and data analytics to analyse how it was using promotions and signals at the best times to market promotions to customers.

RD: What are some of the biggest challenges you have encountered when it comes to the implementation of new technology in a company, and how can these hurdles be navigated?

Floyd: The challenge that comes up time and again is the siloing of data. What we are trying to do is to find signals in data but what we often find, particularly for early-stage companies, is that managers are focused on their own KPIs and are not really interested in what other parts of the business are doing.

Therefore, when you are trying to leverage data analytics and AI, implementing cultural change is central to the success of the project. Often you will want to change the culture of the company completely, but that is not realistic. The key is to identify the culture that exists in the company and adapt, making subtle changes to make data and AI work for the business.

Categories: Insights Expert Commentaries

TAGS: Permira

Nicholas Neveling explores how GPs are harnessing big data and AI not only to boost portfolio company performance, but also to provide a competitive edge when it comes to sourcing and executing deals

Private equity is at a digital inflexion point as growing numbers of managers embrace technology to gain a competitive edge in the core business of deal sourcing and portfolio management.

When it comes to back-office functions, technology has played a crucial role in helping managers meet rising investor expectations for faster, more detailed reporting and fund accounting. But digitalising the private equity front office has been a tougher nut to crack in an industry where ‘pressing the flesh’ and the black books of savvy dealmakers have long been the primary drivers of dealmaking and value creation.

Rapid developments across deal software, artificial intelligence and data analytics, however, are reshaping how managers think about supporting core front-office functions, and are driving a surge in uptake for technology in front-office settings.

A poll of 110 private equity LPs by Coller Capital found that 75% of respondents saw artificial intelligence as a useful tool for originating dealflow, with 60% saying it could be useful as part of a deal assessment or post-transaction portfolio company engagement. In a separate survey published at the end of 2023, EY found that 74% of private equity-backed portfolio companies were already using or piloting the use of AI solutions in their transaction processes.

“Firms are incorporating digital lenses into target screening, using alternative data sources to conduct market screens, using large-scale company data to identify add-on opportunities and leveraging data from other assets in a portfolio to inform investment theses,” says Andy Roberts, an associate partner at Bain & Company. “We’ve seen, for example, firms using credit card and e-receipt data, web traffic, search traffic, blog mentions, Amazon scraping and tech reviews to spot fast-growing brands that are under the radar.”

The strategic importance of GPs’ tech enablement has become especially apparent through the current macroeconomic downcycle.

GPs with the digital capability to collate data quickly and accurately, and gain early visibility of portfolio performance, sector trends and deal valuations, have been much better positioned to navigate market headwinds and keep deal pipelines flowing in flat markets.

“Looking back at 2023, global private capital dealmaking was much slower compared to the record activity in 2021 and 2022. Our analysts view this as a market correction, rather than a collapse [...] this correction has made reliance on data and insights more important than ever,” says John Gabbert, founding chief executive of private markets data and intelligence provider PitchBook.

Technology is also becoming increasingly important for GPs when articulating their investment propositions and points of difference to prospective LPs.

“Tech enablement is becoming an important differentiator for GPs, and more and more investors now demand that GPs utilise technology to enhance their operations,” says Yuriy Shterk, chief product officer of Allvue, a specialist alternative assets software developer. “Accessing data and being able to slice and dice it to understand how capital is being deployed is becoming an essential capability that LPs want to see managers evidence.”

Still early days

Progress with the implementation of front-office digital tools, however, varies significantly across the industry, with many firms still testing the waters and assessing their specific organisational requirements.

“Private equity is a young industry and managers are working out what processes can be improved and where technology can have an impact,” says Yann Magnan, chief executive and co-founder of 73 Strings, a software company focused on illiquid asset classes. “The priority for all managers is to identify the tasks that are necessary but relatively low value, and can be taken off deal teams and managed with digital tools.”

Pinpointing these workflows and selecting an appropriate technology solution, however, is not always obvious, and there is a delta emerging between private equity’s technology leaders and managers that are only just embarking on their digital transition.

At one end of the spectrum, some managers have recruited dedicated development teams to build proprietary data analytics platforms that use machine learning and algorithms to identify deal targets and scope out transactions early in the origination pipeline. At the other end, some managers that have run successfully for years using very basic technology tools are now looking to upgrade their front-office technology infrastructure.

“Across the market, dealflow is much more visible and much more competitive, and if you want to win deals you have to have all of your ducks in a row,” says Matthew Hardcastle, vice-president of industry solutions for Intapp DealCloud. “All of your deal intelligence and knowledge has to be pulled together in one place. You want to be investing firm time in the right assets, rather than just reacting to what is coming in. Data and pipeline management are central to that.”

The technology is there to make resources and contacts available to portfolio company teams without overwhelming them
Lucie Mills, NorthEdge

Data demand

Aggregating data into one place is the starting point for building this capability. This enables firms to build deeper, more proactive visibility of key performance indicators for existing portfolios in the first instance, which can then be expanded to cover shadow portfolios and potential target companies.

“Structuring data correctly and aggregating data into a single place is the first step,” Magnan says. “Collating data from across a firm into one data warehouse is mainly a mid-office function, but the process does have impact and potential for the front office. The ability to extract meaningful benchmarks from existing portfolios gives GPs a much clearer picture of the best-performing strategies and value creation levers. This intelligence feeds into the deal origination process and provides deal teams with insight into the most attractive companies and sectors to invest in.”

Firms that have successfully aggregated data and built data lakes are now taking the next step, layering third-party data and AI tools over their data pools to drive further gains.

“The most successful firms have shown great discipline around how they triage and manage their deal pipelines and are now taking that further. Once processes are running well, forward-thinking managers are exploring how they can use third-party data and ChatGPT-like functionality to summarise deal intelligence and make people more efficient,” Hardcastle says.

Data providers have recognised this demand and are supporting managers by developing tools that facilitate the integration of their data into the data lakes of managers.

“Our solutions are often custom-built to each client's unique requirements,” says Laura Gonzalez, EMEA and customer success managing director at PitchBook. “We offer direct data feeds, CRM (customer resource management) integration, and API (application programming interface) solutions that have customisable queries and robust analytical tools to digest large quantities of data within existing business systems.”

Gaining an edge

Firms that have successfully embedded digital tools into front-office functions say they have been able to accelerate target identification and expedite
deal conversion.

“Put simply, our time to target identification is faster, and our quality of insight and foresight stronger, which drives our target discovery to be six to 12 months or more ahead of the market, and our conversion ratios of lead-to-execution substantially ahead of peers,” claims Yair Erez, a partner at midmarket buyout firm Stanley Capital. Read our interview with Erez on page 22.

Large-cap manager Permira, meanwhile, has established an advanced analytics unit within its value creation team to provide direct support to portfolio companies and explore ways to drive growth and efficiencies through the use of data analytics and AI.

“Broadly speaking, our strategy is to work with and encourage our portfolio to experiment with GenAI applications, and as part of that, leverage the portfolio as a distributed laboratory to rapidly prototype solutions and then share the learnings within the portfolio,” Permira vice-president David Floyd says (turn to page 8 to read our full interview with Floyd). “There is an average of three GenAI development projects currently live in each portfolio company – over 200 in total – with new initiatives being identified continually.”

In addition to its work directly at portfolio company level, Permira has also developed internal tools to support front-office work. One of these, Gaia, is an internal platform the firm developed to run AI tools securely across all of its internal data.

“The initiative started as an experiment to see if we could use generative AI effectively, and we are now in the production phase. We have seen teams across the whole organisation use it,” Floyd says. “It is still early days but initial indications suggest that every individual using the platform saves between 5% and 11% of their time every week. The exploration and testing of ways to use the technology to automate more simple tasks, as well as handle autonomous workflows, is an ongoing process.”

Permira has also built a second proprietary platform called Prism, which provides readouts of a target company’s customer churn ‘health’, as well as its upselling and downselling performance.

Accessing data and being able to slice and dice it to understand how capital is being deployed is becoming an essential capability that LPs want to see managers evidence
Yuriy Shterk, Allvue

Proprietary or in-house?

Reflecting the industry’s wider approach to operational support, firms have used a mixture of proprietary and third-party technology when digitalising front-office workflows.

Permira, for example, has explored using complementary third-party technology options to support and enhance its Gaia and Prism platforms. These include AI-powered enterprise search tools such as Hebbia and Glean, as well as automated workflow tools like Dataiku.

Midmarket manager NorthEdge, meanwhile, uses Microsoft Dynamics as its CRM and third-party data visualisation tool Cobalt, but also works with AI academics at the Alliance Manchester Business School to develop bespoke AI-powered deal-filtering tools.

In addition, NorthEdge has built a proprietary portfolio support tool called Nexus, which serves as an interface between portfolio company senior management teams and the NorthEdge operating partner network.

“Nexus has been a really efficient way to bring relevant groups of people together across the portfolio to share knowledge and information and facilitate networking. The technology is there to make resources and contacts available to portfolio company teams without overwhelming them,” says NorthEdge partner Lucie Mills (turn to page 14 to read our full interview with Mills). “Nexus is a ready-made content hub – covering everything from pricing strategies and recruitment to customer engagement and supply chains – that portfolio companies can draw from whenever they require it.”

Dealcloud’s Hardcastle says that managers will typically turn to established software providers for core areas such as CRM, portfolio monitoring and fund accounting technology, then develop in-house tools to cover more specialist, bespoke internal requirements.

Working in tandem

Whether managers are using in-house technology, off-the-shelf software, or a combination of both, the industry is still a long way from reaching a point where technology can realistically replace the value of human insight in the dealmaking process.

Critical thinking and personal relationships are paramount. The role of technology is to produce actionable data that complements the deal team’s judgement and allows dealmakers to spend more time with management teams and less time on manual tasks that can be automated and streamlined.

“We are not trying to replicate everything we do, but rather harness technology to give us more insight, help us get to things quicker and support the building of relationships with potential deal targets and portfolio companies,” NorthEdge’s Mills says.

The ability to build networks and personal relationships with management teams and advisers is likely to remain the most central element of successful dealmaking for some time yet.

But in order to identify and reach these key stakeholders before the competition, it is becoming increasingly important for managers to overlay human insight with digital capability – something even LPs are now keeping a watchful eye on, further fuelling the digital arms race among GPs keen not to get left behind in tough fundraising times.

Categories: Insights

TAGS: Northedge Permira

Global early-stage venture firm DN Capital has appointed Gülsah Wilke as partner and head of the firm’s German office in Berlin.

The newly created role is part of DN’s drive to bolster its European footprint, the firm said in a statement.

Wilke is an investor, adviser and co-founder of 2hearts – a diverse community of people with immigration backgrounds in Europe’s tech industry that seeks to provide mentorship for young talent.

Previously, she has worked as chief operating officer at Ada Health and as an investor at Axel Springer, where she also led the group’s pricing and monetisation team. 

At Axel Springer, Wilke was the founder of Axel Springer_WoMen, a global network to support women in leadership positions, promote equal pay and mentor female talent. 

She has also held stints at McKinsey & Company and IBM. 

DN Capital is a global early-stage venture firm, founded in 2000. Based in London, Berlin and San Francisco, the VC focuses on seed, series-A and select series-B opportunities in Europe and North America of up to €20m of capital. The firm has backed startups including Remitly and Shazam. The firm has €1bn under management.

Categories: People LP & GP moves Geographies DACH

TAGS: Dn Capital Germany

INVL Baltic Sea Growth Fund-backed Eco Baltia has acquired Eko Osta.

Established in 1999, Eko Osta is engaged in collection, transportation by floating and land vehicles; treatment and recycling of petroleum-contaminated water and soil, recycled lubricating oils, organic solvents, used oil filters and tyres; geological, hydrogeological and geotechnical research; environmental quality monitoring and environmental remediation. 

Eko Osta is an environmental resource management and recycling company in the Baltics. It has 70 staff members and generated a turnover of €7.79m in 2023.

According to INVL, the add-on acquisition will ensure better collection and circulation of waste in segments where compliance with national standards has so far been difficult. 

The acquisition of the company is to be carried out through Eco Baltia’s subsidiary Latvijas Zaļais Punkts. 

In a statement, INVL said the financing of the transaction is planned through bank funding, although the parties have agreed not to disclose the terms. 

The INVL Baltic Sea Growth Fund has commitments of €165m and focuses on the Baltic countries and neighbouring regions including Poland, the Nordics and Central Europe. 

The fund acquired a 52.81% stake in Eco Baltia in June 2020. The company achieved a consolidated turnover of €210m in 2022.

Categories: Deals Buy-and-build Sectors Energy & Environment Geographies Central & Eastern Europe

TAGS: Baltics Invl Baltic Sea Growth Fund

Palatine-backed accountancy firm BK Plus has inked its first acquisition in the Southwest of England by adding on Atkins Ferrie.

BK Plus, a UK-based provider of accounting and business advisory services, was acquired by Palatine’s Buyout Fund IV in September 2023.

Based in Cornwall, Atkins Ferrie provides tailored financial and commercial solutions to businesses predominantly in the Southwest region. 

Under Palatine’s leadership, the SME-focused firm has acquired Abrams Ashton (based in St Helens, Northwest of England) and Andorran Chartered Accountants (based in Gloucestershire).

The integration of Atkins Ferrie into BK Plus will enable more effective service delivery to a wider client base and help strengthen its position nationwide, Palatine said in a statement. 

Headquartered in Manchester, Palatine recently topped £1bn in total funds raised. To know more about Palatine’s investment thesis, read our latest profile.

Categories: Deals Buy-and-build Sectors Business Services Finance & Insurance Geographies UK & Ireland

TAGS: Accounting Palatine Uk

Montagu has carved out MDC, the medical device components business of Johnson Matthey, for £550m.

MDC develops and manufactures miniature components for minimally invasive medical devices used in high-growth clinical specialities. The business has decades of expertise in the metallurgy, micro-machining and coating of speciality alloys, with manufacturing sites in San Diego, US, plus Mexico and Australia.

Listed on the FTSE250, Johnson Matthey is a British multinational speciality chemicals and sustainable technologies company, which was founded in 1817.

In a filing shared with the London Stock Exchange, Johnson Matthey said: “With our sale of MDC announced today and a separate sale of our Battery Systems business, we have concluded the divestment programme for our value businesses that was originally announced in May 2022 as one of our key strategic objectives.”

The deal represents Montagu’s second carve-out announcement in three months. The firm completed the acquisition of Cook Medical’s biotech business unit in January and its subsequent merger with RTI Surgical. Since 2002, Montagu has completed more than 30 carve-outs.

According to reports, Johnson Matthey started looking for a buyer for its medical device unit in May last year.

ADVISERS

Montagu
Raymond James
Kirkland & Ellis 
PwC

Johnson Matthey
Goldman Sachs

Categories: Deals €500M or more Sectors Healthcare & Education Geographies UK & Ireland

TAGS: Goldman Sachs Kirkland & Ellis Montagu Pwc Raymond James

Genesis Capital has acquired a minority stake in Kasper Kovo through its Genesis Private Equity Fund IV.

Founded in 1992 and based in Trutnov, Czech Republic, Kasper Kovo is an engineering business specialising in the production of metal components for industrial and technological applications. With 400 employees and two production facilities, it has a turnover of approximately CZK800m (€31.6m).

Genesis Capital, which invests in small and medium-sized companies in Central Europe, said the portfolio company is a major regional business with an international reach, known for its reliability.

Rudolf Kasper, founder of Kasper Kovo, aims to reduce significant risks by diversifying ownership away from sole dependence on himself.

The investor intends to build a professional management team to execute Kasper Kovo’s strategy for new products and markets.

Since its inception in 1999, Genesis Capital has raised six private equity funds with a total volume exceeding €350m. These funds have supported more than 70 companies.

Genesis holds investments in the following companies: Hecht Motors, Borcad CZ, TES Vsetín, XBS Group, PFX Group, STT Servis, AV Media, Kasper Kovo, HP Tronic/Datart, 11 Entertainment Group, Summa Linguae Technologies, Conectart, GTH catering, R2B2, Home Care Promedica, HC Electronics, JP-Prolak, SEA – Chomutov, and UPS Technology.

Categories: Deals €200M or less Sectors Engineering Geographies Central & Eastern Europe

TAGS: Genesis Capital

Exponent has invested in Ethos Engineering. 

Founded in 2005 and based in Dublin, Ethos provides electrical and mechanical designs for sustainable buildings. The company has worked on more than 90 data centres across 19 countries in EMEA.

The GP is backing the portco’s incumbent management team led by CEO Greg Hayden.

Established in 2004, Exponent invests in midmarket companies headquartered in the UK, Ireland, Benelux and the Nordics.

According to the GP, the data centre market is expected to show strong structural growth in the coming years, driven by increasing consumption of data, the continued shift to the cloud and rapidly evolving AI requirements.

Ethos is the PE firm’s seventh platform investment in Ireland, which Exponent sees as a market characterised by a “robust” and “innovative” regulatory framework.

The GP’s investment is earmarked to accelerate Ethos’s growth plans, expand the range of services it offers and further develop the portco’s technology, capabilities and people.

Exponent has invested more than €1bn in Ireland, including most recently backing Chanelle Pharma, a manufacturer of generic pharmaceuticals. The firm's other deals in the Emerald Isle include: Fintrax (now called Planet), a County Galway-based financial technology and services firm, in 2012; Enva, a recycling and resource recovery solutions provider, in 2017; and H&MV Engineering, a specialist in high voltage electrical engineering, in 2022.

The GP has raised more than €3bn to date. A selection of Exponent’s current and past investments include Trainline, Moonpig, Ambassador Theatre Group, Big Bus, Dennis (publisher of The Week magazine), SHL, Isio (formerly KPMG Pension Advisory), Loch Lomond and Quorn Foods.

ADVISERS

Exponent 
Alantra
KPMG
LEK
A&L Goodbody

Ethos
Capnua Corporate Finance 
Beauchamps

Categories: Deals Sectors Engineering TMT Geographies UK & Ireland

TAGS: A&l Goodbody Alantra Capnua Corporate Finance, Beauchamps Data Exponent Ireland Kpmg Lek

UK-based Endless has exited its investment in Findel to Manutan.

Headquartered in Greater Manchester, UK, Findel is an educational resources supplier. Employing about 300 people, the business has a distribution centre and offices in Nottingham.

Endless typically seeks to support buyouts, non-core acquisitions from larger groups, transformations and financial restructurings.

The GP originally acquired Findel in April 2021 from Studio Retail Group. The investment was managed by Endless’s Andy Ross and David Isaacs.

In three years, Findel said it has invested in its brands, giving them each a distinct identity that matches their customers' wants and needs. 

The portco also invested in its operations and systems and joined the Science Based Targets Initiative.

Headquartered in Paris, Manutan is a B2B e-commerce business, which has a specialism in educational supplies. With a turnover of €946m, it employs 2,200 people and operates 28 subsidiaries across 17 European countries, including the UK.

The buyer said it shares the same business model as Findel, which combines the strengths of digital technology with a focus on sustainability.

With offices in Leeds, London and Manchester, Endless is currently investing its £400m Fund V.

ADVISERS

Endless
Clearwater (corporate finance) 
Walker Morris (legal)

Manutan
CIL (commercial due diligence)
KPMG (financial due diligence and tax)
Anthesis (ESG) 
Intechnica (digital)

Categories: Deals Exits Sectors Healthcare & Education Geographies UK & Ireland France & Benelux

TAGS: Anthesis Cil Clearwater International Education Endless France Intechnica Kpmg Uk Walker Morris

Lower midmarket GP Kester Capital has closed the Kester Capital III fund on its £200m hard-cap.

The fund exceeded its target of £150m and more than doubled the size of its predecessor fund, Kester Capital II.

The latest vehicle, which was oversubscribed according to the UK investor, attracted a number of new institutional LPs from the US, Europe and the UK, alongside support from existing investors.

The strategy for Kester Capital III remains focused on investing in primary buyouts in the healthcare and technology sectors.

The PE firm typically makes equity investments between £10m and £40m.

Kester Capital has committed 10% of the new fund’s carry to the Kester Foundation, which was established in 2022 to support a range of charities and not-for-profit organisations.

Kester Capital III builds on the successes of Kester Capital I and Kester Capital II, which have delivered three consecutive exits with a return over 4x and seven consecutive exits with a return over 3x. Kester Capital’s most recent exit from Jollyes, announced earlier this month, delivered a return of 4.2x.

ADVISERS

Kester Capital 
First Point Equity
Osborne Clarke

Categories: Funds Small [€200M or less] Sectors Healthcare & Education TMT Geographies UK & Ireland

TAGS: First Point Equity Kester Capital Osborne Clarke Uk

Alcuin Capital Partners has invested in Mainprize Offshore.

Founded in 1979, Mainprize Offshore is a European crew transfer vessel designer, owner and operator, supplying offshore wind farms across the North Sea.

It is the sixth investment from the Fifth Alcuin Fund, which held its final close on £185m in October 2022.

The portfolio company’s shareholders, Bob and Sharon Mainprize, said Alcuin stood out to them from their first meeting, adding that the GP clearly understands the business and its growth potential.

Alcuin said Mainprize Offshore enjoys strong relationships with several of the largest global wind farm developers and operators, adding that it will work with the portfolio company to expand and develop its fleet of vessels.

The deal represents Alcuin’s first venture in the offshore energy sector.

Categories: Deals €200M or less Sectors Energy & Environment Geographies UK & Ireland

TAGS: Alcuin Capital Partners Uk

PAI Partners, through its PAI Mid-Market Fund, has acquired a majority stake in Beautynova from Bluegem Capital Partners.

Headquartered in Milan, Beautynova is a developer of professional haircare products. Its portfolio of brands include Depot, milk_shake, z.one concept and Medavita.

The seller will maintain a shareholding alongside a syndicate of Bluegem co-investors.

The business generates 70% of revenues outside Italy, mainly in the US and Europe.

Founded in 2007, Bluegem is a pan-European private equity firm focused on non-discretionary consumer staples.

Since Bluegem took ownership of Beautynova in 2020, the portfolio company has strengthened the senior management team and invested in production facilities, ERP systems and product development.

During the GP’s holding period, Beautynova more than tripled its sales and expanded into new regions, notably the US, which now accounts for 18% of Beautynova total sales.

PAI, which currently has c.€27bn in AUM, said Beautynova has a well-diversified offering and strong footprint in the “attractive” and “resilient” global professional haircare market.

The buyer, which has completed a total of 38 buyouts in the food and consumer sector, will draw on its experience to help Beautynova adapt to evolving consumer trends and develop its brand.

Bluegem’s sale follows the exit of luxury home fragrance brand Dr Vranjes Firenze to L’Occitane Group in January this year.

ADVISERS

Bluegem
Houlihan Lokey
BPER Corporate & Investment Banking
Latham & Watkins
PwC
PedersoliGattai
ERM

PAI
Raymond James
Banca Akros Banco BPM
Unicredit
White & Case
New Deal Advisors
OC&C
PwC TLS
Latham & Watkins
Willkie Farr & Gallagher
Ramboll

Beautynova
Alvarez & Marsal
Boston Consulting Group

Categories: Deals Exits Sectors Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Alvarez & Marsal Banca Akros Banco Bpm Boston Consulting Group Bper Corporate & Investment Banking Erm Houlihan Lokey Italy Latham & Watkins New Deal Advisors Oc&c Pai Partners Pedersoligattai Pwc Ramboll Raymond James Unicredit White & Case Willkie Farr & Gallagher

MML Capital Partners has sold Arηs Group to global professional services business Accenture.

According to the seller, the offer has been positively received by Arηs’ management team and shareholders.

Founded in 2003 and headquartered in Belvaux, Luxembourg, Arηs is an IT services firm that focuses on the Benelux and European institutions markets.

MML Capital Partners invested in Arηs Group in June 2023, with the IT services firm's co-founders and key employees reinvesting alongside the GP at the time.

As part of that initial deal, the portfolio company said it would remain “independent”.

Categories: Deals Exits Sectors Business Services Geographies France & Benelux

TAGS: Accenture Luxembourg Mml Capital Partners

Verdane has backed Nordic software provider Ingrid, leading a €21m transaction into the company.

The transaction also saw participation from Schibsted Ventures.

Headquartered in Stockholm, Ingrid personalises delivery options for customers in 180 countries and handles 40 million orders a year. Its partnerships with 250 retailers include UK fashion brand Paul Smith and Norwegian online pharmacy Farmasiet. 

The company’s delivery experience platform connects retailers, carriers and consumers to create a better shopping experience. Ingrid’s solutions cover the end-to-end experience from online checkout to order tracking and returns, along with related operations, including transport administration and store-based fulfilment.

Verdane’s investment will enable the company to continue its international expansion across the Nordic markets, the UK and the Netherlands to become Europe's leading delivery experience platform, the private equity firm said in a statement.

The B Corp-certified investment firm has nearly €7bn in AUM.

Categories: Deals €200M or less Sectors Retail, Consumer & Leisure TMT Geographies Nordics

TAGS: Sweden Verdane

MML has received an offer to sell its portfolio company Gravotech Holding. 

Headquartered in France, Gravotech provides engraving, marking and cutting solutions, serving clients in 100-plus countries from its three industrial platforms in the US, France and China.

The put option letter has been extended by the French company Braton Europe, a wholly-owned subsidiary of Brady Corporation.

The offer values France-based Gravotech at about €123m.

MML backed Gravotech alongside BPI France in 2018. At the time of acquisition, Gravotech was generating more than €120m in turnover.

According to MML, its decision to sell to Brady will be contingent upon completing an information and consultation procedure concerning the proposed sale.

Listed on the New York Stock Exchange, Brady Corporation provides industrial and safety printing systems and solutions. Founded in 1914, Brady employs about 5,600 people worldwide and posted sales of $1.3bn in 2023.

Categories: Deals Exits €200M or less Geographies France & Benelux ROW

TAGS: France Mml Capital Partners

Main Capital-backed PeakAvenue has acquired UK-based Isograph, a provider of safety engineering software. 

Established in 1986, Isograph’s product suite comprises reliability, availability, maintainability and safety solutions, known as RAMS, and the company is the go-to-vendor for ‘fault-tree' software for bluechip clients worldwide. 

PeakAvenue is an international software solutions company for engineering and quality management. It was founded in 2022 through the merger of two German companies, Plato and IQS Software. The company provides software solutions for product lifecycle management and risk analysis. 

The bolt-on will strengthen PeakAvenue’s international presence and help it gain a stronger foothold in the UK and strategic industries, Main Capital said in a statement. 

The acquisition will also enable significant cross-sell opportunities. PeakAvenue, on the other side, will support Isograph in expanding its footprint in continental Europe and integrate Isograph’s software into the PeakAvenue Cloud Platform.

Isograph has offices near Manchester and Salt Lake City, Utah. The firm started off by providing consultancy and software development services in the field of safety and reliability. Over time, the company began development and support of off-the-shelf reliability products. 

More than 1,900 clients use Isograph's software, with a strong footprint in the UK, US, Germany and Australia. The company serves customers in aerospace, semiconductors, energy, defense, automotive, transportation, medical and telecommunications, among others. 

Netherlands-based Main Capital Partners is currently fundraising for two vehicles – Main Capital VIII and Main Foundation II.

ADVISERS

Grant Thornton (financial and tax due diligence)
McDermott (legal)
WDP (technology due diligence)

Categories: Deals Buy-and-build Sectors TMT Geographies UK & Ireland France & Benelux

TAGS: Grant Thornton Main Capital Partners Mcdermott Wdp

Manchester-based Palatine recently celebrated raising a total of £1bn in capital since starting its journey in 2005, founder and partner Gary Tipper tells Real Deals

The milestone comes after the GP completed the first closing of Palatine’s Growth Credit Fund (€75m) and launched the fundraising phase of its fifth Buyout Fund. 

Since Palatine's inception, Tipper, along with partners and co-founders Ed Fazakerley and Tony Dickin, has sought to demonstrate that being situated outside London does not preclude raising funding from investors.

According to its website, Palatine seeks opportunities within the UK midmarket that represent a commitment to society and the environment through a varied and sustainable investment strategy.

Today, with a team of more than 40 people and almost 20 years of investments under its belt, the GP continues to believe that private equity is a "force for good". 

Diversification

Instead of seeking larger funds, Palatine focuses on exploring diversification across sustainability-led strategies. 

Starting as a buyout fund, in 2017 the GP set its trajectory to launch its first impact fund with a focus on education, job inequalities, access to healthcare and climate change across the UK and Northern Europe. According to Tipper, the progression to a new strategy was entirely natural. 

In May 2023, the GP launched its Growth Credit Fund, ​​which aims to lend to companies in the tech and manufacturing sectors across the UK’s North, Midlands, Southwest and Southeast.

"The common themes across all the funds we have raised is the regional focus, a commitment to sustainability and an asset class that our investors want to back. A significant proportion of our buyout fund investors have also committed to the Impact and Growth Credit Funds," Tipper explains. 

We are looking at making investments into companies that want to reduce their carbon usage and also promote diversity and inclusion

Tipper underlines that each fund has a separate dedicated investment team, each supported by the firm’s value enhancement, portfolio management, sustainability, and finance and admin teams. 

The overall focus across all funds remains spotting ESG opportunities. "It is important for all investors as we are looking at making investments into companies that want to reduce their carbon usage and also promote diversity and inclusion," Tipper notes.

Examples of past investments include Back2Work, a company headquartered in Manchester that delivers training courses to help the long-term unemployed return to work, and the UK charity reward shopping site Easyfundraising. 

A friendly face 

Palatine prides itself on its atypical corporate culture and self-identifies as "the friendly face of PE". 

"We have a strong culture at Palatine, we support our businesses as we see private equity as a force for good with the aim of helping our investee companies to grow,” Tipper says. 

We see private equity as a force for good with the aim of helping our investee companies to grow

At the basis of Palatine’s value creation strategy, the GP supports a knowledge-sharing approach between its portfolio businesses. It encourages management teams to use each other as sounding boards, sources of inspiration and advice, and to cross-pollinate ideas and experiences, Tipper explains. 

To achieve this, Palatine also creates dedicated forums and peer-to-peer networks for events and roundtable discussions, to facilitate more informal discussions that collaborations can grow from. 

What the future holds 

While Palatine’s ethos has barely changed during its 20-year existence, the investment world has. 

One significant change that has swept the PE industry is an increase in the amount of work needed during both the pre- and post-investment phases, according to Tipper. 

“The level of due diligence carried out nowadays is significantly higher,” Tipper says.

You need a much greater focus on how you can help generate and drive value post-investment

“In addition to that, you need a much greater focus on how you can help generate and drive value post-investment. We have our own in-house value enhancement and sustainability teams to help with this, which I think is pretty unique for a fund of our size.”

When questioned on what essential characteristics have become crucial for a GP to be successful, Tipper cites transparency as the main feature of navigating choppy waters today.

"I think you've got to be absolutely crystal clear on what your USP is when talking to investors. Most investors see hundreds of funds a year so if you can’t clearly articulate this, then you will struggle to raise funds,” he highlights. 

The future is bright 

Tipper has high expectations for 2024 compared to last year – but envisages that any upturn will materialise in the second half of the year.

“I still think that the market is tough, both for new deals and also exits. We have got one exit going through at the moment that will be another strong one for us but generally, the M&A market is still depressed,” he says. 

"The depressed market has had a significant impact on distributions back to investors, which in turn means they have less cash to make new commitments, hence the tougher fundraising market. I think we will see the market improve as we go through 2024," he adds.

A debt-type fund that is still delivering good returns is maybe seen as a safer haven at the moment

Using the recent fundraising of Palatine’s growth fund as an example, Tipper takes the opportunity to emphasise how debt strategies are currently more attractive to investors. 

"Given the current environment, some investors have been looking at ‘safer havens’ and a debt-type fund that is still delivering good returns is maybe seen as a safer haven at the moment," he says.

As for Palatine itself, The GP is not shaken by the external landslides and continues on its way to its next landmark: £2bn in funds raised.

"We have got several deals we are currently looking at. So I'd be surprised if we don't do at least one deal in the next month or so," Tipper concludes.

Categories: People Profiles Geographies UK & Ireland

TAGS: Manchester Palatine Private Equity Uk

Gilde Healthcare has sold its majority stake in RAD-x to Swiss Life Asset Managers’ infrastructure equity platform and Vesper Infrastructure Partners’ Next Generation Infrastructure Fund I.

Headquartered in Mannheim, Germany, RAD-x is a diagnostic imaging provider with 23 centres across Germany and Switzerland.

Gilde Healthcare, through its private equity platform, invested in and, together with the founders, set up the portfolio company in 2016.

Since its inception and partnership with the first diagnostic imaging centre, RAD-x now has more than 130 doctors and 750 staff across Germany and Switzerland.

Established in 2011, the Swiss Life Asset Managers infrastructure equity platform manages more than €10bn in assets under management. The platform has made 75 infrastructure investments in both direct and indirect opportunities across the energy, communications, transportation, regulated utilities, social infrastructure and renewable energy sectors.

Vesper Infrastructure Partners’ Next Generation Infrastructure Fund I is a closed-end alternative investment fund based in Luxembourg managed by Sanne LIS, which pursues infrastructure investment opportunities, in “next generation” infrastructure, by focusing on companies active in clean, digital and decentralised energy; decarbonised mobility and connected logistics; date-centric, low latency digital infrastructure; and sustainable, circular and healthy living solutions.

Vesper Infrastructure Partners said diagnostic imaging benefits from an accelerated demographic shift linked to a continuously ageing population in Europe, adding that the growing focus on preventive care will demand increasingly efficient early-stage identification and diagnosis of diseases. 

According to the investor, the German diagnostic imaging market is highly fragmented, and an estimated 25% of all radiologists in Germany are older than 60, boosting the demand for succession solutions that will support further industry consolidation and tangible growth potential for RAD-x in the future.

Historically, RAD-x has acted as one of the market consolidators and remains well positioned to further broaden its radiology platform across Europe under the new ownership.

The consortium will support RAD-x to expand its geographic reach while developing its product offering to provide healthcare infrastructure services.

Gilde Healthcare currently manages more than €2.6bn across two fund strategies: private equity, and venture and growth.

The investor’s private equity strategy backs profitable lower midmarket healthcare companies based in Northwest Europe.

ADVISERS

GILDE HEALTHCARE
Lincoln International (corporate finance)
EY (financial due diligence and tax)
Willkie Farr & Gallagher (tax)
L.E.K. Consulting (commercial due diligence)
LUPP+Partner (legal)
Ebner Stolz (legal)
Dentons France (legal)

Categories: Deals Exits Sectors Healthcare & Education Geographies DACH

TAGS: Dentons Ebner Stolz Ey Germany Gilde Healthcare L.e.k. Consulting Lincoln International Lupp+partner Swiss Life Asset Managers Vesper Infrastructure Partners Willkie Farr & Gallagher

Pricoa Private Capital has acquired a minority stake (14.5%) in TeacherActive.

Headquartered in Birmingham, UK, TeacherActive is an education recruitment agency with 15 local branches across England and Wales. It has more than 200 members of staff.

Pricoa’s investment allows “ownership realignment” across the company’s management team, the portco said in a statement.

The business has been supported by Tosca Debt Capital since 2018.

Pricoa is the private capital arm of PGIM, the global investment management business of Prudential Financial. With regional teams in 15 offices worldwide, Pricoa manages a portfolio of more than £79bn as of 31 December 2023.

Through Pricoa’s initial funding and follow-on capabilities, TeacherActive plans to expand its offering and geographic reach.

ADVISERS

Pricoa
Akin Gump Strauss Hauer & Feld (legal)
KPMG (financial due diligence)
RSM UK (tax)
Grant Thornton (commercial due diligence)
Global Counsel (political due diligence)

TeacherActive
Clearwater International (corporate finance)
Gateley Legal (legal)

Categories: Deals Sectors Healthcare & Education Geographies UK & Ireland

TAGS: Akin Gump Strauss Hauer & Feld Clearwater International Gateley Legal Global Counsel Grant Thornton Kpmg Pricoa Private Capital Recruitment Rsm Uk

Spanish GP Sherpa has sold its majority stake in Horizons Optical to Oakley Capital.

Founded in 2017 in Barcelona, Spain, Horizons is a provider of medical software and equipment for making bespoke spectacle lenses that can correct a range of eye conditions including short-, mid- and far-sightedness, as well as astigmatism.

As part of the agreement, CEO Santiago Soler will retain a "significant" share in the business and will continue to lead Horizons. 

Sherpa invested in Horizons in 2017 through Fund II. 

Sherpa’s strategic approach focused on two areas. Firstly, the GP aimed to enhance Horizons’ product offering for independent laboratories, to enable direct competition with larger integrated groups; and secondly, it supported the business in elevating the customer experience in optical stores, incorporating original solutions such as virtual reality applications within the optical industry.

During Sherpa’s investment period, Horizons consolidated its geographical presence into markets including the US, Asia and Latin America. 

Horizons’ growth strategy resulted in ten million lenses being produced by the business in 2023. 

Oakley Capital acquired Sherpa’s majority stake via its Capital Origin Fund I.

The deal represents Oakley’s sixth deal in Spain, following vLex, Seedtag, Alerce, Grupo Primavera (now Cegid), Idealista and several education assets, reinforcing its commitment to Iberia as a key investment area. 

It will also be Origin I’s ninth investment, after which the fund will be 75% invested, Oakley said in a statement. 

Headquartered in Madrid and with more than €350m of AUM and a team of 35 professionals, Sherpa Capital eyes midsized companies with turnovers ranging between €20m and €300m.

More recently, Sherpa acquired 70% of Spanish logistics specialist Logistica Carosan. Read more about the deal here.

Categories: Deals €200M or less Sectors Healthcare & Education Manufacturing Geographies Southern Europe ROW

TAGS: Oakley Capital Sherpa Capital Spain

Bravo Capital Partners-backed In Group has acquired Tecno In.

Founded in 1987 with headquarters in Milan and Naples, Italy, Tecno In specialises in geological services and testing on infrastructure, offering monitoring and diagnostics technologies for highways, railways, ports, airports, industrial sites and monumental works.

In Group is a testing and inspection platform created by Bravo Capital Partners II to develop an aggregation project in the testing and inspection sector.

According to the GP, the deal brings In Group’s total revenues up to €30m. 

As part of the transaction, Davide Sala and Lucio Amato, founders of Tecno In, have reinvested, becoming shareholders of In Group alongside Bravo and the founders of In Situ, Massimiliano La Porta and Claudio Fazzini Giorgi.

The deal represents In Group’s second bolt-on, after the acquisition of construction company Insitu in December 2023.

Bravo Capital Partners II closed in July at a hard-cap of €110m. 

The fund is currently eyeing opportunities in the Italian market and seeks to acquire majority stakes in small and medium-sized B2B firms. BCP II’s ticket size is between €5m and €20m.

It prioritises buy-and-build growth and M&A strategies, as they complement Bravo’s value-creating strategic purpose aimed at attracting new management, the GP said in a statement.

With six investments completed since the fund closing in July 2023, the GP is in the final stages of its fund deployment.

Through BCP II, Bravo has expanded its investor base, incorporating several European LPs including EIF, Axis Capital and a range of European family offices of entrepreneurial families, the GP told Real Deals in July

Based in Milan, Bravo Capital Partners invests in Italian SMEs. Last December, Bravo’s portfolio company Lodestar acquired IT and software consulting firms Icubed and Logical Systems. Read more about the acquisitions and strategic approach of the firm here

ADVISERS

In Group
Pedersoli and Pantè (legal)
Russo De Rosa Associati (fiscal)
Deloitte (accountancy and ESG)
Goetz & Partners (business)

Tecno In
Studio Associato AC Avvocati e Commercialisti (legal)

Categories: Deals €200M or less Sectors Construction & Infrastructure Energy & Environment Geographies Southern Europe

TAGS: Bravo Capital Partners Deloitte Goetz & Partners Pedersoli And Pantè Russo De Rosa Associati Studio Associato Ac Avvocati E Commercialisti

The Corporate Sustainability Reporting Directive (CSRD) is a core European regulation that companies have to adhere to. Complying with the CSRD necessitates conducting a "double materiality" assessment.

This assessment serves as the foundation for compliance, defining the precise reporting standards, disclosures and data points essential for inclusion in an organisation's sustainability reporting, as well as those that may be justifiably omitted.

While the CSRD offers some guidance, the responsibility for determining materiality ultimately rests with the organisation itself. This can result in uncertainty surrounding the effective execution of a double materiality assessment.

But fear not, Real Deals is here to provide clarity via this exclusive webinar.

During the discussion with a panel of experts, we’ll delve into the intricacies of conducting a thorough double materiality assessment. Watch the full webinar to gain insights, best practices and practical strategies to navigate this essential process with confidence.

The panel
Andrea Siaw, ESG executive, Hg
Gert-Jan van de Poll, senior associate ESG, sustainability and strategy, Holtara 
Aurora Bardoneschi, director – ESG and sustainability, risk advisory services, BDO

Categories: Insights Webinars

TAGS: Bdo Csrd Hg Holtara

H.I.G. Capital has carved out the thermal commercial vehicles division from Valeo.

The portfolio company will operate under the name Spheros.

Established in 1956 and headquartered in Germany, Spheros is a developer and manufacturer of thermal management services for a wide range of passenger buses and coaches (both conventional and electric), as well as refrigerated transportation fleets.

The company offers a comprehensive product portfolio, including air conditioning systems, heaters, coolant pumps and other related hardware.

H.I.G. is an alternative investment firm with $60bn in capital under management, based on total capital raised by the firm and its affiliates. Its equity funds invest in management buyouts, recapitalisations and corporate carve-outs of both profitable as well as underperforming manufacturing and service businesses.

Spheros said it is well positioned to push forward with growth plans, capitalise on its position in the conventional and electric bus segment, and explore considerable opportunities in adjacent market segments.

Mark Sondermann is the newly appointed CEO of Spheros.

Since its founding in 1993, H.I.G. has invested in and managed more than 400 companies. The firm’s current portfolio includes more than 100 companies.

ADVISERS

H.I.G. Capital
Gibson, Dunn & Crutcher (legal)

Categories: Deals Sectors Manufacturing Geographies DACH

TAGS: Germany Gibson, Dunn & Crutcher H.i.g. Capital

Bain Capital has acquired two UK-based software firms.

Via its Tech Opportunities vintage, the investor has acquired a majority stake in Finova and purchased MSO, the mortgage sales and originations software business of Iress, and is combining the two organisations.

Based in London, Finova provides software to help lenders and brokers in the mortgage, lending and savings sectors with originations and servicing.

MSO, headquartered in Cheltenham, provides residential mortgage and buy-to-let origination software to banks and building societies in the UK.

MSO is being carved out from Iress, which provides software and services for trading and market data, financial advice, investment management, mortgages, superannuation, life and pensions, and data intelligence. It has more than 2,000 employees based in Asia-Pacific, North America, Africa, the UK and Europe.

Bain Capital said the mortgage market is becoming faster-paced and more complex, which is increasing the need for more sophisticated software tools such as personalised pricing.

According to the investor, these combined businesses will be well positioned to meet the demand for more advanced software, and its customers will benefit from a broader software suite that supports a wider range of financial products.

Categories: Deals Sectors Business Services Finance & Insurance Real Estate Geographies UK & Ireland

TAGS: Bain Capital Carve-outs Software Uk

EQT has sold its 20% stake in Ottobock.

Founded in 1919 and headquartered in Duderstadt, Germany, Ottobock is a prosthetics and orthotics specialist with more than 400 patient care centres worldwide, providing a diverse range of high-tech and customisable devices designed to help amputees’ mobility.

The GP sold its 20% back to existing majority shareholder Professor Hans Georg Näder and the Näder Family.

The transaction is set to value the prosthetics firm at €5.5bn, according to Bloomberg

The exit was completed via EQT’s fund EQT VII, with the transaction expected to close in H1 2024.

EQT Private Equity acquired a 20% stake in Ottobock in June 2017, with a vision to accelerate growth, invest in innovation and digitalisation, and expand the global patient care network, the GP said in a statement at the time.

Working closely with the management team and Professor Hans Georg Näder, the company increased sales by c.8% p.a. to about €1.5bn in 2023, from c.€880m in 2016, the GP said. During the same timeframe, adjusted Ebitda doubled to approximately €280m based on preliminary FY23 results, the GP added. 

Carlyle and KKR were among the private credit firms financing the acquisition.

Carlyle Global Credit provided a debt financing solution of €1.1bn to Ottobock through a consortium of investors co-led by the GP. 

Professor Näder said in a statement: “I am confident that with Carlyle’s support, Ottobock’s future growth is assured.”

Currently, Ottobock delivers products in 135 countries and employs more than 9,000 employees worldwide, according to its website. 

EQT is a Swedish global investment organisation founded in 1994. Its funds invest in private equity, infrastructure, real estate, growth equity and venture capital in Europe, North America and Asia-Pacific. 

As of 2022, EQT's AUM was €210bn.

ADVISERS

EQT
J.P. Morgan 
Hengeler Mueller
KPMG
BCG 

Categories: Deals Exits €500M or more Sectors Healthcare & Education Manufacturing Geographies Nordics DACH

TAGS: Bcg Hengeler Mueller J.p. Morgan Kpmg

Unigrains Italia has acquired an undisclosed stake in La Prensa Etichette.

Founded in 1974, La Prensa Etichette is an Italian firm specialised in the printing and finishing of labels for mineral waters and consumer food products, for major agrifood industrial clients. 

The firm has invested alongside BNP Paribas, Alexa Invest and La Prensa’s management team.

Unigrains’ acquisition was completed via its agrifood-focused fund, Unigrains Italia fund. 

In terms of value creation, the support of its new shareholders will allow La Prensa to focus on external growth opportunities by leveraging its supply chain expertise, commercial network and existing range of products, the business said in a statement.

La Prensa intends to strengthen its teams with a particular focus on further developing its technical and commercial expertise, it added. 

In a statement, Unigrains Italia highlighted its commitment to support La Prensa’s development projects through organic and external growth, internationalisation or shareholder transitions, working alongside management teams.

Currently, La Prensa employs more than 130 employees across four sites, covering a total surface area of 10,000m² of production space.

Since its inception in 2016, Unigrains Italia fund has invested in a range of portfolio firms, such as European chestnut retail leader Agrimola, Italian frozen bakery firm Glaxi Pane, puff-pastry business Sfoglia Torino, and ice cream and pastries supplier Albert. 

The fund recently completed its third exit by selling its stake in frozen transport and logistics specialist Trasporti Romagna to Eurizon. 

In December, Unigrains Italia Unigrains acquired an undisclosed stake in Sinfo One, alongside business founders the Pomi family. Read more about the acquisition here

The investor eyes midsized Italian agrifood companies with enterprise values between €30m and €120m, providing equity tickets between €8m and €25m. 

Established in 1963, its parent firm Unigrains has supported more than 1,000 companies to date and has more than 80 companies in its current portfolio and €950m of equity capital. 

ADVISERS

Investors
Gitti and Partners (legal, for Unigrains Italia)
Studio Legale Bird & Bird (legal, for BNP Paribas)
Alvarez & Marsal Italia (financial)
Pirola Pennuto Zei & Associati (fiscal and structuring)
Goetzpartners (strategy)
ERM Italia (ESG)
BNL Equity Investments
Alexa Invest
Civesio Printing 

Delfino family (sellers)
Studio legale DWF (legal)
Abele Marco Asinari (financial and fiscal)
Illimity Bank (bank financing)

Categories: Deals €200M or less Sectors Manufacturing Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Abele Marco Asinari Alexa Invest Alvarez & Marsal Bird & Bird Bnl Equity Investments Civesio Printing Dwf Erm Italia Gitti And Partners Goetzpartners Illimity Bank Italy Pirola Pennuto Zei & Associati

Ardian has acquired the data centre platform Verne from Digital 9.

Ardian will support Verne with up to $1.2bn of commitment through equity and debt to fund its expansion plan across Northern Europe, the firm said in a statement. 

The deal was signed in November last year when Ardian agreed to acquire the company for $575m. 

Verne is a data centre platform headquartered in the UK, while Digital 9 Infrastructure is an investment company listed on the London Stock Exchange.

Founded in 2012, Verne delivers access to “cost-effective” renewable energy and international connectivity spanning Europe and North America for its international clients.

According to Ardian, Verne is a market-leading choice for organisations running high-performance computing workloads, notably AI, machine learning and large language models.

Verne currently operates with 100% renewable energy in Iceland and 100% decarbonised energy in Finland and the UK. Its customers include leading industrials, financial services, research and AI organisations.

As part of its value creation strategy, Ardian said it plans to multiply Verne’s existing sold capacity of 29MW for 2023 by close to four times in the medium term.

Ardian currently has $31bn of AUM in direct infrastructure activities. It has $6bn deployed across various subsectors of digital infrastructure.

Categories: Sectors Construction & Infrastructure TMT Geographies UK & Ireland France & Benelux

TAGS: Ardian

“Impact investing has been around for a long time. But it's only recently that the asset class has proved that it can both attract capital and help companies scale effectively,” reflects Pål Erik Sjåtil, managing partner and CEO of Lightrock.

A former senior partner at McKinsey & Company, Sjåtil joined the impact investment firm in 2020, shortly before it spun out of LGT, the international private banking and asset management group controlled by the House of Liechtenstein.

Lightrock's heritage goes back to LGT Venture Philanthropy. In essence, precursors to Lightrock have been investing since 2009, but the firm’s impact investing was made from LGT’s balance sheet until 2021. Today, the impact investment manager oversees more than $4bn in assets and is rapidly growing to add more products, strategies and people.

With its headquarters in the UK – where the firm has a staff of 55 – Lightrock now employs 115 employees across its six offices. The firm has recently moved its offices to London’s Piccadilly Circus, where the swanky interiors are adorned with subtle tones of green, to highlight Lightrock’s commitment to sustainability.

I spotted a unique opportunity to not only build upon a strong and proud legacy but also to create something new and special

An office in Utrecht, Netherlands has also been recently added to the network, where Lightrock’s public equity team sits, Sjåtil tells Real Deals

Steering the conversation back to his decision to join Lightrock, the managing partner says: “I spotted a unique opportunity to not only build upon a strong and proud legacy but also to create something new and special.”

Best of both worlds

The conversation with Sjåtil comes after Lightrock had an action-packed start to 2024. In January, the firm completed an investment in green fuel manufacturer Velocys, marking its first-ever take-private deal. 

For the rest of the year, the firm plans to further expand its geographic footprint, likely in Singapore and the US where Lightrock has made investments. 

Elaborating on his aspirations for 2024, Sjåtil says: “From a product point of view, we have existing strategies that we plan to double down on, in addition to completing our public equity strategy, while also considering the development of one to two new strategies for the future.”

We believe a presence on both ends of the market will be quite synergetic

Lightrock’s foray into the public equity world is perhaps the most interesting development at the firm. The firm is launching a new strategy that it regards as an attractive opportunity, while simultaneously maintaining its commitment to the private world. 

“We are not saying that we are moving away from the private markets. We believe a presence on both ends of the market will be quite synergetic, especially as some of the investments we make in the private market space will end up becoming public stocks. Furthermore, a solid grasp of the public markets can also bolster our value proposition to founders, and elevate our standing in the broader ecosystem,” Sjåtil explains. 

The public equity strategy will invest in listed companies with a market cap between €500m and €2bn. For this, Lightrock has recently set up a team in Utrecht, the Netherlands. 

People, planet, productivity 

Lightrock’s investment strategy typically favours minority stakes in Europe, Latin America, India and Africa. 

Presently, Lightrock has a generalist impact fund, a dedicated climate fund and a public equity solution, as well as a couple of region-focused generalist impact funds. By and large, the firm deploys in Europe and North America, which is also the focus of its climate fund. Lightrock’s generalist fund invests across all of its geographies but the firm may look at expanding the coverage of its climate strategy in the future.

These vehicles have won commitments from reputable LPs including Uniqa, AP1, Golding Capital Partners, GenZero, Carbon Equity and Haniel.

In India, Lightrock has made investments in education, healthcare and financial inclusion – sectors that have historically been underserved from a capital perspective. Sjåtil points out that the Indian economy has been doing well and it’s become easier to be an investor in the country, which is facilitating investments. 

“There is a transformation going on in India driven by digitalisation and the improvement of infrastructure, which we are trying to capitalise on,” he notes. 

There is a transformation going on in India driven by digitalisation and the improvement of infrastructure

In Africa, Lightrock invests mostly in asset-light and fintech-focused investments. The firm’s dedicated LatAm fund has been largely deployed, Sjåtil adds.

When it comes to Europe, he believes that in areas such as sustainability and the transition towards climate-conscious businesses and societies, the continent “exceeds expectations” and he’s increasingly optimistic about the region’s potential to foster future champions.

He touches upon the firm's recent Velocys take-private and reveals that even though it is a bit too early in the process, the experience of delisting a company has been good and the firm remains open to considering more of these in the future. 

However, not without a caveat. Sjåtil notes that when it comes to take-privates, it is also important to consider the jurisdictions in which these transactions will be done, due to varying regulations. “Such deals require a high degree of conviction since there’s a lot of time and cost involved in the early stages,” the CEO concludes.

Categories: People Profiles Geographies UK & Ireland France & Benelux

TAGS: Impact Investing Liechtenstein Lightrock Uk

Jeito Capital has appointed Sarah Leroy as secretary general, a newly created role.

Leroy will be responsible for legal and financial affairs, compliance, HR and sustainability. She will also join the firm’s executive committee.

Leroy brings knowledge of corporate governance, structuring complex financial transactions and global corporation operations, with more than 25 years of experience working with international groups and alternatives.

Between 2018 and 2023, Leroy was legal, tax, compliance and insurance director at sugar producer and cooperative group Tereos. She became head of human resources in 2023.

Before that, Leroy joined AXA IM Alts as head of corporate finance and legal in 2003, and was promoted to global head of legal in 2011. She spent 15 years helping to deploy the manager’s investment strategies as it expanded its presence in the US and Asia.

Dr Rafaèle Tordjman, founder and CEO of Jeito Capital, commented on Leroy’s appointment: “The creation of this new position reflects our desire to combine the efforts of our teams with those of our cross-functional teams to amplify value creation at Jeito Capital and its portfolio companies. Our portfolio companies from France and the United States all serve a common and ambitious objective: to accelerate therapeutic innovation for the benefit of patients.”

Jeito Capital is based in Paris, France with a further presence in Europe and the US. The firm invests in biopharma and medical innovation.

Categories: People LP & GP moves Geographies France & Benelux

TAGS: Jeito Capital

Growth Capital Partners (GCP)-backed Bridewell has acquired Arculus.

Funding was provided by HSBC.

Based in Hove, UK, Arculus is a cybersecurity consultancy, providing services in security architecture, penetration testing, information risk management, compliance and certification, managed services and cyber readiness assessments.

Founded in 2013, Bridewell is also a UK cybersecurity specialist firm. It is headquartered in Reading and employs 146 people across its London, Edinburgh, Newcastle and Manchester offices.

GCP, a UK investor in technology and services businesses, completed a minority investment in Bridewell in March 2021.

Bridewell said bringing itself and Arculus together felt “absolutely right” from a strategic standpoint, claiming that it is a “perfect fit” for the portfolio company to expand its expertise, skills and accreditations.

As a result of the bolt-on, Bridewell has strengthened its position as an adviser to critical national infrastructure (CNI)-focused organisations, expanding further into the public sector where it sees a significant opportunity to offer a broader range of services across the Arculus customer base.

Together, these two businesses will comprise more than 250 employees.

GCP is currently investing from GCP Fund V.

ADVISERS

Cowgills (financial and technical due diligence)
Flint Global (political due diligence)

Bridewell
Addleshaw Goddard (legal)

Management 
GBH (legal)
Cavendish (corporate finance)

HSBC
Pinsent Masons (legal)

Categories: Deals €200M or less Buy-and-build Sectors Business Services TMT Geographies UK & Ireland

TAGS: Addleshaw Goddard Cavendish Cowgills Cybersecurity Flint Global Gbh Growth Capital Partners Hsbc Pinsent Masons Uk

Mutares has carved out Magirus from Iveco Group.

Founded in 1864 and headquartered in Ulm, Germany, Magirus manufactures and sells firefighting vehicles and equipment.

The company generates more than €300m in revenues and employs about 1,300 people across its four sites in Germany, Italy, Austria and France.

In 2023, the business represented approximately 2% of Iveco Group revenues and recorded an adjusted EBIT loss of €35m.

Mutares said Magirus represents a compelling value proposition and sees huge potential in the business, citing its brand, innovation and technology.

The investor added that Magirus has a competitive positioning as a leader in its field, which draws the way for future growth in a “resilient” and “expanding” market while optimising the portfolio company’s supply chain and seizing further market opportunities overseas.

The deal is Mutares’ second acquisition in 2024.

Categories: Deals Sectors Manufacturing Geographies DACH

TAGS: Germany Mutares

Keensight Capital-backed BYG4lab has acquired Finbiosoft.

Founded in 1982, BYG4lab is a software company specialising in data management solutions for medical laboratories. 

The company serves 4,500-plus individual laboratories. BYG4lab is headquartered in France and employs nearly 100 people, of which about 40% are in R&D.

Based in Finland, Finbiosoft is also a software provider for medical laboratories and was founded in 2011.

According to Keensight Capital, Finbiosoft complements BYG4lab’s offering, enabling access to extensive cross-selling opportunities.

The bolt-on also extends BYG4lab's reach into new markets, notably in several European countries and the US.

BYG4lab has been a portfolio company of Keensight Capital since 2022. 

Categories: Deals Buy-and-build Sectors Healthcare & Education TMT Geographies France & Benelux Nordics

TAGS: Finland Keensight Capital

Nordic private equity group Axcel closed its largest fund to date at an oversubscribed hard-cap of €1.3bn last week. 

At a time when fundraising has proved to be disproportionately more challenging, Axcel VII exceeded its target of €1bn. 

Talking to Real Deals shortly after the fund closed, managing partner Christian Schmidt-Jacobsen says the firm opened its data room towards the end of autumn 2022. “We brought in the first capital and activated the fund in February last year.”

Schmidt-Jacobsen also reveals that Axcel VII was “definitely” impacted by the market conditions and the denominator effect. “There’s less liquidity in the ecosystem, which we had not experienced to this degree in any of our previous funds.”

There’s less liquidity in the ecosystem, which we had not experienced to this degree in any of our previous funds

Until August last year, the pace [of Axcel’s fundraising] had been progressing “in a stable way” but accelerated toward the end of the year when the GP hit its target.

According to Schmidt-Jacobsen, Axcel was even allowed to surpass its hard-cap because it had a handful of high-quality investors that it wanted to bring in and was concerned about losing them otherwise. 

In terms of its size, Axcel’s latest vehicle is 60% bigger than its predecessor fund, which closed at a hard-cap of €807m in 2021.

Diversifying the investor base 

Founded in 1994, Axcel is a Nordic private equity group focusing on midmarket companies. To date, the sponsor has raised seven funds, amassing more than €4.1bn. 

Axcel’s latest haul secured commitments from some “very strong” American LPs. Going forward, the firm’s ambition is to increase this base. Schmidt-Jacobsen notes: “We've not had a long history of having a US investor base, but we have gotten a foothold now.”

We've not had a long history of having a US investor base, but we have gotten a foothold now

Other LPs that committed to Axcel’s seventh fund include Danish pension fund Danica Pension, Swedish pension fund AP6, Chr Augustinus Fabrikker (investment arm of the Augustinus Foundation), Austria-based UNIQA, Switzerland-based Partners Group, and Alpinvest.

Overall, non-Nordic investors constituted 42% of the funds’ commitments while the share of new investors stood at 44%. Pension funds and life insurers, which had a 28% in Axcel’s last fund, topped 30% this time. 

In total, the investor base consists of LPs from the Nordics, Europe and the US, and includes foundations, pension funds, insurance companies, fund-of-funds and family offices, as well as friends and family.

Top of the priority list 

Reflecting on the fundraise, Schmidt-Jacobsen observes how ESG was “non-existent” at the time Axcel was raising its Fund V in 2017, but this has changed with the GP’s latest raise. “The ESG dialogue since then has skyrocketed from an LP side. European LPs have also started demanding robust ESG frameworks from GPs seeking commitments,” he observes.

European LPs have started demanding robust ESG frameworks from GPs seeking commitments

During the past 12-18 months, fundraising across the industry has widely been described as a "tale of two cities", characterised by a pullback by LPs from all but a few names.

In Axcel’s case, the firm believes consistent performance, diligence, patience and delivering “year in and year out” worked in its favour and helped it win investor commitments. 

Axcel’s sector focus includes technology, business services and industrials, healthcare and consumer. 

The fund has already made its first four investments, including XPartners, a sustainability-focused technical consulting group; Progrits, a software and information services company; and Tic Elkas/Eegholm Group, providers of electrical panels.

In total, the firm is targeting 12-14 investments in companies with an EV of €100-300m and is eyeing three to five deals per year, most of which will have a strong buy-and-build component in addition to sustainability and digitalisation.

ADVISERS:

PJT Park Hill (placement agent)
Clifford Chance and Kromann Reumert (legal)

Categories: Funds Funds in Focus Large [€1B+] Geographies Nordics

TAGS: Axcel Clifford Chance Kromann Reumert Pjt Park Hill

Talde Private Equity has acquired a majority stake in Plymouth Group.

Plymouth Group is a Spanish company specialised in the manufacture and commercialisation of solutions for electrical insulation, serving a wide range of industries such as mining, utility and industrial sectors. 

 The deal aims to consolidate Plymouth Group’s position and continue to drive its expansion plans. 

The current management team will continue to lead the management in this new phase, the GP added.

This deal represents the fourth investment by Talde’s fund Talde Capital Crecimiento II FCR. The fund’s size is currently €102m and it has investment tickets between €7m and €18m.

Its current investment portfolio includes logistics e-commerce specialist CACESA (acquired in 2021), online commerce specialist Auxitec (acquired in 2022), and designer and developer AVS (acquired in 2023).

Plymouth products are currently distributed from its warehouses in Spain and the US to more than 75 countries.

Founded in 1976, Talde Private Equity is a PE investor based in Spain. Since its inception, the GP has participated in more than 160 investment projects through both early-stage and growth strategies. 

Talde’s investment track record includes the divestment of Rotecna, a company specialising in equipment for pig farms, and Deltalab, a manufacturer of disposable material for laboratories. 

ADVISERS

Talde
PWC (legal)
Euskaltax (legal)

Categories: Deals €200M or less Sectors Construction & Infrastructure Manufacturing Geographies Southern Europe

TAGS: Euskaltax Majority Stake Pwc Spain Talde Private Equity

Kurma Partners has sold Amolyt Pharma to AstraZeneca.

Amolyt Pharma is a clinical-stage biotechnology company that develops new treatments for rare endocrine diseases.

Under the terms of the agreement, AstraZeneca will acquire all of Amolyt Pharma's outstanding shares for a total consideration of up to $1.05bn, on a cash and debt-free basis. 

This includes $800m upfront at deal closing, plus the right for Amolyt Pharma's shareholders to receive an additional contingent payment of $250m payable upon achievement of a specified regulatory milestone.

Amolyt marks the third exit of Kurma Biofund III and the first exit of Kurma Growth Opportunities Fund.

Kurma Biofund III previously exited Emergence and Corlieve in 2023.

Kurma Biofund III aims to invest in projects and companies in the life sciences sector in Europe and the US. Its current size is €160m.

Kurma Growth Opportunities Fund invests in SMEs raising growth capital through late-stage, crossover and public rounds in finance in therapeutics, diagnostic and healthtech as well as medical devices, with a major focus on European countries. 

Kurma has backed Amolyt Pharma since 2019 as co-lead investor of an oversubscribed series-A financing of €67m.

With the deal, Amolyt Pharma will join the AstraZeneca Group as part of Alexion, AstraZeneca Rare Disease.

The deal aims to bolster Alexion’s late-stage rare disease pipeline and expand on its bone metabolism franchise, AstraZeneca said in a statement.

Founded in July 2009 and based in Paris and Munich, Kurma Partners is a European venture capital firm that eyes opportunities within the healthcare and biotechnology industry, from pre-seed to growth capital. 

Kurma invests through its funds Kurma Biofund I, II and III; Kurma Diagnostics and Kurma Diagnostics 2; and the most recent Kurma Growth Opportunities Fund. 

Kurma Partners is part of the Eurazeo Group. In 2019, Eurazeo raised its stake in Kuma Partners to 70.6%, becoming a leading investor in the funds managed by the VC investor.

Categories: Deals Exits €500M or more Sectors Healthcare & Education Geographies France & Benelux

TAGS: Exits Healthcare Life Sciences Pharma Sale

Central European private equity firm Genesis Capital has acquired GAF. 

GAF is a Czech manufacturer of complex custom processing of steel, stainless steel and aluminium that produces products used in the food industry, healthcare, textile or rail transport industries, among others. 

The firm is investing through its Genesis Private Equity Fund IV. As part of the transaction, founder and owner Luděk Fofoňka will retain a “significant” stake in the company. 

According to the firm, GAF has more than doubled its turnover in the last four years.

GAF was founded in Žamberk in 1993 and has been focusing on engineering production. Currently, GAF has an annual turnover of almost CZK400m (€15m).

Since November last year, Genesis Capital has acquired two businesses and exited one

The GP offers growth and development financing to small and medium-sized companies in Central Europe. Since its foundation in 1999, Genesis Capital has raised six private equity funds totalling €350m.

Categories: Deals €200M or less Sectors Engineering Manufacturing Geographies Central & Eastern Europe

TAGS: Czechia Genesis Capital

London-based Coniston Capital has completed an investment in Equity Networks, a provider of managed IT services. 

The transaction represents the sixth investment from Coniston Capital I LP, which held its final close in March 2022 on £40m. 

Equity Networks was founded in 2011 and offers four key services: cloud applications, cloud infrastructure, security of data, and communications. The business has made five acquisitions to date.

The partnership with Coniston will enable Equity Networks to further build on its acquisitive growth strategy. 

As part of the transaction, Edward Spurrier, who has served at Alt Networks and Wavenet, will join the board of directors as non-executive chairman. 

The deal was led by Alfred Chambers and Ben Kirby.

ADVISERS:

Browne Jacobson (legal)
Old Mill (corporate finance)
Barnes Roffe (legal) 

Categories: Deals €200M or less Sectors TMT Geographies UK & Ireland

TAGS: Barnes Roffe Browne Jacobson Coniston Capital Old Mill

Inspirit Capital-owned Vysus Group has sold ModuSpec. 

The company has been bought by specialist offshore rig inspection company MR Group, which is based in Singapore. 

ModuSpec was a part of Vysus Group but was carved out by the GP. The transaction represents the fourth divestment from the group.

Vysus Group, a global engineering and technical consultancy, was acquired by Inspirit Capital in 2020.

The transaction completes the restructuring of Vysus, enabling the business to further develop and grow its global consulting and technical delivery capability across the traditional energy, renewable energy and complex industrial sectors.

The deal sees Aberdeen-headquartered ModuSpec being sold to Leo Nagtegaal, who founded the firm in 1986.

Albert Farrant, partner at Inspirit Capital, said: “The divestment programme is now complete and the remaining core business is well positioned to continue its growth and benefit from the energy transition as a standalone technical and engineering consultancy with a global footprint.”

Categories: Deals Exits Sectors Construction & Infrastructure Energy & Environment Geographies UK & Ireland

TAGS: Inspirit Capital Scotland

Barcelona-based healthcare investment firm Asabys Partners has sold Cara Care to Mahana Therapeutics for an undisclosed sum. 

Berlin-based HiDoc Technologies, operating as Cara Care, focuses on digital digestive healthcare. 

The acquisition adds four digital treatment programmes targeting significant populations to Mahana’s digestive health portfolio. 

Based in San Francisco, Mahana Therapeutics provides digital chronic condition management programmes. 

The combined entity will create a global company offering a comprehensive digestive health portfolio. According to Asabys, the acquisition of Cara Care is expected to accelerate Mahana’s market entry in Europe where the reimbursement of digital programmes is outpacing the US. 

Cara Care’s IBS prescription-based digital programme is currently being prescribed, and reimbursed, to thousands of patients in Germany.

Mahana is backed by prominent investors including JAZZ Venture Partners, Lux Capital, Gurnet Point Capital, Main Street Advisors, KKCG and Asabys Partners.

Categories: Deals Exits Sectors Healthcare & Education Geographies Southern Europe DACH ROW

TAGS: Asabys Partners Jazz Venture Partners, Lux Capital, Gurnet Point Capital, Main Street Advisors, Kkcg Spain Us

Interpath Advisory has bolstered its team with the appointment of value creation specialist Jayshree (Jay) Shah to lead the firm’s support for healthcare and life sciences businesses as a managing director. 

Shah arrived at Interpath in London from FTI where she was the EMEA healthcare and life sciences sector lead in the corporate finance and restructuring practice. 

She has more than 20 years of experience working for corporate and private equity clients across value creation, commercial and operational pre-deal diligence, business transformation, operational cost reduction, carve-outs and post-deal integration.

Her previous stints also include PwC and EY. 

Interpath has also hired Robbie McFaul as a director in its transactions services team. McFaul arrived after nearly 11 years with PwC where he specialised in transactions within the healthcare, pharmaceutical, technology, media and telecommunications sectors. Based out of Interpath’s Leeds office, he will support managing director Louise Smith who joined the firm from EY in October 2023.

Interpath, which is KPMG’s former restructuring division, now employs more than 160 professionals in its advisory practice, delivering full-service deal advisory, including M&A, transaction services, debt advisory and M&A tax, as well as forensics, valuations, data analytics and value creation. The firm advised on more than 130 transactions in 2023.

KPMG sold its restructuring business to H.I.G. Capital in 2021 in a £400m deal.

Categories: People Advisory moves Geographies UK & Ireland

TAGS: Interpath Advisory Kpmg

LDC-backed Onecom has acquired Excalibur Communications.

Excalibur Communications is a UC and mobile communications provider with IT managed service capability and longstanding partnerships with Vodafone, Microsoft and Gamma.

Founded in 2002 and headquartered in Whiteley, Hampshire, Onecom is a communications technology and cloud communications specialist, delivering fixed-line, mobile, unified communications and cloud solutions. 

The bolt-on adds to Onecom's mobile communications capabilities, consolidating its presence within the UK communications industry, expanding its geographic reach from the Excalibur Swindon operations centre and adding an "established customer base" to Onecom’s client portfolio, the GP said in a statement.

In 2019, Onecom secured investment from LDC in a £100m deal to allow it to implement its strategy to grow through acquisition.

Onecom has made 11 acquisitions, more than doubled revenue and tripled its profitability since the investment. It now has about £180m of revenues and more than £35m Ebitda, according to the GP's website.

Onecom has 12 regional offices and more than 400 partners, including Samsung, Apple, Gamma, Five9, Mitel and Vodafone, and manages nearly 80,000 business customers according to its website. 

LDC has a longstanding track record in the business services sector, having made more than 25 investments into businesses with a combined enterprise value of more than £2bn since 2012, according to its website.

The GP has also recently invested in software developer 15below. Read more about the deal here

ADVISERS

Onecom
HMT (communications)

Excalibur Communications
Acuity (finance)

Categories: Deals €200M or less Sectors TMT Geographies UK & Ireland

TAGS: Ldc Uk

Hyperion Equity Partners-backed Ranger Fire & Security has acquired Syncro Group.

Headquartered in Saint Helens, Syncro Group is a national fire and security platform with national coverage and a strong focus on fire detection, extinguishers and security alarm services. 

Ranger Fire & Security is a recently formed company serving the UK's fire and security sector that provides inspection, maintenance, repair and installation of portable fire extinguishers, fire sprinklers, fire alarms, emergency lighting, suppression systems and other ancillary services.  

In terms of value creation, the GP said in a statement that the bolt-on aims to consolidate Ranger Fire & Security's presence across the UK, bringing together a range of qualified fire and security businesses in a one-stop-shop collaborative platform.

The GP added that the group will allow UK businesses, charities and the public sector to manage and fulfil their fire, safety and security regulatory obligations through the use of one platform. 

With this aim in mind, Syncro addition will enhance the group’s offering in extinguishers, detection and security services.

Hyperion added in a statement that it is providing more than £20m in funding capacity to make acquisitions and invest in the group’s infrastructure as part of this mission, with at least five other acquisitions planned by the end of 2024. 

Last February, midmarket GP Hyperion acquired a pair of fire and security businesses: Midlands-based Ignis Fire Protection and Wales-based Amerex Fire International. 

Following the twin deals, Hyperion launched Ranger Fire & Security, as part of which the companies will continue to trade under their own names.

Hyperion Equity Partners was founded in 2022 and focuses on buy-and-build strategies in highly fragmented industries. Hyperion typically eyes controlling stakes in businesses valued between £10m and £100m, with Ebitda of up to £10m.

ADVISERS

Ranger Fire & Security
Cortus (financial tax and due diligence)
RSM (tax structuring)
Gateley (legal support)
Thincats (debt funding support)

Categories: Sectors Business Services Retail, Consumer & Leisure Geographies UK & Ireland

TAGS: Cortus Transaction Services Gateley Hyperion Equity Partners Rsm Thincats

Palatine has hired Alistair Armstrong as partner in its Impact Fund I.

In his new role, Armstrong will be responsible for sourcing and leading new investment activities in Impact Fund I, with a focus on its environmental proposition. 

Armstrong brings extensive experience in private equity, having partnered with a range of  management teams during his career, particularly focusing on the application of data, analytics and AI throughout the investment process. 

The investment professional joins from lower midmarket private equity firm Primary Capital, where he spent 16 years. There, he led B2B-focused investments in companies including railway services specialist Readypower, electronics manufacturer Foster+Freeman, construction equipment supplier VJ Technology, manufacturer specialist Metamark, executive search firm GatenbySanderson, and industrial manufacturer Amtechand Napier Turbochargers.

During his time at the firm, Armstrong also developed a proprietary deal origination algorithm for Primary, which has been used by the GP for deal sourcing since 2016.

He started his career as executive, transaction services at Deloitte, where he worked from 2001 to 2003, focusing on tax structuring and tax due diligence.

Impact Fund I invests in companies focusing on tackling education and job inequalities across the UK and Northern Europe, access to healthcare and climate change. Since inception, the fund completed four investments: workplace specialist Inclusive Employers, sustainability advisory and solutions firm Anthesis, waste management company Roydon Recycling, and global water and environmental tech innovation consultancy Isle Utilities.

Palatine is a UK midmarket private equity investor focused on delivering returns through sustainable growth by building on solid foundations with a commitment to the environment and society. Founded in 2005 and headquartered in Manchester, with offices in London and Birmingham, the firm focuses on three lines of investments: buyout, impact and debt. With ticket sizes between £5m and £30m, it predominantly seeks opportunities within the UK. 

Palatine recently held the first close of its maiden Growth Credit Fund on £75m. Find out more about the fundraising process here

Categories: People LP & GP moves Geographies UK & Ireland

TAGS: Palatine Palatine Private Equity Uk

Last Friday was International Women’s Day, and as part of Real Deals' ongoing focus on women in private capital, here we speak to Kerry Baldwin, co-founder of Cambridge-based venture capital firm IQ Capital.

In the venture capital space, there continues to be a wide gap between investments made by female-founded teams when compared to male-founded teams, according to a recent report by PitchBook. 

With that in mind, Baldwin, who has been in the industry for more than 20 years, recounts the feeling of isolation felt during the early stage of her career. 

“In the 1990s, when I came into venture capital, there simply weren't women in the sector and I entered this world as an investor, where I had no female mentors, no female support, no females around to bounce ideas off. Nothing. It just didn't exist then. I had to fight it at every step,” she highlights.

The VC environment at the time was particularly "lonely" and "hard for women", due to a separation of roles in legacy firms that resulted in a shortage of women at the investment table – with the majority of females occupying predominantly administrative roles. 

“That's how it was, which is different from today where operations and investment teams work as one,” she highlights.

I entered this world as an investor, where I had no female mentors, no female support, no females around to bounce ideas off. Nothing. It just didn't exist then. I had to fight it at every step

With more than 20 years of experience in deeptech venture capital, Baldwin is a veteran in the industry. In 2006, together with Max Bautin, Simon Hirtzel and Ed Stacey, she co-founded IQ Capital, investing in innovative deeptech companies.

To date, its team has achieved more than 20 exits, including trade sales to Oracle, Google, Apple, Facebook and Siemens, as well as several IPOs.

Originally with BDO Stoy Hayward, she joined Venture Technologies in 1998, investing in the first wave of UK deeptech companies, and has focused on deeptech early-stage technology across five funds which invest from seed to £30m.

Baldwin relates that she had to make "unusual efforts" to succeed in the industry from the beginning; habits such as perfecting her skills through an above-average level of preparation were simply the norm to her.

“One thing I've had to do my entire life and I still haven't shaken off is the fact that I over-prepare for every single meeting – that’s the product of the '90s when I had to know my stuff better than anyone else at the table,” she explains. 

According to the investment professional, the environment has radically changed since then – and for the better. Today, the UK has a strong presence within the European venture ecosystem as a large number of new funds were launched after 2006, following the launch of several educational programmes led by the British Business Bank to support the industry during the early 2000s.  

Capital was being deployed in the sector and into more startups, attracting many women both within venture capital firms and their portfolio companies, who started to unite in stronger communities over time, supporting each other, Baldwin explains.

One thing I've had to do my entire life and I still haven't shaken off is the fact that I over-prepare for every single meeting

Community is crucial

Baldwin emphasises how communities that foster diversity can help bring real difference to the sector. These groups don’t necessarily have to be made up of managers, as every role in the industry is important, she explains.

“One person can’t champion diversity alone, it’s the work that’s going on behind the scenes that makes the difference," she says.

To tackle gender inequality, the tech specialist underlines the impact of mentoring as "crucial" to the success of every woman in the industry. Mentoring also helps to promote models of successful women and further create stronger communities for women in tech, while supporting their improvement in an ultra-competitive field. 

“Today, I mentor women who are in positions where they haven't reached the next promotion yet. And we can focus on simple topics like how you approach an investment committee, how you put your hand up for sitting on a board of an exciting company, how you do research, build your network and similar topics,” she explains. 

According to Baldwin, every position requires its own specific mentoring trajectory – and for female CEOs, sometimes even more than one mentor can constitute tremendous resources for achievement, as a vast knowledge of the sector is needed. 

One person can’t champion diversity alone, it’s the work that’s going on behind the scenes that makes the difference

“Everyone forgets that when you run a venture capital fund, you witness in the first five years of operation a range of varied situations for the first time, so I make sure I make time for women and diverse new funds, guiding on areas such as LP engagement and capital allocation models,” she adds.

How to break into VC 

For women thinking of entering the venture capital industry, Baldwin has a wealth of valuable tips. For example, earning a specialism in one area or industry – from barriers to scaling, GTM or any technical area – is a key that can unlock doors, according to the investor. 

Particularly, Baldwin stresses the importance of becoming an expert on boards. “Remember what venture capital boards are there to do? They all have similar problems in the early growth phase – product roadmap, hiring team, understanding which market strategy to follow – so being fluent in marketing tools amd SaaS tools is essential to understand the data and inference,” she explains.

According to Baldwin, a venture capital fund is made up of "so many components", and to be a GP you have to embrace all of those elements. “So you have to source deals and be a voracious networker all the time in your career,” she adds.

Work together

With an overly dynamic field such as VC, perhaps unsurprisingly, the allocator emphasises that a collaborative approach is key to securing the best results. 

“The field is overly competitive – the founder will pick the fund that’s right for them – so work together, share deals together. And just be very collaborative in the ecosystem with other women and diverse founders,” she highlights. 

Role models are also effective sources of inspiration – and it is interesting to note how, during the interview, the VC specialist keeps mentioning names of women who are excelling in the industry, as a reminder to look outside and be guided by the achivements of great personalities. 

Just two names on Baldwin's long list are Gupreet Manku, who spent 10 years at the British Private Equity and Venture Capital Association as deputy director and is now CEO of the non-profit organisation Level 20; and physicist and inventor Carmen Palacios-Berraquero, co-founder and CEO of quantum networking startup Nu Quantum. 

“Gupreet Manku has been championing this cause for decades, and now she’s at Level 20 as the CEO, and it’s because of people like her that we are having this discussion today – we must celebrate her work,” she highlights.

The future is really strong – talent wants to come into this sector because founders and venture investment are making such an impact on the future and giving purpose to jobs

The future is diverse 

Baldwin also took the opportunity to stress the importance of attracting new joiners to VC from diverse socioeconomic backgrounds, to have more impact in the boardroom and connection with founders – not necessarily just women. 

“A woman and a man from the same university education with an MBA at the end of it, broadly they think similarly,” she explains. 

“Today we have got diverse venture teams, diverse founders, diverse investors at the table. I think the future is really strong – talent wants to come into this sector because founders and venture investment are making such an impact on the future and giving purpose to jobs,” she concludes.

Categories: Insights Expert Commentaries Geographies UK & Ireland

TAGS: Diversity And Inclusion International Women’s Day Iq Capital Talent

Mirova, a subsidiary of Natixis Investment Managers (NIM) focused on sustainable finance, has launched a new €200m social fund.

The Mirova Impact Life Essentials (MILE) fund will support the growth of unlisted European companies that contribute to the transition towards a better society.

The fund will seek investments from institutional and individual investors in Europe and will be spearheaded by senior investment director Judith-Laure Mamou-Mani.

“MILE fund is designed to tackle critical issues fundamental to individual wellbeing. It emphasises the importance of addressing environmental transition and energy efficiency, while also prioritising education, health and mindful consumption. This approach underlines our belief that addressing environmental challenges must be complemented by a focus on social issues,” Mamou-Mani says.

The fundraise is in its early stages but has already received seed capital of about €20m from Mirova’s mother company NIM to kickstart the fund and begin making investments, states Marc Romano, head of impact private equity funds at Mirova.  

“We plan to conduct the first client closing in late June and to have our first deal close by April at the earliest,” he adds. 

We believe we're at a point where we can align investor interests with available investment opportunities
Marc Romano, Mirova

Mirova’s thesis for the fundraise comes after the impact investor identified investor demand for a social fund in the early growth phase in Europe. 

“This fills a gap in the market, as launching a fund requires conviction, clients and investment opportunities. We believe we're at a point where we can align investor interests with available investment opportunities,” Romano says. 

The fund will target ticket sizes ranging from €5-15m.

“This aligns with the acceleration capital that companies may require growth capital to get to the next stage. We also promise our investors a net DPI of around 2x and a net IRR of around 15%,” Mamou-Mani confirms. 

On the road

The fundraise comes as the wider fundraising environment remains challenging. However, the fund’s strategy makes it attractive to investors seeking to diversify their portfolios by investing in SFDR and impact funds, and to wholesale clients eager to access private equity products with meaningful investments, according to Mamou-Mani.

We've already secured loyal and engaged LPs and benefit from a robust ecosystem in private assets and ESG/impact investing
Judith-Laure Mamou-Mani, Mirova

She says: “While we don't claim fundraising is easy, we're backed by a talented team with strong integrity in our impact approach. We've already secured loyal and engaged LPs and benefit from a robust ecosystem in private assets and ESG/impact investing.”

Making an impact

Founded in 2012, Mirova is a global asset management company focused on sustainable investing. 

Headquartered in Paris, Mirova offers a broad range of equity, fixed income, multi-asset, energy transition infrastructure, natural capital and private equity solutions designed for institutional investors, distribution platforms and retail investors in Europe, North America and Asia-Pacific. 

“We believe success requires both systemic change and behavioural transformation to support populations. Our investment philosophy sees no trade-off between impact and potential return, but rather a synergy between the two. Companies addressing societal challenges with strong ESG practices are attractive to strategic buyers seeking to improve their own ESG metrics, making them appealing for acquisition due to their innovative and sustainable nature,” Romano says.

Mirova and its affiliates have €29.7bn in assets under management and €1.2bn in assets under advisory as of 31 December 2023. Mirova is a mission-driven company, labelled B Corp.

Categories: Funds Funds in Focus Small [€200M or less]

TAGS: Mirova Natixis Investment Managers

Dealcraft meets Minecraft

At first glance, videogames and private equity seem to mingle as well as oil and water. Where one is all about virtual battles, pixelated quests and the fervent mashing of buttons, the other moves to the austere rhythm of financial statements, market analyses and the solemn nodding of boardroom approvals. 

Yet, recently, this Old Bird – while enjoying a casual lunch peppered with industry gossip – uncovered an unlikely bridge between these two worlds. It appears two operations maestros, normally found dissecting balance sheets, were animatedly discussing the strategic merits of videogames. 

Yes, you heard that right. The same videogames that have been the bane of many a parent’s lives were now being heralded as crucibles of the very skills these financial titans value: problem-solving, resilience and the invaluable lesson that in the face of failure, one can always hit the reset button and start anew. It actually made sense! 

It seems the worlds of private equity and videogaming aren’t so disparate after all; both are quests for triumph, albeit with very different loot at stake. 

The Name Game

Vulture has noticed a trend among GPs who’ve taken to naming their funds with a nod to their cultural heritage. 

It’s a refreshing shift from the usual corporate monikers, injecting a bit of personality and history into the mix.

However, there’s a catch. As cultural and social norms are in constant flux, there’s a looming risk that today’s homage could become tomorrow’s faux pas. This Old Bird was interested therefore to uncover the lengths to which GPs go to sidestep potential naming blunders. 

One GP likened their naming process to a high-stakes game in a strategy-filled war room. The mission? To ensure that their fund’s name won’t end up on the wrong side of history. 

Indeed, it seems these GPs are navigating the delicate dance of cultural homage with the grace of a tightrope walker in stilettos. One wrong step and their fund’s name might end up as outdated as a fax machine in the digital age.

Categories: Insights The Vulture

TAGS:

The panel:
• Christophe Aulnette, senior adviser for tech and telecom, Seven2
• Ash Patel, growth specialist – cyber, ECI Partners
• Steve Darrington, chief financial and risk officer, Phoenix Equity Partners
• Caleb Mills, chief technical officer, Doherty Associates

Moderated by:
Taku Dzimwasha, editor, Real Deals

Cybersecurity has emerged as a paramount concern for corporations across the globe. 

The recent cyberattack on the British Library, which resulted in the institution allocating approximately 40% of its reserves towards recovery efforts, illustrates the devastating impact of such threats. That incident serves as a potent reminder that no entity – and that includes private equity portfolio companies – is immune to the dangers. On 28 February, Real Deals hosted a cybersecurity webinar in collaboration with IT solutions and cybersecurity provider Doherty Associates. Here, we round up the key discussion points.

RD: What do you see as the most pressing cybersecurity threats facing firms today and how have they evolved recently?

Caleb Mills: Phishing remains the predominant threat vector, now leveraging AI for more targeted and adaptive campaigns. While traditional methods like accessing systems for ransomware are declining due to increased cloud adoption, there are ample tools available to defend against such threats.

Steve Darrington: Bad actors have shifted their focus from targeting private equity firms directly to their portfolio companies. PE firms have strengthened security measures around large money transfers. However, bad actors recognise the potential vulnerability of portfolio companies, as their financial stability is crucial to the interests of the PE firm.

Bad actors have shifted their focus to target portfolio companies
Steve Darrington, Phoenix Equity Partners

RD: How do PE firms assess cybersecurity in pre-investment and how do you manage that threat post-investment? 

Ash Patel: We proactively engage in both pre- and post-deal assessments. In the pre-deal phase, we leverage open-source tools to evaluate a potential investment's cybersecurity posture and identify risks without conducting penetration testing. This includes reviewing the company's compliance with standards and certifications like ISO or SOC 2, which indicate a robust cybersecurity framework. Post-deal, we benchmark the company's existing security measures against frameworks such as NIST to pinpoint any deficiencies. By collaborating with the company's CTO and board, we create a roadmap to address these critical vulnerabilities, enhancing their overall security posture.

Continuous monitoring of key third-party suppliers is crucial
Ash Patel, ECI Partners

RD: How should PE firms effectively assess and mitigate cybersecurity risks in their portfolio companies? And do you believe a top-down or bottom-up approach is best? 

Christophe Aulnette: We implement a standardised framework across all companies, covering training, disaster recovery plans, EDR processes and cyber insurance, with a shared vocabulary. While we drive adherence to this framework, we do not replace management's role. We provide resources and tools to monitor progress, including monthly scans and benchmarking across our portfolio companies, both within and beyond their sectors. 

In the post-deal phase, we utilise a more in-depth tool called active directory auditing, an extension of our cyber analysis. This tool assesses potential vulnerabilities within a company's active directory – a common source of compromise. We focus on lightweight analysis, addressing issues like dormant accounts and domain vulnerabilities. Additionally, we conduct phishing campaigns and other relevant assessments. All these components are integrated into a continuous improvement framework, emphasising ongoing action rather than static snapshots.

RD: While PE firms can have a direct influence on their portfolio companies’ cybersecurity, they have less of a say in terms of suppliers’ cybersecurity. Do you agree that this is one of the greatest threats and how do you try to mitigate the vulnerability?

Patel: Continuous monitoring of key third-party suppliers is crucial due to the significant risk they pose. This involves regular questionnaires and the use of open-source tools to stay vigilant for any changes. Implementing privileged access management for individuals with critical access helps track their activities. Proper onboarding and offboarding procedures are essential to prevent dormant accounts from being exploited. These three key aspects are often overlooked but are critical for maintaining security.

Aulnette: Third-party risks are significant for our portfolio companies, as well as for large enterprises facing the challenge of managing numerous suppliers. With potentially thousands of suppliers, manual audits or questionnaires for each one are impractical. Automated tools help prioritise risk assessment by identifying the top 10% of suppliers that are new or integrated into the information system, and evaluating their cybersecurity posture. This enables focusing resources on the most critical suppliers.

Manual audits or questionnaires are impractical... automated tools help prioritise risk assessment
Christophe Aulnette, Seven2

RD: How should firms approach incident response and recovery planning to minimise downtime and protect their reputation in the event of a cybersecurity breach? 

Mills: The key elements of incident response involve defining roles and responsibilities beforehand, making difficult decisions in advance whenever possible, and ensuring there is clear and easily accessible documentation. Having these protocols in place and tested before an incident occurs allows for clear-headed and logical decision-making, rather than feeling pressured in the moment.

Cyber insurance plays a crucial role in post-breach recovery
Caleb Mills, Doherty Associates

Critical decisions, such as whether to inform regulatory authorities or engage with a PR partner, should be addressed in advance. Cyber insurance plays a crucial role in post-breach recovery, covering both technical and legal aspects like GDPR compliance and public exposure mitigation. The insurer's expertise aligns with minimising fallout from breaches, offering support in various aspects of recovery.

Darrington: The mindset required for handling cybersecurity responsibilities is often described as ‘professional paranoia’. It acknowledges the inevitability of incidents and prompts individuals to constantly evaluate potential vulnerabilities and respond accordingly. A key mantra is to question the effectiveness of any plan by asking when it was last tested and whether there's a recent detailed analysis of its strengths, weaknesses, opportunities and threats. Plans must be regularly tested and refined to ensure they hold up when implemented.

Click here to watch the webinar in full.

Categories: Insights

TAGS: Doherty Associates Eci Partners Phoenix Equity Partners Seven2

Liberta Partners has acquired 50.1% of the shares in Negotiation Advisory Group (NAG).

Founded in 2018 in Munich, Germany, NAG is a negotiation consultancy that has supported more than 2,900 negotiations with an annual volume of more than €25bn, thanks to its team of over 50 international experts.

The remaining shares will continue to be held by NAG management and employees, the GP said in a statement.

Liberta Partners seeks to continue the business’s expansion throughout Europe, attracting an international customer base by strengthening its product portfolio. 

With the deal, the management team will see NAG’s former managing director Katharina Weber taking over as COO.  

Liberta Partners was founded in 2016 and is a multi-family holding company based in Munich. The company eyes opportunities in German-speaking countries, particularly in succession situations and corporate spinoffs.

Categories: Deals €200M or less Sectors Business Services Geographies DACH

TAGS: Germany Liberta Partners

Schroders Capital has launched a UK venture and growth Long-Term Asset Fund (LTAF).

British Business Bank (BBB) and Phoenix Group are supporting the operation as cornerstone investors, backing the fund with a total investment of £300m, split equally. 

BBB awarded the allocation to invest in UK science and tech companies, as part of the UK Government’s Long-term Investment for Technology and Science (LIFTS) initiative. 

The allocation will be matched by the long-term savings and retirement business Phoenix Group. 

Both commitments are subject to ongoing commercial discussions and the internal governance processes of all involved parties, the GP said in a statement.

The LTAF seeks to mobilise institutional investment into UK technology and life science companies with a particular focus on the UK venture capital ecosystem. In particular, it aims to provide institutional investors with opportunities to invest long term, through private markets as well as public, into early-stage growth businesses, the GP said in a statement. 

The venture and growth fund would be available to UK registered pension schemes, UK life insurance companies holding the units for businesses, and UK registered charities.

Peter Harrison, group chief executive at Schroders, said: “A UK venture and growth LTAF will act as a catalyst to unlock institutional investment, particularly from UK defined contribution pension schemes, and increase the supply of capital to UK technology and science startups.”

“This initiative will ultimately strengthen UK economic growth and reinforce the UK’s position as the natural home for fast-growing companies,” he added. 

Last year, Schroders launched an LTAF designed to enable UK investors with longer-term horizons to invest in illiquid and private assets with a specific focus on four long-term themes: climate mitigation, climate adaption, biodiversity/natural capital, and social vulnerabilities.

Last month, the investor launched its Renewables+ fund, its second sustainability-focused LTAF.

With $84.4bn of AUM, Schroders Capital offers a diversified range of investment strategies, including real estate, private equity, secondaries, venture capital, infrastructure, securitised products and asset-based finance, private debt and insurance-linked securities.

It is part of global investment firm Schroders, which had £750.6bn of AUM as of 31 December 2023.

Categories: Funds Small [€200M or less] Sectors Healthcare & Education TMT Geographies UK & Ireland

TAGS: British Business Bank Ltaf Phoenix Equity Partners Schroders Capital Uk

Faced with a critical challenge of generating liquidity, private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3trn, according to Bain & Company’s Global Private Equity Report 2024.

Private equity continued to feel the heat in 2023 as rapidly rising interest rates led to sharp declines in dealmaking, exits and fundraising. Deal value fell by 37%, while exits plummeted even more, by 44%. 

The exit conundrum has emerged as the most pressing problem, as LPs starved for distributions pull back new allocations from all but the largest, most reliable funds, the report notes.

“It’s safe to say the private equity industry has never seen anything quite like what’s happened over the last 24 months,” the report states, adding that breaking the exit logjam will require more robust approaches to value creation and rapid innovation in liquidity solutions.

The private equity industry has never seen anything quite like what’s happened over the last 24 months

Other key takeaways from the annual report include the boom in secondaries funds, how private investors are using generative AI and the piling up of unsold assets. 

When it comes to secondaries, Bain believes the industry may have reached a tipping point. Throughout 2023, secondary funds grew faster than any other asset class in response to the industry’s liquidity crunch.

The report also addresses artificial intelligence, underlining that private investors are taking “full advantage” of the field to transform portfolio companies, sharpen due diligence and make investment professionals smarter.

One of the most pertinent observations in the report remains around the requirement for liquidity, with Bain calling 2023 a year where cash became king again in private equity. 

According to the report, the proportion of long-held companies in buyout portfolios is growing and hasn’t been this big since 2012. The authors concluded by saying that future fundraising will depend on the industry’s creativity in returning cash to investors.

Categories: Insights Geographies UK & Ireland France & Benelux Southern Europe Central & Eastern Europe Nordics DACH ROW

TAGS: Bain & Co

In an increasingly challenging financial environment, the battle for seasoned CFOs for private equity-backed firms has intensified, according to a recent Finatal report. 

In The CFO Conundrum: How Can Private Equity Contend with the Talent War for Experienced Finance Leaders?, author of the report Jack Lane, managing director at Finatal, sheds light on the volatile CFO market seen during the past year and presents strategies for PE firms to navigate these challenges.

The report reveals a shift in focus towards value protection and maximisation amid macroeconomic uncertainties and a lower deal volume. This strategic pivot has placed management teams, especially CFOs, under increased scrutiny, with a notable 62% of PE CFOs reporting more engagement with their PE backers. 

While such engagement aims at value creation, it also amplifies the pressure on CFOs, who are now expected to navigate through geopolitical uncertainties, rising debt costs and a tight M&A market.

With CFO salaries hitting record highs – up almost 8% year on year – the expectations of these finance leaders have never been greater. 

With CFO salaries hitting record highs – up almost 8% year on year – the expectations of these finance leaders have never been greater

However, the challenge isn't just about retaining talent but also about aligning CFO capabilities with the strategic direction of the PE firm. The changing landscape has seen some CFOs, particularly those hired during the buy-and-build frenzy of 2021, becoming misaligned with current needs, sparking debates on whether to endure the mismatch or seek replacements.

Lane points out the critical situation of "the untouchables" – CFOs in prime positions with significant equity upsides, making them unlikely to move. This scenario exacerbates the talent shortage, pushing PE firms to either take risks with hires outside their traditional pool or to look for discontented CFOs within it.

The report also underscores the impact of macroeconomic challenges, with 90% of respondents acknowledging the macroeconomic environment as a significant issue. To combat these challenges, PE firms are advised to adopt a dual-process approach, accelerating the hiring process and broadening their search beyond traditional candidates. This includes looking at interim CFOs to bridge gaps and considering first-time PE CFOs, potentially offering a fresh perspective and diversity to the finance function.

Interim CFOs have emerged as a practical solution for immediate needs, allowing firms time to find the perfect match without compromising on quality. This approach has gained popularity, especially in midmarket SaaS investments, as it addresses short-term challenges while enabling firms to maintain their competitive edge.

Furthermore, the report highlights the importance of partnerships with specialised recruitment firms that understand the PE landscape. These partnerships can streamline the hiring process, providing access to a broader talent pool and ensuring that candidates meet the specific needs of PE-backed companies.

As the war for CFO talent rages on, PE firms must adapt their strategies to secure top finance leaders capable of steering their companies through uncertain times. 

As the war for CFO talent rages on, PE firms must adapt their strategies to secure top finance leaders

By accelerating their hiring processes, broadening their search criteria and leveraging interim solutions, PE firms can navigate the complexities of today’s market, ensuring their portfolio companies remain on a path to growth and success.

Categories: Insights

TAGS: Cfo Finatal Talent

EOS Investment Management Group has sold its majority stake in EF Group to GP Alto Partners.

Established in 1929 and with offices in Turin, Bologna, Germany and the Arab Emirates, EF Group is an Italian contractor that specialises in the design and realisation of tri-dimensional spaces and environments for trade shows and events including exhibitions, corporate headquarters, showrooms and concept stores. 

The sale was completed via the EOS IM’s EOS PE fund, while Alto Capital completed its acquisition via its fund Alto Capital V, investing alongside the Giordano family and EF’s senior management. 

The closing of the transaction is expected to take place by April 2024.

EOS IM first invested in EF Group in February 2018, with a focus on accelerating the business’s growth through the extension of services and geographic markets as well as acquisitions, it said in a statement.

During the holding period, the GP co-operated with EF Group’s management team to reinforce the company's market positioning, through specific initiatives focused on sustainability, circularity of business models, introduction of digital services, and enhancing competitiveness in the international markets, the GP said in a statement.

Particular focus was given to geographical expansion, with EF Group strengthening its offering in the German market. 

During the six-year hold, the business also completed two acquisitions – of Italian furniture specialist Xilos in 2019 and design specialist Giordano Allestimenti in 2023.

EOS PE fund’s portfolio currently includes investments in polypropylene producer Atex Group and builder and developer Donati Group, among others. 

With the acquisition, Alto Partners said in a statement that it aims to further bolster the acceleration of EF’s growth strategy, both in the trade show and contract divisions. The GP also aims to consolidate the corporate offering of the business. According to the GP, this will be achieved by organic M&A growth through strategic acquisitions in the sustainable and innovative contract solutions marketspace. 

The deal represents the third investment made by Alto Capital Fund V, which completed its final closing on €273m in December 2023.

EOS IM eyes energy transition and sustainability-focused opportunities, investing in both companies and infrastructure. It has a team of 30 professionals combining industrial and financial experience, and offices in London, Milan and Luxembourg. 

EOS IM has been a UN PRI signatory since 2019 and is an active supporter of the Task Force on Climate-Related Financial Disclosures.

ADVISERS

Banco BPM, Banca IFIS (financing banks)

Alto Partners
Roland Berger (business)
Molinari Agostinelli Studio Legale (legal)
Alvarez & Marsal (finance)
Alma Tax Led (tax)
WI Legal (labour)
ERM (ESG)

EOS Investment Management Group
Vitale & Co (finance)
PedersoliGattai (legal)
RMU (tax)
OC&C (business)

Categories: Deals Exits €200M - €500M Sectors Business Services Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Alma Tax Led Alto Partners Alvarez & Marsal Eos Investment Management Group Erm Italy Molinari Agostinelli Studio Legale Oc&c Pedersoligattai Rmu Roland Berger Vitale Wi Legal

The Cranemere Group has appointed Bernardo Hees as an operating partner in its London office. 

The announcement follows a change of guard that took place in December last year, when Kamil Salame was appointed as the new CEO at the firm’s New York headquarters.

Hees will help oversee Cranemere's operating companies, serve on the boards and assist in the origination and diligence of new opportunities, with a focus on the consumer sector.

He has previously served as the CEO of Kraft Heinz and managing director of Burger King. Hees’s stints also include América Latina Logística, a Brazilian logistics company, global investment firm 3G Capital and Aimbridge Hospitality.

The Cranemere Group partners with founders and owners of private businesses to help them continue building enduring companies. 

Backed by permanent capital, Cranemere’s structure offers an alternative to companies considering a transaction with private equity or a strategic buyer, or accessing the public markets. 

Cranemere owns significant stakes in nine companies across North America and Europe.

Categories: People LP & GP moves Geographies UK & Ireland ROW

TAGS: Cranemere

Quadrivio & Pambianco have sold Autry International to Style Capital.

The deal secured Quadrivio & Pambianco a 4x return and an IRR of 75%.

Autry International is an Italian enterprise making and marketing premium sneakers, and it has built a network of about 750 multi-brand sales points and a digital channel generating approximately 20% of its sales, according to a statement. 

Autry was bought by Quadrivio & Pambianco’s Made in Italy Fund in June 2021. In a relatively short holding period, the company has grown its revenue from €30m in 2021 to €110m in 2023. The Italian investment firm also helped grow the consolidated Ebitda of the company from €8m to more than €33m.

The sale marks the first exit for the Made in Italy Fund, a vehicle focusing on investments in the fashion, design, beauty, and food and wine sectors. 

As part of the deal, Milan-based Style Capital will acquire a 50.2% stake, while the founding partners continue to hold a significant share in the company. 

Quadrivio & Pambianco has reinvested in the company through its Lifestyle Fund II.

The new partnership with Style Capital will further bolster the company's growth, getting a retail expansion plan underway both in Italy and further afield through the opening of more than 20 single-brand boutiques in the main luxury marketplaces, while still expanding the digital channel and consolidating international wholesale distribution.

ADVISERS:

Quadrivio & Pambianco
JPMorgan and Mediobanca (corporate finance)
Legance (legal)
Pedersoli Gattai (legal)

Style Capital
Studio Chiomenti (legal)
RDRA (tax)
PwC (financial due diligence)
UniCredit (debt financing)

Categories: Deals Exits Sectors Retail, Consumer & Leisure Geographies Southern Europe

TAGS: Italy Quadrivio & Pambianco Style Capital

Tresmares Capital aims to hold the first and final close of its third private equity vehicle this month, partner Ignacio Calderon tells Real Deals. 

The Spain-headquartered investment firm finished deploying its second PE fund – worth €175m – towards the end of last year and started discussing the idea of raising its successive vehicle with investors concurrently.

The third vintage of Tresmares’ private equity strategy has amassed €300m and is already oversubscribed. According to Calderon, 50% of the commitments for the fund have come from Santander Bank and the remainder is mainly from family offices based in Spain. 

Tresmares’ private equity strategy looks at minority stakes of 25-45%, usually in family-owned companies. While being sector-agnostic, Tresmares targets companies with “good” margins and an Ebitda of €2-15m. 

“Our tickets vary between €8m and €25m. In terms of geographies, we will largely look towards investing in Spain,” Calderon notes.

A small section of the new fund will also look at investing in the UK, where Tresmares has recently set up shop. 

From the €300m, commitments of €200m will be reserved for founder-led businesses in Spain (with no scope for co-investing alongside other sponsors), while the remaining €100m will be aimed at co-investing alongside other sponsors across Europe and direct investments in founder-owned businesses in the UK.

The firm has already completed one deal from the new fund: Rioja Nature Pharma, a company manufacturing dietary supplements in Spain.

In Calderon’s view, the fundraising process was quite atypical for a fund this size. “We did not use a placement agent and we also didn’t have interim closings,” he explains.

King & Wood Mallesons is serving as legal adviser for the fundraise. 

London calling 

A spinout of Santander Bank, Tresmares started as a minority private equity manager in 2014, but in 2020 decided to add a direct lending strategy to its arsenal. According to the firm, the manager’s direct lending operations have "quickly" eclipsed its PE offering for two reasons. 

José Ignacio Dengra, a partner in the London office explains: “First, the direct lending strategy represents €3bn of commitments versus €300m for minority PE. Second, the minority PE strategy has a more niche use case: founders who wish to retain control while simultaneously seeking partnership with institutional capital.”

The firm now sees itself as a one-stop shop for private capital with a core focus on high-growth SMEs. In November 2022, Tresmares announced the launch of a £725m evergreen fund and the opening of its London office as part of its international expansion.

One of the biggest drivers of success for Tresmares has been mScope, a proprietary business and market intelligence tool that helps to identify companies

In 2023, which was the first full year of operations for Tresmares’ UK office, the firm completed five debt transactions and one equity transaction, while growing its investment team to 10, outlines investment director Miguel Sánchez.

Sánchez and Dengra were brought in from the firm’s Spain office last year.

As the dealmakers reflect on the group’s successes and their vision for the London office, they highlight: “Since inception, one of the biggest drivers of success for Tresmares has been mScope, a proprietary business and market intelligence tool that helps to identify companies. This deal origination tool has been revolutionary for our office in Spain. By the end of 2024, we want to adapt mScope for the UK market.”

Healthy pipeline 

Beyond fundraising, there’s a lot more brewing at the Spanish firm’s offices. Some 18 months after Tresmares set up shop in London, the firm is plotting team expansion, opening offices and launching new funds. 

Elaborating on the imminent plans, Phil Arbour, CEO and managing partner (UK), tells Real Deals: “We have an investment director joining our deal team in April whose focus will be on the UK’s regional coverage (outside the M25). The London team will also be advising a new €150m fund dedicated to Benelux, the Nordics and Ireland, and we are in the final throes of hiring a London-based investment professional who will spearhead our efforts to originate business in those regions.”

On the direct lending side, we expect to do seven to 10 deals in the UK annually, hopefully deploying €250-300m of capital this year

Tresmares is also drawing up plans for two more offices – in France and Germany – likely to be opened in the next 12-18 months as part of its efforts to become pan-European. 

Overall in 2024, the firm has two key ambitions for its London office. Arbour reveals: “The first is to replicate mScope for deal origination in the UK, and although our bread and butter continues to be sponsor-backed business, we would like to increase the volume of sponsor-less business that we write.”

He adds: “On the direct lending side, we expect to do seven to 10 deals in the UK annually, hopefully deploying €250-300m of capital this year. From this strategy, we will focus on companies with Ebitda of £2-20m, with a capacity to deploy £60m. For hybrid transactions that use a blend of both debt and equity, we will aim to write combined cheques up to £80m.”

Categories: Insights Funds Mid [€200M - €1B] Geographies UK & Ireland Southern Europe

TAGS: Exclusive King & Wood Mallesons Spain Tresmares Capital Uk

Synova has provided growth investment to Mecsia, a UK provider of compliance-led, technical inspection and maintenance services. 

The GP acquired the firm because of its market consolidation potential and strong growth, Alex Bowden, partner at Synova, tells Real Deals.

“Mecsia operates in a fragmented industry with over 2,000 service providers, highlighting a significant consolidation opportunity. The company has demonstrated sustained organic growth, at 25% per annum, driven by long-term contracts and structural changes in the market towards specialist technical operators,” Bowden says. 

Partners Bowden and Oliver Bevan led the transaction for Synova and the two will join the board of Mecsia following the deal. Meanwhile, the current management, Jon Coiley (CEO), Paula Miller (CFO) and Chris Kindon (COO), have partnered with Synova and will remain in situ.

Mecsia operates in a fragmented industry with over 2,000 service providers, highlighting a significant consolidation opportunity

Mecsia has over £100m in revenues, employing more than 400 engineers nationally.

Synova plans to support Mecsia's growth strategy by growing the firm’s market share and via strategic acquisitions, which will expand the group's technical service capabilities.

“We have a curated list of strategic acquisition targets to enhance Mecsia's success, which stems from its focus on customer service with a high degree of self-delivery – utilising in-house technical skills rather than relying on outsourcing, unlike much of the market,” says Bowden.

The GP’s strategy involves continuing organic growth while acquiring additional technical capabilities to leverage internally, therefore allowing the firm to maintain control and provide even better service to its clients, Bowden adds.

Exit left  

Mecsia was previously backed by PE firm Rockpool Investments. This latest deal sees Rockpool exit, achieving a blended 7x equity return and 120% IRR across four rounds of investment. 

Rockpool originally backed the management buyout of Mecsia in December 2020, followed by the acquisitions of Acorn Engineering (2021), SK Heating & Cooling (2022) and Artic Building Services (2023). Rockpool equity investors that supported the original MBO of Mecsia in December 2020 generated an 11x return on capital invested.

Tom Coey (investment director), Simon Collins (investment manager) and Toby Hurdle (investment executive) led the investment and exit on behalf of Rockpool.

The deal for Mecsia is subject to regulatory approval. 

We have a curated list of strategic acquisition targets to enhance Mecsia's success

Synova is a growth investor backing companies valued between £20m and £250m in the UK, Ireland and continental Europe.

Rockpool Investments backs UK-based companies with a ticket size from £5m to £15m.

ADVISERS

Synova 
Deloitte (corporate finance)
8Advisory (financial DD and tax DD)
LEK (commercial DD)
Osborne Clarke (legal)

Rockpool and Mecsia
DC Advisory (corporate finance)
Taylor Wessing (legal)
MDW Capital Partners (debt advisory)
PwC (commercial DD)
KPMG (financial and tax DD)
Claritas (tax)

Management 
Liberty Corporate Finance (M&A)
Foot Anstey (legal)
Claritas (tax)

Categories: Deals Deals in Focus €200M or less Sectors Business Services Geographies UK & Ireland

TAGS: 8advisory Claritas Tax Dc Advisory Deloitte Foot Anstey Kpmg Lek Liberty Corporate Finance Mdw Capital Partners Osborne Clarke Pwc Rockpool Investments Synova Taylor Wessing

Foresight has exited Specac International to an unnamed US private equity investor. 

Founded in 1971 and headquartered in Orpington, UK, Specac is a laboratory equipment manufacturer and supplier of mass spectroscopy accessories, with a particular focus on high-specification diagnostic equipment that helps measure the chemical and atomic composition of a wide range of organic and inorganic materials. 

The transaction will generate gross proceeds of approximately £27m to Foresight, representing a 10.3x return on capital invested at an IRR of 34% per annum, with a chance to increase this to 10.9x over time, the GP said in a statement.

Foresight initially invested £2.6m in the MBO of Specac, as a carve-out from British multinational firm Smiths Group in April 2015, via its Foresight VCT, Foresight 3 VCT and Foresight 4 VCT funds. 

The GP supported the business in its growth phase with a particular focus on expanding its customer base and product offering within a range of mass spectroscopy accessories. To achieve this, Foresight focused on strengthening Specac’s management team, improving the product development process and creating an international sales operation, the GP said in a statement. 

Since 2015, the business’s workforce has seen a 70% increase in the number of engineers, with the team now consisting of 70 employees. 

With Foresight’s support, revenues grew by 500% during the investment period, according to the GP.

Specac’s products aim to facilitate pharmaceutical research and production, food safety and other industrial processes worldwide.

Foresight Group also recently backed global event management group Live Group with a £2.8m VCT investment. Get more info on the deal here

ADVISERS 

Foresight
KPMG (lead adviser)
Squire Patton Boggs (legal – company)
Freeths (legal – management)
Cortus (UK), Withams (US) (financial)
Claritas (tax)
CIL (commercial)

Categories: Deals Exits €200M - €500M Sectors Healthcare & Education Geographies UK & Ireland

TAGS: Cil Claritas Tax Cortus Transaction Services Foresight Group Freeths Kpmg Squire Patton Boggs Uk

YFM Equity Partners has secured £90m of commitments for its British Smaller Companies Venture Capital Trusts (VCTs). 

The original offer for the VCTs fundraise was £65m plus an over-allotment facility of £25m. The announcement follows the close of YFM’s Buyout Fund III on £95.5m last year.

YFM's British Smaller Companies VCT was first listed on the stock exchange in 1996 and was followed by the British Smaller Companies VCT2 in 2000. The funds are two of the longest-running VCTs on the market and have more than 15,000 shareholders in place at present, YFM said in a statement. 

YFM's VCTs have invested close to £70m in fast-growing UK businesses. Its portfolio includes the Northwest's first 'unicorn', Matillion, a Manchester-based cloud data integration platform.

According to the firm, its VCTs “continue to bridge a funding gap for smaller, dynamic businesses seeking to accelerate growth and, in doing that, they boost the regional and national economies”.

YFM invests £3-15m into businesses with strong growth potential located across the UK, through a regional network of offices in London, Leeds, Manchester, Reading and Birmingham. The firm manages funds in excess of £630m, which includes venture capital trusts and private equity funds.

Categories: Funds Small [€200M or less] Venture Geographies UK & Ireland

TAGS: Uk Yfm Equity Partners

Troy, an industrial and engineering supplier in the UK, has acquired Scott Direct.

The deal marks Troy’s 19th acquisition and its second since BGF’s multimillion-pound investment in the business last year.

Founded in 1986, Troy is an independent MRO (maintenance, repair and overhaul) product distributor, serving the industrial, engineering and trade sectors nationwide via its acquired distributor network and buying group of 400-plus members.

The Exeter-based firm has acquired Scotland-based Scott Direct Group, which supplies workwear, PPE and power tools to the industrial and trade markets.

Commenting on the deal, Troy chief executive Paul Kilbride said: “Scott Direct has been a Troy member for many years and there has been a close connection to the owners throughout that time.”

Last year’s investment from BGF was led by James Skade and Hannah Waters, investors in BGF’s Southwest team. 

Categories: Deals Buy-and-build Sectors Business Services Other Geographies UK & Ireland

TAGS: Bgf Uk

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