RSM UK has appointed Stuart Clowser as head of private equity. 

Clowser was previously a fund audit partner at RSM and has extensive experience advising private equity funds on their portfolios and on the private equity regulatory environment. 

A member of the BVCA’s accounting committee, Clowser succeeds Charlie Jolly who has been head of private equity for nine years at the firm and now joins the consulting leadership team.

He started his stint at RSM 20 years ago.

CVC has invested in World of Talents, following an exit by Belgian investment firm Baltisse. 

Active in Belgium and the Netherlands, World of Talents is an international platform for HR companies, specialising in bottleneck professions and talent management. 

The company operates in outsourcing, interim (management), and recruitment and selection, generating a turnover of €360m and Ebitda of €50m, with a staff of 4,500.

In 2023, World of Talents expanded to Germany through the acquisition of easyCare, a HR company specialising in the medical sector.

The fresh funds will be used to diversify the company’s offering and expand its geographic footprint nationally and internationally, CVC said in a statement. 

Baltisse is selling its majority stake but reinvesting a “significant” portion. 

Earlier this week, the private equity firm announced its intention to list on Euronext Amsterdam.

ADVISERS

CVC
Freshfields Bruckhaus Deringer (legal)
Lincoln (corporate finance)

World of Talents
Allen & Overy (legal)
Clifford Chance (legal)

After holding the company for only two years, Deutsche Beteiligungs AG (DB AG) has exited its stake in In-tech, a technology company focused on software development, testing and validation. 

The sale has been made to Infosys, a global IT services giant headquartered in Bengaluru, India.

According to DB AG, the sale has reaped a more than 3x return on investment.

The exit represents the first divestment from DB AG Fund VIII, a €1.1bn vehicle that has built up a portfolio of seven companies since 2020. 

Based in Garching near Munich, In-tech is a service provider for software development, testing and validation that shapes digitalisation in the automotive, rail transport and smart-industry sectors. 

In-tech develops solutions in e-mobility, connected and autonomous driving, electric vehicles, off-road vehicles and railroads. 

The IT services and software segment now represents 25% of DB AG’s total portfolio value.

Greenpeak Partners has raised €350m for its inaugural continuation fund, to extend the hold of two German companies operating in the speciality laboratories and testing, inspection and certification (TIC) space.

The vehicle was led by HarbourVest Partners.

The Greenpeak Continuation Fund I will invest in Academia and Certania – portfolio companies currently being managed by Greenpeak Fund II, which closed in 2022. 

The deal has been structured in a way that will provide customised exposure across one or both companies for different investors. 

HarbourVest Partners is acting as the principal lead investor for the vehicle across both companies, while Kline Hill Partners is acting as the co-lead Investor in Academia, alongside a consortium of international syndicate investors.

Greenpeak Partners is a lower midmarket-focused buy-and-build private equity firm in the DACH region. Under the firm's leadership, Academia and Certania have built up their combined Ebitda to nearly €70m while completing more than 30 acquisitions, the GP said in a statement. 

Continuation funds have risen in popularity in the past year, as exits continue to dwindle and LPs crave liquidity.

ADVISERS

Greenpeak
PJT Park Hill (corporate finance)
ISP Healthcare (commercial due diligence)
Roedl & Partner (financial and tax)
Stephenson Harwood (legal)
FMDH Rechtsanwälte (legal)
McDermott Will & Emery (legal)

HarbourVest Partners
Kirkland & Ellis (legal)

Real Deals is thrilled to unveil the much anticipated list of winners from its 23rd annual Private Equity Awards – a ceremony recognising Europe's very best private equity transactions and the most successful firms and advisers. Our winners and shortlisted firms have displayed dedication, hard work and excellence – and are stronger than ever despite the difficult market conditions. Congratulations to all!

The winners were announced during our awards ceremony held on 18 April 2024 at the JW Marriott Grosvenor House, London.

ADVISORY AWARDS

• Asset-Based Lender of the Year: ABN AMRO Commercial Finance
• Fund Administrator of the Year: Aztec Group
• Regional Legal Adviser of the Year: Foot Anstey
• Pan-European Legal Adviser of the Year: Eversheds Sutherland
• Specialist Adviser of the Year: Capstone
• Specialist Fund Adviser of the Year: Asante Capital Group
• UK Corporate Finance House of the Year: Clearwater International
• European Corporate Finance House of the Year: Houlihan Lokey
• Commercial Due Diligence Provider of the Year: Armstrong
• Technology Due Diligence Provider of the Year: Crosslake
• Financial Due Diligence Provider of the Year: Alvarez & Marsal
• Lender of the Year – Bank: HSBC UK
• Lender of the Year – Specialist: Ares Management

SPECIALIST AWARDS

• Diversity and Inclusion Leader of the Year: Hg
• ESG Champion of the Year – Mid-Cap: Abris Capital Partners
• ESG Champion of the Year – Upper Mid-Cap: Investindustrial
• ESG Champion of the Year – Large-Cap: Nordic Capital
• Mid-Cap Private Equity Investment Leader: Robert Knorr, MidEuropa

DEAL AWARDS

• Central and Eastern European Deal of the Year: Enterprise Investors for Unilink
• DACH Deal of the Year: Oakley Capital for IU Group
• France and Benelux Deal of the Year: Archimed for Polyplus
• Mediterranean Deal of the Year: Wise Equity for Cantiere del Pardo
• Nordic Deal of the Year: Norvestor for Kabal
• UK Small-Cap Deal of the Year (EV on entry less than €25m): AURELIUS for Distrelec
• UK Lower Mid-Cap Deal of the Year (EV on entry of €25-100m): Palatine for Anthesis
• UK Upper Mid-Cap Deal of the Year (EV on entry of €100m+): Equistone Partners Europe for Acuity Knowledge Partners

HOUSE AWARDS

• Special Situations House of the Year: AURELIUS
• PE House of the Year-Small-Cap (EV on entry of less than €25m): Kester Capital
• PE House of the Year – Mid-Cap (EV on entry of €25-100m): ECI Partners
• PE House of the Year – Upper Mid-Cap (EV on entry of €100-500m): Oakley Capital
• PE House of the Year – Large-Cap (EV on entry of more than €500m+): Bridgepoint Group
• European Fund of the Year: ECI Partners
• Hall of Fame: Helen Steers, Pantheon

The IT sector continues to present potential rich pickings for investment, but not all that glitters is gold. That’s the message from partners at Progressio, speaking to Real Deals following their purchase of a majority stake in Italian digital services provider Archiva Group.

“Overall, the IT sector has clear growth opportunities and resilience, it has performed well and has not experienced any shocks during the pandemic, and these characteristics make it currently very attractive for private equity firms,” according to Progressio partner Beatrice Capretti.

Companies specialising in digital technologies, such as cybersecurity and AI, show high revenue and ROI potential, making them more credible investments, she says.

But she adds: “One should not make the mistake of investing in platforms that are too fragmented. LPs are prudent and GPs should cautiously select the type of businesses they are looking at within this sector.”

Following this logic, the GP acquired a majority stake in Archiva Group, an Italian digital provider serving more than 1,500 companies, from medium-sized to multinational.

The company says its value proposition is based on three pillars: data, processes and people, with a focus on digital transition, AI and cybersecurity. 

One should not make the mistake of investing in platforms that are too fragmented. LPs are prudent and GPs should cautiously select the type of businesses they are looking at within this sector
Beatrice Capretti, Progressio

The area of data offers a range of services for modern document and digital data management – including digital archiving, national and international electronic invoicing, and automation of document generation. 

"Italy leads in these areas; for instance, electronic B2B invoicing, which is mandatory in Italy, is still optional in many EU countries," explains fellow partner at the private equity firm, Massimo Dan.

Progressio aims to enhance Archiva's solutions, strengthen client partnerships and focus on cybersecurity and information security, enhancing Archiva’s technological expertise including digital workflow platforms, AI applications and robot process automation.

The strategic plan envisages an ambitious M&A strategy, both in Italy and abroad, with a particular focus on the acquisition of functional B2B softwares, Dan explains. 

"We plan to bring concrete use cases from Italy to large international customers, extending that experience in customs bill management and international cross-country invoicing abroad," he adds.

Expertise counts

The GP's first meeting with Archiva was in July 2023. "It wasn't an auction but a 'beauty contest' with few players, organised by the seller's M&A adviser, Clearwater International," explains Dan.

"We were selected within two months and began the business plan immediately together with the management team and the entrepreneur," he adds.

The conversation was "smooth" and "agile", with full cooperation from the management team, according to the GP. 

"We believe that our team's expertise in this technical, relatively new sector stood out. Part of our team have previously worked in an M&A boutique that focuses exclusively on digital services, developing skills that you would struggle to find outside the industry,” Capretti highlights.

"We also have an operating partner, providing specialised support valued by our investee businesses," she adds.

Off the beaten track

The GP reviews between 200 and 250 deals annually, involving conversations with advisors, accountants, and entrepreneurs across Italy.

"We often travel to visit them, building one-to-one relationships. Managers particularly are a key origination source for us," Capretti emphasises. "Over the years we've built a network of sector-focused managers that involve around 80 managers that support us during the entire investment cycle."

Over the years we've built a network of sector-focused managers that involve around 80 managers that support us during the entire investment cycle
Beatrice Capretti, Progressio

Progressio’s origination strategy also includes identifying niche targets through ad hoc analysis to better understand the sector.

“This way we find targets that are completely out of the mainstream,”  the investment professional says. 

Maiden investment

Archiva’s acquisition was completed via the Progressio Investimenti IV fund and represents the first acquisition signed by the vehicle. 

The fund completed the first closing at the end of January with commitments for €182m and has a target of €300m, with a second closing expected by the end of summer. 

It is currently boosting its pipeline, with the GP revealing a few deals on the horizon. “We are imminently completing a new deal in the mechanics sector, and we are in the due diligence phase for an investment within the energy-transition sector that could potentially be completed before summer,” Capretti reveals.

Progressio is an independent private equity firm focused on the Italian midmarket. It has so far managed funds worth more than €730m and completed 23 investments, with 16 add-ons and 17 exits.

ADVISERS

Progressio
Bonelli Erede (legal)
Deloitte (financial due diligence)
Roland Berger (business due diligence)
EY (ESG) 
Russo De Rosa Associati (tax due diligence)

Archiva Group 
Clearwater International (corporate finance)
PwC (vendor financial assistance)
Studio Legale Mancini (legal)
Studio Legale e Tributario Pasquini (legal)

Proemion Holding, a provider of advanced data and analytics technology for mobile industrial assets, has acquired TrendMiner, an industrial analytics company.

Battery Ventures invested €33.5m in the German company in 2022. The bolt-on acquisition has been made for €47m. 

The acquisition of Belgium-based TrendMiner will “significantly” expand Proemion’s existing analytics capabilities for critical industrial equipment, which help equipment manufacturers and operators gather machine data remotely.

TrendMiner produces a complementary, web-based, self-service analytics platform for monitoring critical equipment inside complex industrial environments. Its technology is used across industries including chemicals, oil and gas, pharmaceuticals, power generation, food and beverage, and high-tech manufacturing.

Proemion was founded in 1987. The company’s technology allows customers – who operate in industries including construction, agriculture, logistics and natural resources – to better manage equipment, plan maintenance, save fuel costs and generate CO2 emission reports.

It serves global industrial OEMs and operators from its offices in Fulda, Germany; Dayton, Ohio; and Seoul, South Korea.

bValue, a Polish growth investment fund, has closed its third vehicle on €90m. 

The bValue Growth (BVG) fund represents bValue’s largest ever vehicle having surpassed its target by €10m. 

The announcement comes a year after bValue’s first close, which was held in February last year on €60m. 

Approximately half of the commitments came from financial institutions, including the European Investment Fund and the Polish Development Fund, with the remaining coming from private investors, including Polish and foreign family offices.

EIF invested in the fund through the European Scale-up Action for Risk Capital (ESCALAR) programme, which supports investments in scale-ups, chief executive Marjut Falkstedt said in a statement. 

bValue’s growth equity strategy seeks to fill the financing gap between venture capital funds, which invest at an early stage, and private equity funds, which target buyouts. 

BVG will invest tickets of €5-15m for equity stakes of 20-40%. 

Since its inception in 2016, the firm has invested in 40 companies and made 14 exits. The vehicle has completed its first investment in Hostersi, a provider of cloud migration and cloud infrastructure support services. "We have already deployed 18% of the fund. By the end of this year we intend to deploy up to 45%," Maciej Balsewicz told Real Deals. 

Van Campen / Liem served as the legal adviser. 

This article was amended on 19 April 2024.

Wellington Management has closed its inaugural Climate Innovation Fund (CIF) on $385m.

The vehicle will invest in private companies developing solutions to help mitigate and adapt to climate change. 

Wellington Management will target late-venture and early-growth companies developing tech-enabled solutions such as software, software-enabled hardware, AI, data and analytics in energy transition, sustainable buildings and cities, transportation and mobility, industrial automation, enterprise digitalisation, sustainable consumer, and food and agriculture innovation.

Headquartered in Boston, Wellington Management is a private investment manager.

The vehicle’s investor base includes sovereign wealth funds, pensions, insurance companies, banks, family offices and high-net-worth individuals, it said in a statement. 

Managed by Greg Wasserman and the CIF investment team, the vehicle is a part of Wellington’s expanding $8.5bn private investing platform. 

The vehicle follows Wellington’s three venture funds – Wellington Venture Investments I, Wellington Hadley Harbor IV and Wellington Biomedical Innovation II.

Unigestion has appointed Jordan Dimmock as a senior investment professional in its global secondaries team.

Dimmock joins from abrdn, where he was an investment director monitoring more than $1.5bn of transactions, and has 10 years of experience in private equity. 

In his new role, he will be focusing on sourcing and underwriting transactions for the sixth vintage of Unigestion’s secondaries strategy, the asset manager said in a statement. The vehicle is currently is open. 

Unigestion has more than 20 years of experience in secondaries with a global team of 70.

Its sixth vintage has a target portfolio of 40-60 transactions – split between North America and Europe (40% each), and the remainder in Asia. 

During the past 24 months, Unigestion’s secondaries team, headed by Ralph Büchel, has closed almost 30 transactions globally.

Ardian has partially exited its stake in Planisware following the launch of an initial public offer (IPO) of its portfolio company Planisware on Euronext Paris. 

As part of the IPO, the French software company’s co-founders will retain a majority stake.

Since 1996, Planisware has enabled companies to improve their project portfolio management (PPM) processes. The company has 12 offices and employs a staff of 700 supporting customers in 38 countries.

Ardian, via its growth strategy, first acquired a stake in Planisware in 2003 followed by a reinvestment in 2018. During its hold, the private investment firm has helped accelerate the group's international expansion, particularly in the US, and supported its M&A strategy, with the acquisition of NQI in 2018 and the integration of Japanese subsidiary IFT in 2023.

In 2023, the company achieved sales of €156m, with annual growth of 20% and an adjusted Ebitda margin of 33%.

Planisware’s IPO on Euronext Paris sees the company’s market cap top €1bn. Ardian will continue to retain its c.5% stake in the company.

The software company postponed its intention to float in October last year.

ADVISERS

Hogan Lovells (legal)
White & Case (legal)
Rothschild (corporate finance)
BNP Paribas (bookunner) 

Herbert Smith Freehills has promoted 27 new partners globally, with the promotions taking effect on 1 May 2024.

Many of the new partners focus on areas aligned to the firm's vision and which the firm has prioritised, such as private capital, energy transition and ESG.

In all, 14 of the 27 promotions are aligned with private capital, with promotions based across the firm’s global network of offices in Asia, Australia, EMEA, the UK and the US.

These include former senior associates Laura Ackroyd, Vassilena Karadakova, Philip Lis and Carolyn Milligan.

The appointments reflect the firm's ongoing commitment to invest in its international network, its practices and its sector expertise, the law firm said in a statement. 

CEO Justin D’Agostino added: "We are incredibly pleased to recognise the breadth of talent we have in our leading practices across the network. Our new partners have the skills, expertise and outlook to ensure we continue to drive our strategy and our growth areas of private capital, energy transition and ESG. They are integral to the future leadership and success of the firm."

Herbert Smith Freehills is an international law firm with headquarters in London, UK and Sydney, Australia. 

Interest rates in Europe appear to have peaked, but buyout deal financing and portfolio company working capital remains expensive. With traditional lenders still cautious, midmarket alternative credit providers are finding ways to step up, work together and provide private equity-backed companies with capital in a still tricky environment.

In this roundtable discussion, Real Deals talks to lenders and advisers about how the former have kept deploying capital and supporting private equity firms in the face of stiffening market headwinds

At the table:

• Graham Barber, PNC Business Credit
• Don Brown, Stephenson Harwood
• Nicholas Buxton, Investec
• Steven Chait, IGF
• Michael Holmes, ABN Commercial Finance
• Jake Hyman, Blazehill Capital
• Ross Morrow, DunPort Capital Management
• Cem Yaslak, BZ

 Moderated by Nicholas Neveling on behalf of Real Deals

Real Deals (RD): How have the lenders around the table responded to the rising rate cycle? Have higher rates led to any changes in deployment appetite or approach to underwriting?

Cem Yaslak: Our appetite at BZ has certainly grown in the last couple of years. We have expanded our product range to include cashflow products, to complement our full-suite ABL offering. And we recently partnered up with UBS to meet increasing demand for these hybrid structures. BZ has a strong track record of working with sponsor-backed corporates. However, the recent softening in the M&A market has led to lower sponsor-led activity. This has been, to some extent, replaced by refinancing activity as existing facilities mature, and corporates find it more difficult to access liquidity via the mainstream bank market. This creates an exciting opportunity for alternative lenders like BZ to support these corporates going forward.

Michael Holmes: We have also seen an uptick in refinancings come to the table. We are an ABL lender and there is a growing interest from corporates to turn to their balance sheet in order to raise debt, whereas previously they might have used other financing solutions. We also see an opportunity to grow our business at the larger end of the market. Previously we had a lot of focus on the midmarket, but now we are working more regularly with bigger credits, which has been positive and has enabled us to sustain steady deployment. In terms of underwriting, our approach to assessing credit risk hasn’t changed. Obviously, you've got to buy into the forecasts you are looking at, and sense-check those forecasts. This is something that we would always look at, but in the current environment we take a bit more time to assess and make sure that forecasts stack up.

Ross Morrow: From an underwriting perspective, our priorities are unchanged. We still focus on the same things and want to see the same good-quality business fundamentals evident in the credits we finance. One area that we are focusing on more in an inflationary environment is the ability of a company to pass on prices. Businesses that have not been able to push through price increases have been challenged. If you aren't able to pass on price increase in an inflationary environment, margins will be squeezed and free cashflow will suffer as a result. With respect to demand, it has been marginally up year on year, and we considered approximately the same amount of opportunities in 2023 as we did in 2022, but I would say that the quality of what we saw in 2023 was definitely different. The quality was fine through the first half of 2023, but in the second half of the year a lot of what we saw just didn’t meet our underwriting criteria or risk appetite. As a result, we took a step back from the market in Q4 2023 and ultimately underwrote about 60% of our 2022 volumes in 2023. That hasn’t been a problem for us really, as our model is not a volume game, it’s about picking good credits and working with good borrowers.

One area that we are focusing on more in an inflationary environment is the ability of a company to pass on prices. Businesses that have not been able to push through price increases have been challenged. Ross Morrow, DunPort Capital Management

Nicholas Buxton: Lower M&A volume has meant lower demand, but as other speakers have highlighted, we have also seen rising refinancing volume. With a refinancing, however, you always have to ask yourself and get comfortable with what is driving the refinance. Does the refinancing solve a problem for a sponsor (for example, revised exit horizon, additional funding for growth, recapitalisation, etc) or for the incumbent lender (for example, the borrower is over-levered or facing structural headwinds)? Clearly the former is more palatable from an incoming lender perspective, with problem-solving for our sponsor clients something we pride ourselves on at Investec. In terms of appetite, we remain eager to do deals and maintain deployment. To that end, it helps to have an active and acquisitive portfolio when M&A activity cools. Private equity firms still have the ambition to grow their portfolio companies and we have been kept very busy financing buy-and-build
strategies across our portfolio. Yes, the M&A market has been a bit subdued, but our clients are still acquisitive, and we like to back those strategies. Our bold mandate on the term lending side means that we are well equipped to support these strategies and that represents a major differentiator for us.

Graham Barber: The last 12 months have been a period of unsettled activity for lenders, which is not surprising given that interest rates have gone up by 500 basis points since December 2021 and inflation has been high. Against this backdrop, we have spent our time understanding the ability of borrowers to service and repay debt. You simply have to do that because we are in a different market now. Debt costs are up and therefore liquidity has come out of the market because of that. There is, however, capital available to deploy. From a new business perspective, there was less activity through the course of 2023 but good-quality assets still came to market. With fewer assets seeking finance and lenders aiming to deploy the same level of debt, it becomes more
competitive and you have to pick and choose what credits you want to pursue. You've just got to be choosy. You also have to make sure that you have a product offering that is relevant and can help clients across a number of scenarios. For PNC, that has meant evolving from being an ABL lender offering additional ‘stretch financing’ into a more sophisticated senior secured lender both in the US and here in the UK. That evolution has enabled us to do deals in the ABL arena, the technology finance arena with software-as-a-service recurring-revenue lending and the super-senior/’first out’ arena of revolvers and term-loan-As in front of private credit funds. Our ability to do more, and add more value, is probably greater than its ever been and we have to continue aligning ourselves with the needs and wants of sponsors, and being a relevant player for them.

Steven Chait: The slowdown in the M&A market has meant that activity has ebbed and flowed. One month it will be really busy and then the market will go quiet. We have a strong appetite for new business but it is a choppy market. That said, we have seen opportunities to help companies that have CBILs and (recovery loan scheme) RLS loans to repay. Another interesting area has been carve-outs. When businesses are carrying leverage, we've been able to carve-out some of that leverage against some of the assets in the business and repay some money to a sponsor by taking security over the receivables, for example. In the current high-rate environment, another unique selling point for us has been speed to market. If we say we're going to do something, we do it, and we can do it very quickly. We've just done our largest deal of all time within a month. Sponsors and portfolio companies really value that certainty of execution in an uncertain market.

Jake Hyman: Rising interest rates and widespread uncertainty have created opportunity for Blazehill, being a fund that operates in the midmarket private credit space. The ABL heritage of the platform coupled with our flexible mandate and ability to stretch meaningfully beyond the value of the assets and into the cashflows has meant we’ve been uniquely positioned to support a range of sponsor and non-sponsor backed business during a time where we’re seeing the more traditional cashflow market be a little bit more selective. As mentioned by Graham earlier, when it comes to underwriting, one of the key areas of focus in the current higher interest rate environment is sensitising a borrower’s ability to service debt. Yes, Blazehill has the ability to push beyond conventional lending parameters and provide enhanced flexibility and quantum, but we still need to ensure the facility doesn't put too much pressure on a company's longer-term liquidity position – it's about picking the right opportunities. As an example, we’re seeing a number of transactions that are growth-like in nature, where during the quieter M&A market sponsors have turned their focus to existing portfolio companies, identified accretive investment opportunities and are now looking to raise transformative capital to accelerate growth and provide a bridge to an exit for what are fundamentally strong businesses.

Another interesting area has been carve-outs. When businesses are carrying leverage, we've been able to carve-out some of that leverage against some of the assets in the business and repay some money to a sponsor by taking security over the receivables, for example. Steven Chait, IGF

Don Brown: Everything that has been said chimes with what we have seen across the deals we have advised on. Credit committees are definitely tougher. Due diligence has been enhanced and transactions that don't fit the box have been struggling to get approval. There is undoubtedly a much more selective approach to risk. On the borrower side, sponsors are cautious when it comes to putting extra money into portfolio companies and this is one of the main reasons we've seen deals fail. There is not an unwillingness from lenders to put debt in, but deals can end up stuck because the borrower can't raise the equity injection on which the debt is contingent. These scenarios, however, can open up opportunities for alternative lenders to step in and plug funding gaps between debt and equity; and also help sponsors who are under pressure to take money off the table and make distributions to investors.

RD: An uptick in refinancing is something that has been mentioned by everyone. During the next two to three years, there is a big maturity wall approaching. How does that play out, given that cost of capital is much higher than it was when this vintage of loans was first issued?

Morrow: The so-called ‘maturity cliff edge’ is a topic that comes up time and again, and I remember having this exact same conversation back in 2011-12. It's all about supply and demand, and if you step back for a moment and look at the private credit landscape specifically, the vast majority of private credit funds are focused on the mid and upper midmarket. There are large pools of capital to service companies at this end of the market, and lenders in this space can get creative and use holdco financings, preferred equity, PIK toggle and similar instruments to manage refinancings. In addition, the liquid high yield and levered loan markets will deliver capital solutions to a proportion of affected borrowers, and for the rest I’m sure ‘amend, extend and pretend’ will be prevalent for a while. When you look at businesses with Ebitda below the £7-8m threshold, however, the supply of capital is much tighter. That presents an interesting dynamic. If lower midmarket sponsors want to refinance in order to extend investment periods and wait for multiples to normalise, they may require larger financing packages to cover the longer hold periods. It is going to be interesting to see how lower midmarket lenders respond to that. Most private credit lenders in the lower midmarket can't hold more than £30m, and most top out at about £20m. When refinancing, companies
will either have to grow into a new, larger lender who has the capacity, or try and introduce a new lender into the club of existing lenders. While not common in the lower midmarket, there is precedent for club transactions among participants and an increasing willingness to facilitate some. I do think demand will outstrip supply in the lower midmarket, so there will be some tension.

Hyman: There is a cohort of legacy acquisition finance facilities that have approached or will be approaching maturity. We find ourselves in a very different credit environment today compared to when these loans were initially issued, so there will be instances where it may be suboptimal for sponsors to simply amend and extend existing facilities, as there may be a more economically efficient source of third-party capital available. Sponsors should use the opportunity to reappraise their options and consider alternatives to bank syndicate term loans when it’s time to refinance. For example, a conventional ABL revolver that can flex in line with a company’s working capital profile may be more fit for purpose for certain businesses, particularly if partnered with a more creative slice of credit fund debt to ensure day one and ongoing availability is maximised.

Chait: We've seen refinancings where debt funds are at the limit of their ticket sizes and have approached us to consider a carve-out of the receivables, which we've done. In these deals there is additional liquidity coming into the business as a result of a more flexible working capital facility secured against the receivables. We can get comfortable with these structures because of the secured nature of invoice financing.

Brown: The maturity wall is creating more space for creative structures, where other lenders can come in to help secure refinancing and lower financing costs. We have seen transactions, for example, where borrowers can refinance with an existing lender, but only at a much higher cost, and will look to bring in other lenders to lower the all-in cost of capital. Sometimes, a second lien structure can help firms avoid the need to sell the business at a discounted valuation multiple. So, there can be opportunities for ABLs here.

We find ourselves in a very different credit environment today compared to when these loans were initially issued, so there will be instances where it may be suboptimal for sponsors to simply amend and extend existing facilities, as there may be a more economically efficient source of third-party capital available.  Jake Hyman, Blazehill Capital

RD: How comfortable are different types of lenders when it comes to working with each other?

Buxton: That is a good question. At Investec, we have the ability to lead-underwrite or participate in larger deals and have developed a list of partners that we can share deals with and who are comfortable with having ABL and term loans in the same structure. We have completed a number of deals alongside a varied cohort of lenders, from traditional ABL lenders and private debt funds to high-street lenders, with lenders participating in the ABL, term loans or both tranches. Trusting your partners and understanding what their requirements are is essential for these partnerships to work and deliver. The key is getting that first deal over the line. Once the first deal is done and you have first-hand insight into a partner’s credit committee process and legal requirements, the process becomes smoother. That makes the intercreditor documentation much easier and it makes sharing deals much easier. With the recent re-emergence of club deals, we believe it is vital to have this capability in the current market.

Chait: Intercreditor agreements are much more advanced now and precedent has been set, which makes working with other lenders and the debt funds much more palatable. We've got so much more experience in the industry when it comes to building clubs of different lender groups, and most borrowers and advisers will know what we can and can't deliver. Good relationships have been built between lenders and with the sponsors. It has taken a long time but I think we're definitely in a good place.

Yaslak: We have worked with several lenders in the past, including Leumi and Secure Trust, and remain open to partnering with others where together we can offer the most optimal solution for our clients. As these types of partnerships have become more commonplace, it has allowed intercreditor precedents to be set, providing a smoother path for future transactions. In addition, it has demonstrated to sponsors and corporates that mainstream-alternative ABL club structures can offer the best structure in certain situations. BZ can lend from £20m to £150m, and at the higher range of ticket sizes there is an opportunity to partner with other lenders.

Chait: Relationships and reputation are critical. We all want to do bigger deals, control the collateral and control the transaction ourselves, but there is a maturity and recognition in the industry that sometimes deals do have to be split between a first lien and second lien lender, or put together by a club. Partnering with other lenders is a real focus for us at IGF and something we definitely want to do more of.

Morrow: Lending partnerships between term debt and working capital/ABL lenders are certainly possible and have many advantages in the right circumstances, but they are no panacea for an over-levered balance sheet. Just because it is possible to combine term debt with ABL financing, doesn’t mean that it’s necessarily the right thing to do. The quantum of debt won’t change and a borrower will still have to match interest costs to cashflows.

Barber: Ross makes a good point. Revolving ABL facilities are there to help generate liquidity as well as lower the overall cost of debt for borrowers and sponsors. By nature, working capital ABL revolvers are self-liquidating. Where challenges arise, it is normally because of a one off or ongoing cash-burn event and even the ABL revolver has become core borrowing. Problems don’t come out of nowhere, and lending clubs/syndicates and sponsors have to have honest discussions upfront about what the purpose of a financing deal is. Is the ABL adding liquidity because the business needs more working capital headroom, repaying some existing debt with a lower cost of capital to save on interest costs? Does this saving on interest costs actually stop cash burn? Is the ABL solution allowing for a turnaround/improvement plan to be implemented and actioned? Is it part of a new debt structure to effect a sale?

ABLs accept not every deal works out but we all want to make sure that borrowers have a runway to success as opposed to just adding liquidity to prolong the inevitable. It is crucial to have the conversations and join the dots because when you do, different lenders can work very well together. A private debt fund will want to be close to full-drawn and see its money at work and the ABL can do the revolving facility piece that the private credit fund can’t. While bringing an ABL into a structure can often generate extra liquidity on its own, sometimes the answer to getting the extra liquidity is to do it in conjunction with a balance sheet restructuring, with debt being taken off the table to provide companies with a chance to survive. ABLs have always had a role in all sorts of financing events over the years, especially in times of economic challenge or change. There is no reason why that won’t continue in the higher debt cost environment of today, even when there is more lender choice than ever.

ABLs accept not every deal works out but we all want to make sure that borrowers have a runway to success as opposed to just adding liquidity to prolong the inevitable. It is crucial to have the conversations and join the dots because when you do, different lenders can work very well together. Graham Barber, PNC Business Credit

RD: Given the dynamics involved in pulling clubs together, how easy (or not) is it to negotiate and agree on intercreditor documentation?

Barber: The intercreditor is always the elephant in the room that you have to address. When you are working through an intercreditor, it is important to take a few steps back and interrogate what is driving the need for a new financing facility. M&A is relatively easy to understand because you are all going in together and everybody has bought into the story. But if you are refinancing an existing deal and existing lenders, then something has changed. ABL is all about financing change but the question is what has changed and what that means the intercreditor should look like. What are you solving for? What does the sponsor really want? People like single-lender solutions because they're easier to understand and you are in control of what goes on. In the current environment, however, everyone has to accept that you can’t do every deal as a single lender. There have to be some trade-offs on the intercreditor to unlock more opportunities for everyone. That's just how it works. It requires all the parts of the puzzle to come together. The good news is that there is appetite to do it.

Holmes: For the last 18 months, we've been trying to establish relationships with alternative lenders, and the intercreditor agreement is always tricky. It is very difficult to agree a vanilla intercreditor when each transaction is different. Our approach has been to get as far as we can with standard intercreditor terms and then negotiate further details when a specific need or transaction arises.
We've made it a long way down the line with a number of lenders, but these transactions have unfortunately not always happened. You still see situations where one lender can come in and do the whole deal. Borrowers prefer that. That said, we will get there. I'm convinced that it's a matter of time because there are obvious benefits for borrowers in working with us and other lenders.

Hyman: This is an area that we've come to know really well over the last few years at Blazehill. We’re continuing to build on what is already a pretty comprehensive playbook and believe we have developed a strong reputation in the market for deliverability and commerciality, which are both critical, particularly on sponsor-led transactions. Over 75% of our existing deals are either structured with an ABL in a senior position ahead of a junior Blazehill hybrid term loan, or are structured on a bifurcated basis where each lender carves up separate security for themselves. The facilities are always bespoke to the situation and specific transaction dynamics, and the intercreditor agreements look very different across each of the deals. In the past, it has been notoriously difficult to partner a senior ABL with junior term debt, particularly when the junior term debt is stretching into the cashflows, due to competing interests between the two lenders. The cashflow lender wants to preserve enterprise value for as long as possible, while the ABL lender will always need to reserve the right to reduce advance rates, build in reserves and manage their position
carefully. That can be difficult for more traditional cashflow lenders to accept.

The rise of midmarket private credit funds, however, specifically private credit funds with an ABL heritage, has meant we’re starting to see these facilities executed on a more regular basis. Having sat the other side of the table in previous roles, we at Blazehill appreciate the core ABL principles are centred around having a certain level of borrowing base control, but we also understand that ABL as a product has come a long way since the ‘lender of last resort’ days, and that mainstream ABLs will invariably look to preserve enterprise value and avoid a liquidation at all costs, working collaboratively with all parties. Awareness of the ABL’s key priorities and approach to lending has made partnership between senior ABLs and junior credit funds possible – and that is very good news for sponsors and borrowers going forward.

Buxton: Whether a multi-lender or bilateral deal, the vast majority of deals that we do are on an integrated ABL and cashflow basis, with term lending typically between 1-3x of leverage on top of the ABL. The sizeable term lending element gives other parties – sponsors and other lenders – confidence because there is a natural alignment of interests between the debt tranches. In bilateral deals, an intercreditor would simply not be required. Because we are in both tranches of the debt structure, enterprise value preservation is always a key consideration in our credit decision-making and it would be self-harming to unduly alter ABL funding metrics to the detriment of our term loan position.

Holmes: To add to that point, in the discussions around intercreditors we have had during the last 18 months, many concerns come from preconceived ideas of ABL. We've all spoken about how much the ABL industry has grown but I think many of the concerns around the intercreditor emanate from how ABLs might have been viewed 10 years ago. But that is not what ABL is today. ABL has matured and evolved, prioritising a relationship-driven approach to meet the needs of our clients. I have been in situations where we are one of many parties involved and there is no need to turn to the intercreditor because there is a partnership and a determination to find the best outcome for all parties involved.

RD: Don, as the lawyer at the table, what have you observed with respect to intercreditors? Is it becoming easier?

Brown: As lawyers, there is nothing we like more than an intercreditor… especially a complicated one that needs a lot of legal focus! There is a whole area of the market where there are ABL club deals, which are just like any other syndicated transaction. Everyone is sharing the same security, has exposure to the same assets and is more or less aligned on enforcement strategy. Partnering ABLs with cashflow lenders, however, can be difficult and there are sometimes challenges at the intercreditor stage. It can be hard to get everybody on the same page, especially where the parties haven't worked together before, and even more so if the cashflow lender is working with an ABL for the first time. Each intercreditor discussion is different, because every deal is different, so agreeing a standard creditor agreement is hard.

But despite these challenges, we are seeing more and more examples in the market of ABLs and cashflow lenders working together successfully. There is more willingness to be flexible than previously. ABLs are getting more comfortable with tiered events of default, for example, where the ABL will accept different standstill periods, unless there's been something fundamental like a fraud requiring the ABL to act quickly. The emergence of hybrid lenders, who have one eye on the borrowing base analysis and another on the cashflow, has really helped to move the market on. We are also seeing examples of split lien structures – where one ABL lender will take a second lien position behind a senior ABL. These deals can sometimes be quite easy to negotiate because of both parties' familiarity with asset-based lending.

There is still a way to go but the market is coming closer together. Private equity sponsors are now much more comfortable with ABL as a potential solution than they were 10 years ago. As a result, we are seeing more and more deals succeed with cashflow and ABL, or split lien ABL, in the capital structure.

Apax-backed Palex Medical has acquired Duomed to create a European medtech distribution platform entirely focused on value-added products and services. 

Founded in 1955 and headquartered in Barcelona, Palex Medical is an independent medtech value-added distributor focused on Southern Europe and providing a diverse range of products and services to more than 2,000 customers, targeting the hospital market.

Headquartered in Belgium, Duomed is a European medtech distributor, specialising in endoscopy, surgery, critical care, medical imaging, physiology monitoring and infection control, with expertise across 17 therapeutic areas.

The acquisition aims to create a pan-European medtech distribution platform able to provide medical technology equipment and solutions across Northern, Western and Southern Europe. 

The combined group would benefit from an expanded geographic footprint, a strengthened product portfolio and therapeutic area coverage, which would help customers and enhance their value proposition, Palex said in a statement. 

Apax first invested in Palex in July 2023, alongside GP Freeman Capital, which first invested in December 2021.

Following the transaction, Apax and Freeman said they would partner with Palex’s management team to help drive future value creation and pursue international growth, according to a statement from the GPs. 

Palex also recently completed the acquisition of Izasa, a medical equipment manufacturer based in Spain, following European expansion plans.

Apax eyes opportunities across four global sectors – tech, services, healthcare and internet consumer services. 

The GP recently acquired payroll provider Zellis Group from Bain Capital. Find more info on the deal here. 

Magnesium Capital, a private equity firm focusing on energy-transition investments, has closed its inaugural fund on its hard-cap of €135m.

Magnesium Capital I started raising funds in April last year and has exceeded its initial target of €100m. 

Based in London, Magnesium invests in profitable European companies that positively impact the decarbonisation of the production, distribution and consumption of energy through technology and tech-enabled services. 

According to the firm, the fund has received commitments from “bluechip” institutional investors from the US, Europe and the UK, including fund-of-funds, investment advisers, asset managers and family offices.

The vehicle has made three investments so far. 

Magnesium Capital has already exited two investments for 4.2x gross MOIC, the firm said in a statement. 

ADVISERS

Triago (placement agent)
Simpson Thacher & Bartlett (legal) 
PwC (tax)

All Seas Capital has secured a “significant minority” stake in Reducate EdTech Group, an online continuing professional education (CPE) platform with strong foundations in the Netherlands and Denmark.

According to All Seas Capital, the company is actively seeking edtech entrepreneurs and companies in the CPE market to join forces with. The investment, therefore, would accelerate the company’s European growth strategy, the investment firm said in a statement. 

Reducate operates through 11 brands, serving more than 175,000 professionals across Europe in more than 40 different professions. The online professional development company recently acquired E-WISE and Blueprint Learning to its portfolio of e-learning courses.

All Seas Capital’s co-founder Marc Ciancimino and director Charlie Budenberg will join Reducate’s board.

For All Seas, which was established in 2019, the deal marks its first investment in the Netherlands. The firm invests with a combination of debt and minority equity. 

The investment has been made by All Seas’ maiden fund, All Seas Capital I, which closed last year with commitments of $400m (including co-investments).

ADVISERS

Lincoln International (corporate finance)
De Brauw Blackstone Westbrook and De Breij (legal) 
Strategy& (commercial due diligence) 
Deloitte and RSM (financial and tax due diligence) 
EY (structuring)

Equistone Partners Europe has exited its majority stake in work-platform lifts company Acces Industrie to Delmas Investissements & Participations, a Bordeaux-based family investment group active in the energy, handling, lifting and transport sectors. 

Financial terms of the deal were undisclosed. 

Acces is a rental specialist of mobile aerial-work platforms and related handling equipment, which was acquired by Equistone in 2020. 

During Equistone’s four-year hold, Acces’s presence expanded domestically, with the acquisition of Watine Manutention in October 2023 and Uping in 2022. The latter marked the company’s entry into the Spanish market. 

The private equity firm’s value creation levers saw the company’s headcount grow from 445 to 650 people, while revenue grew from €90m in 2020 to €140m in 2023.

The divestment represents Equistone’s third exit in the French market since December.

ADVISERS

Equistone
Natixis Partners (corporate finance)
Goodwin Procter (legal)
8 Advisory (financial due diligence)
Roland Berger (commercial due diligence)
EY (tax)

Management
Duroc Partners (legal)

Delmas Investissements
Clearwater International (corporate finance)
Hogan Lovells (legal) 
Deloitte (financial due diligence)

FairCap has acquired the company that operates the Överum agricultural plough business in Sweden (to be renamed Overum AB) from Italian-American multinational corporation CNH Industrial N.V.

Headquartered in Överum, Sweden, Överum AB specialises in the manufacture of agricultural machinery, with a particular focus on ploughs. 

In terms of value creation, the GP will support Överum in its changing course towards an exclusive focus on plough manufacturing and spare parts, the GP said in a statement.

It added that improving social, environmental and economic aspects of the business will also represent a "key element" of its future strategy. 

According to FairCap, the carve-out transaction was "complex" and involved both FairCap’s Italian and German offices.

The GP notes that ploughing has been a core agricultural tool of importance for many centuries and will continue to remain a necessity for soil cultivation, especially for weed control in organic farming as it does not allow the use of chemical herbicides. 

With offices in Munich, London and Milan, FairCap specialises in acquiring small and medium-sized companies in special situations (carve-out, turnaround, succession) with the aim to transform them into sustainable businesses while taking financial, ecological and social aspects into account, its website says. 

Current investments include: manufacturer of technical springs for the agricultural and automotive sectors S & P Federnwerk GmbH & Co; manufacturer of wire springs, pressed and bent parts Stumpp + Schüle; and electronic applications manufacturer Exprotec Group.

FCDE has acquired a majority stake in Kermel from French investment firm Qualium Investissement.

Founded in 1992 and headquartered in Colmar, France, Kermel specialises in the development, design and production of high-performance technical textile fibre for the manufacture of fire-resistant personal protective garments for firefighters, military personnel, police forces and industry workers. 

Kermel’s management team, led by CEO Philippe Declerck, has also invested in the firm.

The deal was completed via FCDE’s FCDE Independent Fund II, which closed in April 2023.

In terms of value creation, the GP will support Kermel towards consolidating its European geographical footprint and development strategy, with a particular focus on France and Germany.  

The GP also seeks to further bolster Kermel’s presence in North America, which now accounts for about 40% of its business. 

Kermel generated sales of about €50m in 2023, the GP said in a statement. 

Since its inception, FCDE has supported more than 30 businesses. Its current portfolio includes electronic identity documents manufacturer Selp, customised fixtures and fittings specialist Lindera, and medical devices producer Didactic. 

ADVISERS

FCDE
EY (financial)
Gramond & Associés (tax, legal)
Indefi (sustainability due diligence)
Ramboll (environmental due diligence)
Gibson, Dunn & Crutcher (legal)
Natixis Partners (M&A)
Duroc Partners (financial)

Qualium Investissement
DC Advisory (M&A)
Accuracy (financial due diligence)
LEK (strategic due diligence)
ERM (environmental due diligence)
DLA Piper (legal)
Kartesia (financing)

London-based GP Cairngorm Capital Partners has sold MRO Plus Solutions Group (MRO+) to NVM Private Equity. 

Headquartered in Grimsby, Lincolnshire, MRO is a specialist distributor of critical industrial components to diverse end markets. 

The business was formed by Cairngorm Capital in 2018 with the acquisitions of MJ Wilson Group and Helix Tool Company. 

MJ Wilson is a national provider of flow and process instrumentation products, while Helix is a market-leading distributor of carbide cutting tools in the north of England. 

During Cairngorm Capital’s holding period, MRO+ expanded its product offering with a particular focus on strengthening its technical expertise, which resulted in its technical sales staff rising to more than 90 specialists.

The GP also supported MRO+ in its geographical expansion across the UK, broadening its geographic branch footprint, with the business currently operating from seven sites.

In 2019, MRO+ acquired Support Instrumentation, a process instrumentation company with expertise in bespoke instrumentation implementation, headquartered in Edenbridge, Kent.

Further growth is being delivered throughout 2024, with MRO+ expecting to deliver a revenue CAGR of 18%, according to a statement by Cairngorm Capital.

Cairngorm Capital eyes opportunities in the UK and the US. It focuses on midmarket growth companies, operating in a range of sectors including maintenance and improvement of properties, wealth management and sustainability. 

ADVISERS

Cairngorm Capital and MRO+
Rothschild & Co (corporate finance)
BDO (financial and tax)
Browne Jacobson (legal)
Johnston Carmichael (tax structuring) 
H2Glenfern (presentation)

NVM
Fairgrove (commercial due diligence)
BDO (financial due diligence)
Continuum (management due diligence)
Lockton (insurance due diligence)
Deloitte  (tax structuring)
Arrowpoint Advisory (corporate finance)
Browne Jacobson (law)

Genesis Capital has acquired a majority stake in Carussel.

Established in 2003, Carussel is a Hungarian provider of digital tools for the automotive industry, with a client base including car dealerships, distributors and manufacturers across Europe.

The business focuses on the development and operation of modular dealership management systems, offering a portfolio of online marketing services such as communication, web development, design and project management.

Carussel's founder, Mario Della Donna, and its current CEO, András Müller, have also invested in the firm. 

The deal was completed via Genesis Capital's Genesis Growth Equity Fund I (GGEF I). With a size of €40m, GGEF I launched in November 2019 and provides ticket sizes of €1-6m, targeting firms with EVs of up to €12m.

In terms of value creation, the GP is eyeing internationalisation, further seeking to develop the business/client offering and expand the company's geographical presence via organic growth and acquisitions, it said in a statement.

The GP believes Carussel is well positioned to capitalise on the ongoing digital transformation within the automotive and car dealership industries, which have been facing general underdevelopment from an IT perspective, it added.

GGEF I eyes investments in small and medium-sized companies in the CEE region, with sectors of interest including value-added manufacturing, specialty engineering, technology-enabled products and services, digitalisation-related business models, new energy technologies, and business and consumer services.

In terms of deal types, it seeks growth equity investments, buyouts and recapitalisations.

Its current investor base includes mainly international and local institutions such as the European Investment Fund (EIF), Amundi Czech Republic, Kooperativa pojišťovna and Česká podnikatelská pojišťovna (both part of the Vienna Insurance Group), as well as financial groups RSJ Investments and Sirius Investments, and Czech family office SPM Capital.

Carussel serves more than 6,000 car dealerships across 50-plus European countries.

Genesis Capital’s GGEF I recently marked its first exit with the divestment of its stake in Homecare Holding to Penta Hospitals CZ. Read more about the sale here. 

ADVISERS

Genesis Growth
Kinstellar (legal adviser)
Amplify Consulting (financial adviser)
Ecovis (tax adviser)

Carousel
EY (transaction adviser)
Oppenheim (legal advice)

Global investment bank Lincoln International has appointed Lewis Gray as managing director in the firm’s business services group in London.

Gray joins after serving a decade at Arrowpoint Advisory, a vertical of Rothschild & Co where he was a director in the business services midmarket mergers and acquisitions advisory practice. He started his career at PwC.

In his new role, the investment banker will provide mergers and acquisitions advisory services to financial sponsors, entrepreneurs, large corporates and management teams, with a focus on legal services, human capital management, professional services and consultancy.

Lincoln’s global business services group now includes 18 managing directors and more than 80 professionals in the Americas, Asia and Europe.

Following a seven-year hold, Bain Capital has sold payroll provider Zellis Group to Apax Partners. 

Formerly known as NGA Human Resources, Zellis Group provides payroll and HR software solutions to customers in the UK and Ireland. The company is headquartered in Bristol, with operations in the UK, Ireland, India and the Philippines. 

According to a report by Bloomberg, the sale is valued at £1.25bn. Zellis Group counts Harrods, Iceland and Jaguar among its clients. 

According to Bain Capital, which acquired the business in 2017, the sponsor established a new leadership team across all divisions, focusing on software innovation and customer excellence. In the past seven years, Zellis Group has strengthened its core cloud-based HR and payroll offerings, and added a benefits-administration software platform through the 2018 acquisition of Benefex, Bain Capital said in a statement. 

The company serves approximately one-third of the FTSE 100, with its payroll software used to pay or reward about five million individuals each month. The company’s Benefex business helps more than 900 companies across more than 90 countries through its benefits, wellbeing, rewards and recognition, and communications platform.

According to James Stevens, managing director at Bain Capital, Zellis has delivered a 20% annual organic growth during the past three years.

ADVISERS

Zellis and Bain Capital
Evercore and Morgan Stanley (corporate finance)
Ropes & Gray (legal)

Apax Partners
Kirkland & Ellis and Weil, Gotshal & Manges (legal)
Arma Partners (corporate finance)

BGF has completed an investment of £6.25m in Skewb, a consultant for digital transformation products and services to the energy and water sector.

The funding will support expansion of the company’s suite of products and services. 

Established in 2018, Skewb employs a staff of 170 and was founded in 2018 in Warwick. 

In the last 18 months, the business has developed proprietary software and services addressing several business process areas such as connections, developer services, water leakage and water demand, as well as emergency and repair, enabling customers to comply with obligations and be cost-efficient.

The deal was led by Nick Holder, David Bellis and Kyle Long, investors from BGF’s Midlands team. Holder will also join the Skewb board.

As part of the investment, an independent non-executive chair will be appointed by BGF.

ADVISERS

Clearwater (corporate finance)
Freeths and Browne Jacobson (legal)
Fairgrove (commercial due diligence)
Claritas (tax)

Two Magnolias, an emerging venture capital (VC) firm, prides itself on its uniqueness. According to its co-founders, Jessica Rasmussen and Marie Korde, what makes Two Magnolias special is the fact that they are one of, if not the only, early-stage VC firms in the UK led by a diverse all-female team, investing in impact under the pillars of sustainability and human health with an extensive focus on founders who are underrepresented – not just in terms of gender and ethincity but also geography. 

In an industry that's historically been dominated by men, the duo stands out in its approach towards embracing diversity every step of the way.

Real Deals sits down with the co-founders to understand more about their investment thesis and the significance of diversity in the venture capital world. 

What led to the establishment of Two Magnolias?

Jessica Rasmussen (JS): Two Magnolias’ co-founder Marie Korde and I have 50 years of experience in the financial services industry between both of us and worked together for six years at Bank of America Merrill Lynch. In 2019, we decided to leave banking to pursue private markets and established Two Magnolias initially as an angel investment fund to invest our capital. 

Since its inception, our investment pillars have been sustainability and human health. We believe these verticals are high growth and offer great opportunities to make significant returns over the next decade. After setting up Two Magnolias, we spent the first two years investing our personal capital while simultaneously strategising about the venture capital market because our end goal was to start a fund. Our research found many gaps in the UK venture capital market and this presented a huge opportunity for us.

Marie Korde (MK): In our observation, only a nominal amount of capital flows to female founders and those who are ethnically diverse and underrepresented. In terms of regions, London and the Southeast [of England] attract disproportionately more private investment than other regions. Through Two Magnolias, we aim to convert these gaps into opportunities and truly embrace diversity every step of the way.

Which fund are you currently investing from and what does your portfolio look like?

MK: We started raising our maiden fund in 2022 and held the first close in October. We’re delighted to share that we are in the final throes of closing the fund in what has been an extremely challenging fundraising environment, particularly for emerging managers. We spent much of last year building our extensive portfolio pipeline and now support eight companies, with three to four more in due diligence. Towards the end of 2024, we will be raising our second fund, the blueprint of which is already complete. 

Why do you think there are only a handful of female-led private investment firms in Europe and what implications does this have on the ecosystem?

JR: It's quite unusual in the UK for two finance professionals to pivot from a long career in one sector to private capital – but it shouldn't be the case and certainly isn’t in other geographies like the US. Our decision to move on from our careers in banking and set up a venture fund was shaped to a large extent by the realisation that there aren't that many female investors in the UK. According to a recent report by Ada Ventures, only 23 women in the UK have a significant GP stake in a venture capital fund, which seems rather shocking considering there are nearly 550 active VC and PE firms in the UK. 

MK: Not having enough women at the very top consequently has a bearing on the flow and control of capital. It naturally follows the philosophy that if we have more female GPs, it should be easier for female-led businesses to receive investment. In fact, however you cut it, female entrepreneurs are generally two to three times more likely to receive funding from female investors.

Our decision to move on from our careers in banking and set up a venture fund was shaped to a large extent by the realisation that there aren't that many female investors in the UK
Jessica Rasmussen, Two Magnolias 

It’s difficult to be an emerging manager in today’s environment. What kind of challenges have you encountered since you set up your business?

JR: As new entrants into this market, we have observed a one-dimensional approach to VC in the UK, with incumbents with very similar profiles and backgrounds. This poses a great challenge for emerging managers with diverse backgrounds who look and think differently.

MK: When raising a first-time fund, there's a lot of focus on having a ‘venture capital’-specific track record, which we don’t think is the right approach. Competence, intelligence, gravitas and the many years of finance or business-related experience that lend themselves to being successful in venture capital should also be considered. In our opinion, female VCs are subjected to many more questions and justifications around their track record and career choices, which shouldn’t be the case.

Female VCs are subjected to many more questions and justifications around their track record and career choices, which shouldn’t be the case
Marie Korde, Two Magnolias

Why is diversity in venture capital so important?

JR: Diversifying the control of capital can help to diversify the flow of capital. Once that happens, capital will naturally flow to female and underrepresented founders. The venture capital industry is driven by robust returns, and research time and again has said that diverse investment teams and balanced portfolios have the potential to yield those returns. 

MR: What makes Two Magnolias special is the fact that we are the only investment firm in the UK which is led by an all-female team, investing in impact under the pillars of sustainability and human health with an extensive focus on underrepresented founders. Across our portfolio, 37% [of companies] have at least one female founder and 50% of founders come from ethnically diverse backgrounds.

The UK’s Department for Business and Trade recently launched a taskforce to invest in women. How do you view this development?

JR: The establishment of the Invest in Women taskforce by the government, along with the allocation of a £250m investment fund, marks a significant and commendable step forward. It signals progress in the right direction. However, for real and comprehensive change to occur, we must also focus on cultivating a more inclusive venture capital industry. It's imperative that women and ethnically diverse GPs receive funding support. This approach ensures that the entire ecosystem operates synergistically, acting as a dual force to profoundly transform the private capital landscape for a new generation of entrepreneurs.

Apheon (formerly Ergon Capital) has sold its majority stake in Italian luxury brand Visionnaire after a 10-year holding period. 

Established by the Cavalli family in 1959, Bologna-based Visionnaire is a designer of bespoke luxury furniture. Visionnaire operates in more than 55 countries.

The sale has been made to FOREL, an advisory company of FARO Alternative Investments, a Luxembourg-based vehicle aiming to raise €1bn.

Led by Marco Bizzarri, former CEO of Gucci, the vehicle is managed by Crestbridge and invests in fashion, luxury and design. As part of the transaction, Leopoldo and Eleonore Cavalli will reinvest in the company and continue in their positions of CEO and creative director respectively.

Apheon secured a majority stake in 2014 through an LBO using its Apheon MidCap Buyout Fund III. For the vehicle – which closed on €508m – the Visionnaire exit represents its final sale. 

The Spanish sponsor’s value creation thesis saw the company undergo a full management build-out across different functions and refocus its strategy from a concentrated end clientele in Eastern Europe, to addressing the global market by driving expansion internationally. 

Visionnaire has since opened five showrooms – in Los Angeles, Miami, Hong Kong, London and Dubai – and has expanded its exclusive mono-brand network to more than 25 stores today.

According to Apheon, it also doubled down on the company’s sustainability strategy, introducing a more sustainable materials sourcing and production process to reduce the brand’s environmental impact. 

ADVISERS

Lazard (corporate finance)
PwC (financial due diligence)
GOP (legal due diligence) 

Bowmark Capital has sold Focus Group to London-based Hg.

According to media reports, the transaction values Focus Group at just under £800m including debt. Bowmark secured a 25% stake in Focus Group in 2020 at a valuation of about £225m.

Founded in 2003 in Shoreham-by-Sea, UK-based Focus Group offers digital workplace solutions, including communications, software services, connectivity and value-added IT services to more than 30,000 SMEs.

During Bowmark's holding period, Focus Group tripled revenues, expanded its solutions and completed 21 acquisitions, the GP said in a statement. Its most recent add-on is Pinnacle, an IT, telecoms and mobile provider based in Bristol.

According to the GP, the "solid" add-on strategy allowed the firm to broaden its coverage across the UK and significantly expand its range of services and technologies solutions.

Focus Group has revenues in excess of £250m, Bowmark Capital said in a statement.

Established in 1997, Bowmark Capital specialises in backing technology, data and services companies, and has made more than 50 investments since inception.

The firm invests up to £300m per transaction through majority or significant minority stakes.

ADVISERS

Focus Group and Bowmark
Houlihan Lokey (corporate finance)
Osborne Clarke (legal)

Hg
Arma Partners (corporate finance)
Linklaters (legal)

CVC, one of Europe’s largest private equity groups, has announced its intention to launch an offering and list on Euronext Amsterdam. 

The sponsor is looking to raise €1.25bn.

Headquartered in Luxembourg, CVC has nearly €190bn in assets and has twice postponed its plans to go public – once in 2022 and then again in 2023. 

The offering (excluding shares that may be transferred pursuant to an over-allotment option) will consist of a mix of existing and newly issued shares, with an expected primary component of approximately €250m. 

The selling shareholders are expected to include Danube Investment, Kuwait Investment Authority, Stratosphere Finance (wholly owned company by the Government of the Hong Kong Special Administrative Region), CellCo and CVC Nominees.

The IPO is expected to see US-based investment firm Blue Owl commit up to 10% of the expected offering, increasing its shareholding from the approximately 8% interest it acquired in CVC in November 2021.

CVC has appointed Goldman Sachs, JP Morgan and Morgan Stanley as joint global coordinators. 

JOINT BOOKRUNNERS

ABN AMRO Bank (in cooperation with ODDO BHF)
Barclays Bank
BNP Paribas
Merrill Lynch
Citi
Deutsche Bank
ING Bank
UBS

Genesis Capital's has marked the first exit from its Genesis Growth Equity Fund I (GGEF I) with the divestment of its stake in Homecare Holding to Penta Hospitals CZ.

Homecare Holding is a home healthcare provider in the Czech Republic, with regional operations in Prague and Pilsen.

With about 50 nurses, the company provides post-operative care, monitoring patients' conditions in a home setting, administers medications, and focuses also on specialised procedures such as peritoneal dialysis, parenteral nutrition administration, and wound care.

Genesis Capital first invested in the portfolio company through its Genesis Growth Equity Fund I in 2020.

Since then, the GP has supported the digitalisation of the business, implemented a new management team and integrated bolt-on acquisitions.

Penta Hospitals is already providing home care in several regions of the Czech Republic. As a result of the Homecare Holding acquisition, Penta Hospitals will become one of the largest entities providing home healthcare in the Czech Republic, employing nearly 100 nurses, the GP said in a statement. 

Deeptech growth investor Jolt Capital has appointed Zineb Semlali as director of investor relations, based in Paris.

Reporting to Jean Schmitt, chairman and managing partner at Jolt, Semlali will play an active role in the company's fundraising efforts. 

She will be responsible for contributing to the development of client relations, and for maintaining and expanding the company's international sales footprint.

Semlali joins Jolt from Cathay Capital, where she supported fundraising, marketing, and responding to investor needs since 2021.

Prior to that, she gained experience as an M&A analyst with MBA Capital, as well as within SCOR's investor relations team.

Located in Paris, Lausanne, Copenhagen and Milan, Jolt invests in European B2B companies with revenues between €10m and €50m.

Beyond Capital Partners has held the final close of its third fund, Beyond Capital Partners Fund III, at its hard-cap of €180m.

Further fund-of-funds from continental Europe were acquired as LPs, in addition to the capital commitment from all institutional investors existing in the predecessor fund.

More than 10% of the fund volume is provided by Beyond Capital Partners and 'Beyond Family & Friends'.

The new fund will continue to acquire majority stakes in profitable DACH companies with enterprise values of up to €50m.

The GP has typically focused on asset-light business models in the areas of B2B services, IT services, software, healthcare, lifestyle and entertainment.

The fund, registered as Article 8+ under the EU's SFDR, has already made two platform investments, as well as its first bolt-on acquisition.

ADVISERS

Beyond Capital Partners
Triago (placement agent)
Clifford Chance (legal)

Triton's sale of data collection company Norstat was the culmination of a strategy at the firm to keep the exit in mind from the outset, Daniel Björklund, investment advisory professional at Triton, tells Real Deals.

“Our approach to exits is to start preparing from day one, identify likely buyers early and try to help build the company into what we understand acquirers want,” Björklund highlights. 

The decision to start an actual sales process for Norstat began in autumn 2023, following the progress that the market researcher had made in internationalising across Europe, consolidating its fragmented market, as well as its consistent strong financial performance, Björklund highlights.

The sale was completed via Triton’s Smaller Mid-Cap Fund I. 

The firm sold Norstat to Swedish investment firm Nalka Invest, partnering with Danish GP Kirk Kapital.

Established in Norway in 1997, Norstat is a data collector for market research and insight in Europe. 

The firm uses research methods to collect data about any desired topic or target group, with services including UX and UI design, brand performance, pricing and audience segmentation. With its services, the business aims to help customers make better data-driven decisions for their businesses.

Our approach to exits is to start preparing from day one, identify likely buyers early and try to help build the company into what we understand acquirers want

The fund seeks to invest in German-speaking and Nordic-based mid-cap companies in the industrials, business services and consumer/health sectors through a typical equity investment of €20m to €50m.

Value creation pillars 

Triton started closely tracking Norstat in 2017 and then acquired the company from a Norwegian family office in 2019 through a proprietary sales process, according to Björklund.

“A significant amount of Triton's investment activity involves family-owned companies, and that experience coupled with our knowledge of the sector helped us understand what was needed and agree on an attractive deal," he explains. 

The GP saw a clear path for the company to be transformed from a strong Nordic player to a pan-European market leader through both organic growth and strategic acquisitions, Björklund adds.

“We also knew there were significant opportunities to be captured due to changing dynamics in the data-collection market, due to the shift to online-based services," he highlights.

International standards

During the four years since the investment, Triton has been focusing on strengthening Norstat’s reputation as a consumer data-collection platform across Europe. 

Björklund explains how Triton identified various avenues for creating value, including how to capitalise on strong organic growth propelled by increased demand for consumer data in a shifting macro environment; to expand Norstat's geographical reach and become a pan-European player; and to expand margins by transitioning from offline to online data collection. 

A particular focus of the GP was on supporting the company through strengthening its commercial capabilities, improving its operations (including automation of processes), and adding new digital products and solutions such as Norstat Express and TestingTime.

Norstat completed and integrated seven acquisitions strategically to bolster its market position and capabilities under Triton’s ownership

“Furthermore, Norstat completed and integrated seven acquisitions strategically to bolster its market position and capabilities under Triton’s ownership,” he adds.

These add-ons were completed in Switzerland, Denmark, the Netherlands, Norway and the UK from 2021 to 2023, and include specialist research services for arts and cultural sector organisations CG Research, qualitative research specialist Respondenten.nl and market research firm Userneeds. 

Today, Norstat serves more than 2,000 market research firms, private and public end clients, media and advertising agencies, publishers, and consultancies across different industries.

The firm has a presence in Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Germany, the UK, France, Switzerland, the Netherlands, Austria and Italy.

Strong culture

When asked if there were any mishaps during the investment cycle, Björklund says: “Norstat was a very well-functioning company already when we acquired it. If anything, having a strong culture and operating model can be a challenge when expanding through acquisitions.”

According to the investment professional, integration following M&As are often iterative processes, where GPs create the new company together. 

“With Norstat we were very clear about what we wanted to build on, and that we wanted to see progress fast,” Björklund notes.

Norstat was a very well-functioning company already when we acquired it. If anything, having a strong culture and operating model can be a challenge when expanding through acquisitions

“To be successful has required a lot of hard and dedicated work, where I believe that Triton’s model of bringing in our own specialised experts, and our longstanding capabilities and experience in M&A integration, were instrumental,” he concludes.

Founded in 1997, Triton is a European midmarket sector-specialist investor. It eyes three core sectors of business services, industrial tech and healthcare. Its strategies include midmarket private equity, smaller mid-cap private equity, and opportunistic credit.

ADVISERS

Norstat and Triton
William Blair (corporate finance)

Dutch firm Karmijin Kapitaal has acquired a majority stake in InvesTree.

Based in the Netherlands, InvesTree specialises in the conservation and management of trees. 

The firm provides services including tree inspections, growth and transplantability research for European municipalities and water authorities, with a particular focus on the Netherlands, with the aim of making urban environments greener and creating biodiversity in urban and suburban areas.

The business is the parent company of four businesses: Bomenwacht, De Boomadviseurs, Grib and Bomenbanen. These companies collectively offer solutions for tree-related planning in public spaces, focusing on areas of expertise that include specialist advice, tree inspections, tree software and data, and tree-specialist talent development.

With the deal, Karmijn Kapitaal aims to support InvesTree as it strengthens its capabilities in the field of tree preservation and management.

In terms of value creation, a particular focus will be given to further professionalising and expanding InvesTree’s software platform and management team expansion.

The current management will remain in their positions, the GP said in a statement. 

Karmijn Kapitaal and InvesTree share the ambition to make the Netherlands and countries within Europe greener, the GP and the business said in a statement. 

Headquartered in Amsterdam, the Netherlands, Karmijn Kapitaal specialises in investments in Dutch SMEs. Its portfolio includes companies active in biogas, art and culture, clothing and beer.

The GP received B-Corp certification in September 2023. 

Mentha has acquired a majority stake in metal-coatings company SPC Group in Belgium.

The portco's founders, Anthony Demaerel and Yves de Mild, and broader management team will remain shareholders and responsible for the daily management of the business.

Established in 2021, Belgium-based SPC specialises in protective coatings within the metal industry, serving clients in energy, infrastructure and industry. 

Mentha investment manager Ruben Stove said: "Regulations and associated compliance requirements are becoming increasingly strict, where scale and expertise only work in favour of players like SPC."

On the deal, De Mild added: "In addition to sector experience and a broad network in the Netherlands, Mentha shares the same no-nonsense approach and entrepreneurial culture as SPC."

The portfolio company will aim for faster international growth, both organically and through acquisitions, with the Netherlands as the initial focus. That said, further expansion in Belgium remains on the agenda.

Armen has appointed Christine Panier as a senior executive adviser in its Paris office

Panier will participate in the selection of management companies that the European GP stakes firm aims to invest in.

Her track record includes a 16-year stint at the European Investment Fund (EIF) as head of Western Europe, overseeing the lower midmarket.

The private equity veteran began her career at Banexi (BNP Paribas Group) in 1988. Latterly, she joined Euromezzanine to lead the origination and monitoring of investments in hybrid debt/equity financing for LBOs.

In 1999, she joined Axa Private Equity (now Ardian) to set up and run the venture division, which she did for seven years.

Learn more about Armen here.

MML Capital-backed Zanders has acquired Dutch consultancy RiskQuest.

Headquartered in Amsterdam, the Netherlands, RiskQuest is a risk consultancy firm providing a range of services including financial-risk modelling, data science and data-foundation strategies. 

Founded in 1994, Zanders is a treasury and risk consulting firm with more than 200 employees across seven offices in Europe, the US and Asia.

In terms of value creation, MML Capital aims to support the business as it further strengthens its presence in the European market, the GP said in a statement.

With the bolt-on, Zanders expands its global team to 450 professionals across 11 offices spread across Europe, the Middle East, the US and Asia, also consolidating a wider service expertise and product portfolio for its international client base. 

The deal includes the acquisition of a software solution suite that will further broaden and strengthen Zanders’ cloud-based software offering, with a particular focus on the areas of credit risk, ESG and financial economic crime.  

The bolt-on follows the acquisition of consulting firm Optimus Prime in January 2023 and management consultant Fintegral in July 2023. 

MML Capital first invested a minority stake in Zanders in October 2021. At the time, MML Capital said the transaction would facilitate Zanders’ growth plans for internationalisation and further bolt-on acquisitions. 

With offices in London, Paris, Dublin and New York, MML Capital supports European and US-based businesses by providing capital for organic and acquisitive growth, both on a local and international basis.

Current investments include communications and IT specialist ARO, independent fostering agency BSN Social Care, and freelance-focused service platform Freeland.

ADVISERS

Zanders
Pinsent Masons
Grant Thornton
DC Advisory
ABN AMRO

Lakestar has closed its latest funds, Lakestar Early IV and Lakestar Growth II, on c. $600m.

LPs included insurance companies, pension funds, sovereign wealth funds, family offices, funds-of-funds and founders.

More than half of the funds' capital comes from Europe, followed by Asia and MENA.

The dedicated early-stage and growth funds will focus their investments on Europe in sectors such as AI, digitalisation, deeptech, healthcare and fintech.

Nurturing businesses from seed to Series-B and beyond, the investor will aim to provide founders with "the resources, mentorship and network needed to succeed".

The new funds have already led investments in tech companies such as energy supplier platform Fuse Energy (UK), embedded finance solution Swan (France), healthtech company Nelly (Germany), NEKO Health (Sweden), a preventative healthcare technology company co-founded by Spotify CEO Daniel Ek, and AI text-to-video technology platform Colossyan (UK/Hungary).

The close brings Lakestar’s assets under management to €2bn. It is supported by a team of 40, spanning 15 nationalities across London, Berlin and Zurich.

The go-to touring agent for stars including Beyonce, Jay-Z and Rihanna had an understandably tough few years during the pandemic. So it was worth its private equity owners delaying an exit to allow the business to recover – a wait that was rewarded.

Apiary Capital ended up chalking up a 4x return on its sale of TAG, formerly The Appointment Group, when it handed the company over to ECI Partners, in a deal announced this week.

The divestment of TAG – which was acquired by the lower midmarket firm in 2018 – marks the first exit for Apiary Capital. 

Speaking to Real Deals, Apiary's managing partner Mark Salter says: "We held TAG for six years, in part because we had a pandemic in the middle which impacted the business. Despite that, TAG bounced back strongly. By the end of 2022, TAG started earning revenue and Ebitda which was pretty much in line with our original business plan. However, we needed to show that the recovery from the pandemic was sustainable, which is why we continued to hold it for a couple of years post-pandemic.”

The primary buyout deal saw Apiary become the first institutional investor in TAG in 2018.

We needed to show that the recovery from the pandemic was sustainable, which is why we continued to hold TAG for a couple of years post-pandemic
Mark Salter, Apiary Capital

While both parties declined to reveal the financials of the transaction, a source familiar with the situation told Real Deals that the business was earning an Ebitda of £4.5m at the time of Apiary’s investment, which the sponsor scaled to £20m in six years.

Media reports place the deal in the £100-150m range. 

A difficult time 

Focused on the entertainment sector, TAG’s repertoire also includes live events in addition to film and TV production. While bands were no longer touring during the pandemic, there was a fair bit of business for TAG in film and TV production, including supporting projects such as Marvel films (shot in Covid bubbles in Australia), which helped keep the company afloat. Even so, Salter describes the period as “pretty difficult”.

To help the company overcome these hurdles, Apiary extended some financial support to TAG in 2020 with the expectation that the company would acquire some market share from other businesses if it continued to serve customers. 

“Having a good management team meant they were able to continue in business calmly and confidently through what was a very difficult period,” the managing partner observes. 

During its six-year hold, Apiary helped TAG complete eight acquisitions and supported the company’s consolidation strategy. On the organic growth side, the firm introduced a “strong” C-suite within the business and invested in technological infrastructure. 

Salter highlights: “Apiary’s initial investment was about £15m, on top of which we extended around £8m to the company to facilitate its bolt-ons. In total, Apiary invested around £23.5m in the business.” 

ECI Partners, which is taking the reins of the business, says it has known TAG since Apiary invested in the business in 2018 and has been tracking the company since then. “We have a long track record in the travel sector and immediately recognised TAG as being a high-touch market leader. Businesses that operate as leaders in their niche because of that level of service tend to win time and time again, which is what got us excited about TAG,” explains investment director Rory Nath.

ECI spent the last year getting to know the business and building relationships. In terms of value creation, Nath outlines that there are some exciting geographies the business is growing into, including Latin America via its Miami office, and that ECI is keen to find more such opportunities and help the business enter new markets. The deal is backed by the firm's 12th fund, which raised £1bn last year.

We have a long track record in the travel sector and immediately recognised TAG as being a high-touch market leader
Rory Nath, ECI Partners

Rothschild was appointed by Apiary to run the sale process, which included both PE and trade buyers. Salter’s says: “It was a competitive process but ECI very quickly emerged as the right partner to take the business forward.”

He explains: “ECI’s style and culture are similar to Apiary and they have got a lot of knowledge and expertise in the sector from their previous investments in Reed & Mackay.” 

ECI was granted exclusivity by Apiary and signed the deal on Good Friday.

ADVISERS

ECI
Clearwater International (corporate finance)
Squire Patton Boggs (legal)

Apiary Capital
Rothschild (corporate finance)
Browne Jacobson (legal)

During the last 15 years, the global private credit market has grown from $280bn of assets under management in 2007 to $1.5trn in 2022, according to PitchBook. 

The boom came after the 2007-08 global financial crisis (GFC), as banks reduced their exposure to lending because of regulatory changes and were unable to satisfy the strong demand from the economy. 

The vast demand for private credit has led to private equity firms launching private credit funds to take advantage of the retrenchment of traditional lenders. 

The asset class is now fully recognised as one of the primary strategies for alternative investment funds and represents approximately 12% of the global alternatives market.

Private credit now plays a starring role in financing transactions such as leveraged buyouts, bolt-on acquisitions and refinancings. 

In the last two years, private credit has blossomed, becoming an increasingly attractive alternative investment option for investors seeking higher yields amid low interest rates in traditional fixed-income markets.

However, last year debt deal volumes slowed on an annualised basis, according to the Deloitte Private Debt Deal Tracker Spring 2024 Update. 

The slow dealflow stemmed from a weak start to the year. However, transaction volume noticeably increased as the year progressed, especially in Q4 2023, where 189 deals were completed, representing a 34% increase compared to Q3 2023, and the second-highest quarter by volume on record since the peak in H2 2021.

“Debt funding availability, particularly private credit, remains robust, although activity levels have plateaued due to increased base rates affecting affordability and reduced M&A activity stemming from macroeconomic challenges and uncertainty in recent months,” says Tom Weedall, managing director of Blazehill Capital, a specialist credit fund with £1bn in assets under management. “With inflationary pressures alleviated, interest rates are expected to come down from Q2 2024 and in turn M&A activity is expected to rebound, so the outlook for the remainder of 2024 is positive and Blazehill Capital expects to be busy.”

This uptick reflected stakeholders adjusting to market volatility. Both private equity and financing parties took time to acclimate, resulting in more transactions later in the year compared to the outset.

With the interest rate environment expected to remain stable this year, private credit deal activity is likely to continue to ramp up. But as private credit deal activity surges once again, is the asset class a potential threat to the global economy as many critics say? 

Tick, tock, bust?

As private credit has captured market share, some regulators have warned that the strategy poses a risk due to potentially risky lending practices and the lack of transparency among private credit funds, which are not as regulated and required to disclose as much as clearing banks.  

The Bank of England, in its December 2023 Financial Stability Report, claimed that private credit and leveraged lending were a significant vulnerability amid global adjustments to higher interest rates.

 However, these concerns are unfounded, according to Antoine Lourtau, partner at Park Square Capital, a European private credit fund that has deployed c.$24bn since 2004.  

“The notion of a private credit ‘ticking timebomb’ makes for attention-grabbing headlines but it’s not evidenced in reality,” Lourtau says. “In Europe, private credit comprises only about 30-40% of the total leveraged loan market, making it significant but not dominant. What’s more crucial is that private credit investors, unlike bankers in 2008, have personal stakes in their investments, ensuring alignment of interests. While investing always entails some level of uncertainty, private credit is not systemic like banks, reducing the risk of wider contagion.”

The notion of a private credit ‘ticking timebomb’ makes for attention-grabbing headlines but it’s not evidenced in reality
Antoine Lourtau, Park Square Capital

This view is seconded by Eric Capp, partner, head of origination and co-head of direct lending at Pemberton, a European private credit manager with c.€13.6bn of assets under management and backed by one of the continent’s largest insurers, Legal & General.

“Our investors are large and sophisticated institutions, well versed in alternative investments and often advised by consultants. Unlike traditional banks, we must consistently deliver performance to retain our investors’ trust and capital allocation,” Capp says. 

Indeed, the US Federal Reserve described last year the financial stability risks from private credit funds as low, “in part because investors in private credit (unlike bank depositors) are required to lock up their money for five to 10 years”, therefore “reducing the risk of destabilising runs at times of stress”.

Risk versus reward 

While the risk to the economy is viewed as being low, private credit isn’t always an entirely safe bet.

In March, it was revealed that BlackRock had liquidated its sterling-focused fixed income vehicle, the BlackRock UK Credit Screened fund, which had £100m (€116m) in assets under management before it was closed on 11 December 2023, after a 50% redemption request following years of outflows. 

At its peak, in October 2018, the fund was worth £750m but this tailed off, with a particular drop in late 2020. In this instance, the fund’s investors could choose either to redeem their holdings or switch to another BlackRock fund.

Credit funds are also not immune from the current challenging business environment. 

Last year saw a surge in European credit funds performing debt-for-equity swaps provided to companies backed by some of the biggest names in private equity, according to ION Analytics, a provider of news, data and analytics for global capital markets. 

Funds fully or partially equitised debt in at least 23 transactions. The swaps, which were triggered by the lendee firms in danger of defaulting, occurred during a period in which interest rates reached the highest levels since the 2007-08 GFC.

But while the global economy remains in a delicate position, the environment is ideal for credit funds to shine and deliver strong returns, particularly because of the current higher-for-longer interest rate environment. 

Ripe for the picking

This year, the interest rate environment has remained stable, despite expectations of cuts in 2024, as economic growth exceeds forecasts, causing central banks to pause on easing. 

This stability is crucial in a landscape marked by record private equity dry powder and abundant capital in both private credit and equity funds. 

Moreover, the European syndicated market has improved, functioning more effectively than six months ago, supporting a positive outlook for investments.

Higher interest rates have a dual impact on private credit funds. They benefit investors by enhancing returns, especially for floating rate instruments, making the asset class more appealing compared to private equity in this current climate. 

However, higher rates pose challenges to credit funds because of the increased pressure on liquidity and the threat of borrowers defaulting, necessitating adaptable structures for new transactions and more conservative posturing regarding terms, according to Marcus Maier-Krug, partner and co-head of portfolio management at Arcmont Asset Management, a private debt fund with €26bn of committed capital deployed. 

In light of the higher interest rates, credit funds have increased covenant requirements, primarily focusing on ensuring closer adherence to budget performance, effectively holding the management and borrowers accountable for meeting their forecasts. 

“Consequently, the acceptable leverage multiples for cashflow lenders have tightened, with what was once a norm of four times leverage now adjusting to approximately three to three and a half times,” says Blazehill’s Weedall. “This adjustment reflects not only a change in structure and covenant conditions but also a more rigorous scrutiny of performance covenants to promptly identify any financial weaknesses or underperformance within the business.”

Another shift seen in the market is a move away from first-out, last-out structures (FOLO) in favour of more flexible private debt offerings. 

“Previously, FOLO structures were popular for achieving lower blended prices, but private debt products now offer enhanced features, including senior loan options, which streamline processes and eliminate the need for complex structures like FOLO,” says Maier-Krug.

Private debt products now offer enhanced features, including senior loan options, which streamline processes and eliminate the need for complex structures like FOLO
Marcus Maier-Krug, Arcmont Asset Management

A FOLO structure is a financial arrangement in which the initial investment tranche is repaid last, inverting the usual repayment sequence. This prioritises the repayment of newer investments over older ones.

They have been a key feature of the European midmarket space but have declined in popularity because of an inadequate return profile and due to credit funds eating up market share from banks.

Meanwhile, increased competition within the private credit space has seen a shift in power over terms away from credit funds in favour of the borrowers. 

“When banks exited the market, private credit funds benefited as they could negotiate more favourable terms with sponsors and implement proper documentation practices. However, as banks return to the market and competition increases, private credit still remains attractive for sponsors,” Park Square’s Lourtau says.

“While documentation is crucial for protecting our risk position, our primary comfort comes from assessing the quality of the business. Although robust documentation is important, it can only mitigate risks to a certain extent. Ultimately, thorough credit underwriting is essential for ensuring the safety of our investments,” he adds. 

Good time to raise

As credit funds adopt a cautious approach, the environment remains conducive to deal and fundraising activity. Investors remain positive about the asset class, with PitchBook’s 2023 Annual Global Private Debt Report stating that $190.9bn was raised by credit funds last year. 

Meanwhile, private debt funds returned to investors 1.8% in the third quarter of 2023, the latest data available, while buyout funds delivered just 0.35%, according to the State Street Private Equity Index. 

This is a good indicator for private debt fundraising. 

“The fundraising environment has notably strengthened since the first half of 2023, with renewed risk appetite and growing confidence in the economy,” Pemberton’s Capp says. “Private debt returns are currently very attractive, and the relative value between private equity and private debt has narrowed significantly.”

Meanwhile, interest rates are expected to remain at their current levels at least until the end of the year, putting pressure on businesses’ liquidity. And the ongoing geopolitical and economic instability will likely lead to market volatility. All of this paints an uncertain picture.

“Embracing volatility is integral to our strategy in private debt as it presents opportunities, necessitating the agility to engage across multiple segments,” concludes Arcmont’s Maier-Krug.

BB Kapital and NRDC Equity Partners (NRDC) have acquired Galeria Karstadt Kaufhof (Galeria).

Headquartered in Hessen, Germany, Galeria is a German department store chain resulting from the merger of Galeria Kaufhof GmbH and Karstadt Warenhaus GmbH in November 2018.

BB Kapital and NRDC are pursuing the takeover and financing of Galeria as part of an insolvency plan. The purchase price for the deal, which lifts Galeria out of bankruptcy, was not disclosed.

Galleria currently operates 90 stores in Germany, generating €2.2bn in sales annually.

The insolvency administrator of Galeria Karstadt Kaufhof GmbH, lawyer Stefan Denkhaus of the firm Boege Rohde Luebbehuesen (BRL), intends to submit the plan to the Essen District Court at the end of April; the creditors' meeting is expected to vote on it in late May, according to a statement from Galeria.

Galeria announced its insolvency in January 2024, following an effort to restructure its business and commitments, with the aim to strengthen the firm’s local focus as a department store, NRDC said in a statement.

After approval by the creditors' meeting, full control of the company will be transferred to NRDC Equity Partners and BB Kapital SA, with BB Kapital’s founder Bernd Beetz as designated executive chairman of Galeria, according to a statement from Galeria. 

According to the agreement, the German-US investor consortium acquires Galeria as a whole and is expected to take over more than 70 shops in Germany.

The company’s management will also be adjusted to reflect the reduced size of department stores, with the aim of managing Galeria like a medium-sized company, NRDC said in a statement.

Headquartered in New York, NRDC Equity Partners invests in retail, real estate and consumer brands. 

BB Kapital, headquartered in Lugano, Switzerland, was founded in 2021 as a private asset management company by Bernd Beetz after the initial public offering of the global US cosmetics company Coty Inc, of which he was CEO.

Current investments include companies in the fashion, beverages and delicatessen, accessories, perfume and cosmetics sectors, as well as real estate and sports segments.

Switzerland-based private equity firm Ufenau has opened an office in London, marking its entry into the UK.

The move follows Ufenau’s expansion into the Netherlands, which the firm announced last year. 

To head its London office, the Swiss sponsor has appointed Peter Eckersley as investment director, joining from Sovereign Capital Partners. 

Since its establishment in 2011, Ufenau has completed several investments in the UK, in the form of acquisitions by its portfolio companies including Kanalservice Group, Intelligent Repair Solutions and EAV Group.

The GP aims to further expand its existing portfolio companies into the region and sharpen its buy-and-build strategy. 

With the addition of the London office, Ufenau now employs more than 50 professionals across six offices in Europe. 

Headquartered in Pfäffikon, the GP now has offices in Madrid, Amsterdam, Luxembourg and Warsaw.

Intermediate Capital Group (ICG) has invested in UK travel insurance specialist Staysure Group, through its European midmarket team.

Founded in 2004, the company focuses on older individuals and those with pre-existing medical conditions (PEMC). Today, Staysure Group operates a portfolio of insurance brands and products, which includes Avanti Travel Insurance and Rock.

The global alternative asset manager sees structural growth in Staysure’s core market of PEMC travel insurance, it said in a statement. 

ICG plans to expand the company’s distribution channels, alongside further investment in pricing and marketing capabilities, through use of enhanced technology, data and AI. 

The transaction sees Staysure’s founder, Ryan Howsam, remain as the majority shareholder.

The European midmarket strategy is part of ICG’s flagship European Corporate strategy, via which the manager targets locally sourced, directly originated and privately negotiated subordinated debt and equity investments.

US private equity firm STG Partners has delisted London-based fintech Gresham Technologies. 

According to filings shared with the London Stock Exchange, STG has completed the take-private for £146.7m through Alliance Bidco.

The offer price represents a 27% premium to Gresham’s closing price of 129 pence on 8 April. 

Based in Menlo Partner, STG invests in companies focusing on data, software and analytics. The sponsor has AUM of $10bn. 

Gresham Technologies is a software company specialising in providing real-time solutions for data integrity and control, banking integration, payments and cash management. The stock was floated on the exchange in 1995.

Paul Hastings served as the legal adviser.

Mutares has acquired Eltel Networks Energetyka S.A. and Eltel Networks Engineering S.A. from Swedish offshore communications specialist Eltel AB.

The total value of the transaction for Eltel, including Mutares’ replacement of Eltel guarantees for the business, is about €25m, according to Eltel’s website.  

Established in 1961 and 1949 respectively and with offices in Kraków, Rzeszów and Olsztyn, all in Poland, Eltel Networks Energetyka S.A. and Eltel Networks Engineering S.A. provide high-voltage services including planning, construction, commissioning and maintenance services.

The businesses have combined net sales of approximately €36m as per end of 2023, adjusted Ebitda amounted to €4.9m and the business consisted of about 410 employees, according to Eltel’s website.  

Their predominant client base currently consists of players within the Polish energy sector, although they are also present in the UK, Germany and the Nordics. 

In terms of value creation, the GP will seek to support the firms’ product offering consolidation as they strengthen their Goods & Services segment and launch a new platform, the GP said in a statement. 

The companies will continue their expansion efforts within Poland and neighbouring countries in the high-voltage segment, aiming to capitalise on the demand driven by energy transformation, the GP added.

The deal represents the third acquisition by Mutares since January and the first in the field of electrical power engineering and construction services this year. Last month, the GP carved out manufacturer Magirus from Iveco Group.

Previous investments include Amaneos, a global partner for plastic-based systems in the automotive industry,  and Nordics-focused service provider Asteri & Palmia.

Bridgepoint Group's mid-cap investment vehicle, Bridgepoint Development Capital (BDC), has entered exclusive negotiations with Forward Global to become a minority shareholder of the portfolio company.

BDC will join Forward Global's management and current minority shareholders, RAISE Invest and Rives Croissance, in a deal that values the group at more than €200m.

Headquartered in Paris, Forward Global designs, develops and manages services and technologies with a view to mitigate and manage digital, economic and information risks for clients.

The group has more than 450 employees across Washington, DC, London, Brussels, Paris and other cities in Europe and Africa. In 2024, its turnover will exceed €100m.

RAISE Invest has been an investment partner of Forward Global for approximately four years, and said it has helped the portco on its international growth and bolt-on acquisitions in France and abroad.

Bridgepoint Group is a listed international alternative asset manager focused on midmarket companies, with more than €41bn in assets under management.

BDC invests €40-150m per company through its latest fund, BDC IV, which was raised in 2020.

Leveraging its international network and experience in working with tech-focused advisory businesses, BDC will look to strengthen Forward Global's development strategy, particularly in North America and Europe, with a target of €150m of strategic acquisitions within the next three years.

BDC's portfolio in France consists of 10 companies to date: Sotralu (2014), Anaveo (2015), Sportscape Group (formerly PrivateSportShop – 2018), Cyrus and Brevo (2020), PluginDigital (2021), Cast and Cegos (2022), Equativ and Sinari (2023).

ADVISERS

Bridgepoint Development Capital
Clearwater
Proskauer Rose
Arsene Taxand
DLA Piper
BCG
KPMG
PwC

Forward Global and management
Natixis Partners
Hogan Lovells
Axipiter
Schoups
Sheppard Mullin
LEK
Oderis
Indefi
Callisto

Maxburg Capital Partners has held the final close of its Maxburg Capital Fund IV on its €450m hard-cap.

The new fund’s LP base includes public and corporate pension funds, consultants, endowments, foundations, insurance companies and family offices across Europe, North America and Asia.

Fund IV is 50% larger than its predecessor, Maxburg Capital Fund III, and will seek to make mainly majority and/or controlling stakes in DACH private companies.

The GP's website said it makes equity commitments of €10-100m per deal, and its previous investments include retail and FMCG, light industries and manufacturing, internet and services, TMT and healthcare.

Poellath advised Maxburg on all legal matters related to fund structuring and fundraising.

Manulife Investment Management has completed the final close of the Manulife Strategic Secondaries Fund (MSSF) on $610m (€563m).

The fund further bolsters Manulife’s $25.8bn private equity and credit business and is exclusively focused on investing in GP-led secondaries.

In addition to the Manulife general accounts in the US, Canada and Asia, MSSF secured commitments from a global group of institutional and high-net-worth investors, according to Jeff Hammer, global co-head of secondaries and co-portfolio manager on the fund, speaking to Real Deals. 

Its investor base currently includes pension plans, insurance companies, endowments, family offices, foundations and private wealth management platforms. 

As the fund’s LP base is showing an increased appetite towards GP-led opportunities, the secondaries team expects to be back in the market with a follow-up round by next year, Hammer reveals. 

The fund’s first closing was completed at the end of June 2022. Additionally, a pro rata strip of the investments that the team had completed on behalf of the general accounts was sold to MSSF at "a very favourable price", according to the secondaries specialist.

The fund has already started its deployment process. The recently closed fund has completed 18 investments across four vintage years: 2020, 2021, 2022 and 2023. 

“This came about because we were able to use a warehouse facility from Manulife to house investments for the fund prior to commencing any fundraising activity. This accommodation will accrue to the benefit of our third-party investors and was a big attraction for Manulife's new LP relationships during the fundraising process,” Hammer explains.

MSSF expects to complete the deployment of fund capital during the course of 2024. 

European opportunities  

The fund is significantly invested in Europe, with roughly a third of Manulife's GP-led secondary portfolio being invested in European companies. 

“We have tended to prefer pan-European companies that operate across multiple jurisdictions and are sizeable enough that we call them 'industrial strength'," Hammer explains. 

The fund also has a strong representation of “alpha-seeking“ technology and lower market companies in Europe.

We have tended to prefer pan-European companies that operate across multiple jurisdictions and are sizeable enough that we call them 'industrial strength'

“We view the Western European investment environment as favourably as we do that of North America, and global co-head and co-portfolio manager Paul Sanabria and I spend significant time in Europe sourcing opportunities,” he notes.

On a global opportunity perspective, the fund seeks "right-sized" diversification, which aims to allow investors to receive the benefits of concentration without the risks of over-concentration.  

“We believe the 'Goldilocks zone' for a secondary market, private markets portfolio is a position-level concentration of 5-8%. We build out our sector, allocations and our individual investments by sizing our basic investment building blocks at these levels,” the investor highlights.

Globally speaking, the fund favours a range of sectors including healthcare, technology, business services, financial services, industrials and consumer. 

“We do not weigh all of these sectors equally and we are influenced by macro conditions to overweight some and underweight others at any given point in time,” Hammer explains.

Supporting the theory with an example, the secondaries head highlights how in 2020 the value proposition for large-cap secondaries was "compelling". This compares to mid-2022, when rates were rising so the value proposition for large-cap secondaries declined in favour of mid and lower midmarket secondaries.  

“As a secondary market investor, one must establish points of view and sub-allocations, but one must also remain opportunistic to address and price liquidity-needing sectors and capitalisation sizes,” he says.

Natural evolution

The fund eyes opportunities in global continuation vehicles with concentrated assets with strong underwriting. The investment team believes the fund can create “secondary market alpha” by thoughtfully curating a portfolio of great companies, underwritten one asset at a time. 

According to Hammer, continuation vehicles currently represent the best mechanism to serve the various stakeholders entered into these transactions.  

“As a secondary investor, we find that the amount of investment opportunity is far more predictable than many of the other structures. Continuation vehicles today also represent the vast majority of transactions in the GP-led market,” he explains.

As a result, the continuation vehicle transaction process has become refined over time to be more predictable and efficient, and less expensive and volatile than other processes such as tenders, staples or strips, he adds.

The overall European economy is appearing resilient. Moreover, the rhythms of the European private equity market have become linked ever more closely to those of the North American market

According to Hammer, portfolio construction in the GP-led market involves deep-dive diligence. His team analyses companies and underwrites returns with a degree of precision that the traditional LP secondary market has never been able to achieve. 

“This creates an opportunity to deliver premium secondary market returns on behalf of our investors,” Hammer notes.

A robust market landscape 

On the PE market landscape in Europe more generally, Hammer says it continues to be robust, paralleling the North American market in its depth and activity. 

“There are clearly pockets in Europe with greater challenges than others, but the overall European economy is appearing resilient. Moreover, the rhythms of the European private equity market have become linked ever more closely to those of the North American market,” he highlights. 

“As interest rates are lowered in both geographies and as realisation activity picks up in both places, we believe that the European market will remain attractive to investors over the next five years,” he concludes.  

Manulife IM has $25.8bn in AUM across private equity and credit.

Finnish private equity firm Juuri Partners has invested in Alvar Pet and simultaneously completed the company’s first bolt-on by acquiring Verkkokauppa Kivuton.

Alvar Pet is a direct-to-consumer pet food brand, while Verkkokauppa Kivuton is an online store focusing on pet health. Both companies are Finnish. 

According to Juuri Partners, the combined entity forms the largest online store in the Nordics specialising in pet health, offering a range of veterinarian-developed products and diets. 

The investment has been made from Juuri's second fund.

Significant growth opportunities

The sponsor noted that the global pet market is estimated to grow to $500bn by 2030, thereby propelling demand for individually tailored pet diets.

During the past three years, Alvar Pet has become one of Europe's fastest-growing startups in the pet industry, claims Juuri Partners. With this deal, the pro forma joint annual sales of Alvar Pet and Kivuton are expected to surpass €10m. 

Juuri Partners manages two private equity funds amounting to approximately €200m, which look to invest in established and profitable small and medium-sized enterprises in Finland. 

The GP’s investor base comprises Finnish and international institutional investors.

ADVISERS:

Borenius (legal)
KPMG (financial and tech due diligence)
Dottir (legal)

Paris-based Quantonation Ventures has held the first close of its second fund on €70m. The vehicle is targeting €200m.

Established In 2018, the venture capital fund supports founders in the deep-tech sector, who work on transforming quantum science and deep physics into tangible devices and applications for sensing, communication and computing. 

Quantonation’s maiden fund closed in 2021 on €91m and has made investments in 27 companies worldwide, with two exits. The VC has invested in spinouts from academic ecosystems worldwide, like MIT, Ecole Polytechnique, Institut d’Optique, Oxford University, Waterloo University, University of Sherbrooke and more.

In line with its predecessor, Quantonation II will also focus on pre-seed and seed-stage investments in 25 companies across Europe, Asia-Pacific and North America. The fund has already completed four deals, namely Diraq, Pioniq, Resolve Stroke and Steerlight.

According to Quantonation, its investors from the first fund have returned for its current vehicle, including Fonds National d'Amorçage 2 (managed by BPI France) and Bradley M Bloom (co-founder and former managing director of Berkshire Partners).

EQT's midmarket Europe division, together with its co-shareholders, have sold Rimes to the Five Arrows Long Term Fund and Five Arrows Principal Investments.

Founded in 1996 and headquartered in London and New York, Rimes provides enterprise data management services for asset managers with the view that they will make better investment decisions.

Since EQT’s initial investment in 2020, the GP has supported the portco in deepening its client relationships by expanding its Benchmark and Index (B&I) data services.

In October 2021, Rimes further complemented its product offering with the acquisition of Matrix IDM, which added an investment management platform and data distribution and warehousing solutions.

Five Arrows is the alternative assets arm of Rothschild & Co and has €26bn in assets under management, with offices in Paris, London, New York, Los Angeles, San Francisco and Luxembourg.

The corporate private equity business of Five Arrows has more than €9bn in assets under management. Its sectors of focus are limited to data and software, technology‑enabled business services and healthcare.

ADVISERS:

EQT and Rimes
Evercore (corporate finance)
Latham & Watkins (legal)

Five Arrows
Jefferies (corporate finance)
Shoosmiths (legal)

MVI Equity-backed Nordic Drives Group has acquired Elektro ApS.

Established in 1957 and with offices in Aalestrup, Aars and Skive, all in Denmark, Elektro ApS is a full-service supplier in the service and sale of electric motors, gears, pumps and frequency converters. 

Founded in 2021, Nordic Drives Group is a consortium of Nordic companies specialised in electric drives and power systems, with a particular focus on electric motors, frequency converters and industrial automation.

With the deal, Nordic Drives Group aims to expand its capabilities in Northern Europe, further strengthening its product portfolio within the industrial electric motors and frequency converters arena. 

MVI Equity formed Nordic Drives Group following the acquistions of Krylbo Elektra AB, Falun Borlänge AB, Jo-Wic Elteknik AB, Elektromekanisk Industriservice AB, Bröderna Eriksson Maskinel i Söderhamn AB, Elektrolindningar T Holm AB and Fabrika A/S. 

The acquisitions were completed via MVI Equity's buyout fund MVI Fund II. 

Founded in 2011 and headquartered in Stockholm, Sweden, MVI Equity eyes opportunities within the Nordic region, with a particular focus on sectors such as digitalisation, resource scarcity, demographics, business-to-business services, business-to-consumer services, engineering, healthcare and hospitality.

MVI Equity has made numerous investments in companies including lift maintenance specialist Granitor, manufacturer Fabrika and garden product retailer HPJ Garden.

Swedish GP Sobro has invested in the building consultancy Clinton Marine Survey.

All existing owners will remain as "significant" shareholders, the investor said.

Founded in 2015 and headquartered in Gothenburg, Sweden, Clinton Marine Survey provides the offshore industry with hydrographic and geological surveys for navigation, dredging operations, mapping and marine construction. The business currently has five vessels and more than 75 employees.

Sobro partner Caroline Hellström said: "We are really happy that Clinton Marine Survey has chosen us as its ownership partner. We look forward to supporting them in meeting their customers' increased demand."

Founded in 2007, Sobro is currently invested in 17 companies across various industries.

Corlytics, a provider of regulatory intelligence, content and automated policy compliance, has received a majority stake investment from Verdane, following a competitive process managed by investment bank Baird.

Corlytics offers regulatory horizon scanning, policy management and attestation. According to the company, it is plugged directly into international regulators.

The deal marks a cornerstone investment of Verdane’s Edda III Fund, which was closed at €1.1bn.

With the fresh funds, Corlytics expects to “accelerate organic growth and augment that with M&A activity, as well as investing significantly in our ‘intelligent offering’, combining data, software and AI”, said the company’s founder and CEO, John Byrne. In 2023, Corlytics acquired ING SparQ (January) and Clausematch (July).

As part of the investment, Simon Russell has been appointed chair at Corlytics. He has previously led tech investment banking at firms including Normura and Dresdner Kleinwort.

In addition to Baird, Corlytics was advised by Dentons on legal matters, and by Liberty on management, while BDO counselled the company on financial and tax due diligence.

Verdane relied on Trinity Square for strategic advice and Burness Paull for legal counsel, while McKinsey handled commercial, and Deloitte managed financial and tax due diligence. Finally, PwC acted on the relevant restructurings.

Equistone Partners has sold its majority stake in Sport Group to US investment firm KPS Capital Partners. 

Founded in 1969 and headquartered in Burgheim, Germany, Sport Group specialises in artificial turf, synthetic outdoor sports and leisure surfaces, with a product and service portfolio that includes the sale of components for industrial and landscaping applications, raw material procurement, installation, and after-sales services and maintenance.

Equistone acquired a majority stake in Sport Group from Swedish GP IK Investment Partners in June 2015. 

During its holding period, the GP supported Sport Group through a buy-and-build programme that led to the completion of nine acquisitions: AstroTurf ( August 2016), STR (August 2016), ProGrass (October 2016), Sportgrass (October 2016), WM Loud (June 2017), SCM (June 2017), ProGrass & New Turf (June 2017) and Fairmont Industry SB Malaysia (October 2017).

Its value creation strategy also focused on increasing the business’s geographical exposure, tapping international markets including Australia, the US and Malaysia.

Finally, the GP supported the business in achieving sustainability expertise through the development of green products, including carbon-neutral football and field-hockey turf, as well as establishing a recycling plant for artificial turf and EPDM rubber. 

Under Equistone’s partnership, the business more than doubled its revenues, the GP said in a statement. Its revenue at acquisition amounted to €298m, according to the GP's website. 

Currently, Sport Group comprises 19 subsidiaries in nine countries and employs more than 1,900 people worldwide, with a customer base that includes football clubs, sports companies and event organisers such as FC Bayern Munich, the US Open and the Olympic Games.

Equistone’s team consists of more than 40 investment professionals operating from seven offices in Germany, the Netherlands, Switzerland, France and the UK. The GP primarily invests in established midsized businesses with EVs of between €50m and €500m. 

Since its inception in 2002, equity has been invested in more than 180 transactions. Its current portfolio comprises about 50 businesses across Europe, among them 20 investments in Germany, Switzerland and the Benelux region. 

Last month, Equistone-backed manufacturing specialist Andra Tech Group acquired Lucassen Group. Find more details about the deal here. 

ADVISERS

Equistone
Houlihan Lokey and William Blair (M&A)
BCG (commercial)
Deloitte (financial)
EY (tax and EHS)
Latham & Watkins (legal)
PwC (data analytics)
Crescendo (communications)
Goodwin (Financing)

Quilvest Capital Partners has appointed Christophe Evain as non-executive chairman of the board.

Quilvest is a global mid and lower midmarket alternatives investment manager overseeing $7bn of AUM.

Evain joined the board in 2021 and brings a wealth of experience from his previous roles at Intermediate Capital Group and Bridges Fund Management. 

In his new role, he will guide Quilvest’s strategic trajectory and oversee governance matters.

Alexis Meffre remains on Quilvest’s board and retains his role as the firm’s CEO, which he has held since 2018. He will continue to focus on the firm’s growth strategy, broadening its capital base and introducing new products.

In addition to this leadership transition, Quilvest has also announced a series of promotions across its teams:

Buyout
Hichem Hadjoudj, partner
Guillaume Laboureix, managing director
Jared Nagae, managing director
Olivier, Bischoff, vice-president

Primaries, co-investments and secondaries
Charles Aponso, partner
Abhishek Damani, managing director

Freshstream Investment Partners has led an equity funding round in its exisiting portfolio company Bella Figura Music (BFM), which saw co-investments secured from a consortium including the Canadian pension fund OPTrust, as well an unnamed family office and a Dutch GP.

Based in London, BFM is music company with a boutique record label and publishing divisions. It invests in artists and writers with a "successful" catalogue. 

The business was launched in 2022 by entrepreneurs Alexi Cory-Smith and Neelesh Prabhu as it partnered with Freshstream, a private equity firm with offices in London and Amsterdam.

In the last six months, the company has expanded its portfolio to include the music catalogues of Jeff Silverman (Aloe Blacc, Adele, Lee Fields, Truth & Soul), and Adrian Wright (The Human League).

These build upon the company’s existing collection of catalogues, including David Gray’s record label IHT, R3HAB’s pre-2022 recordings catalogue, and Guy Chambers’ publishing catalogue, which includes the Robbie Williams hits Angels, Feel and Let Me Entertain You.

BFM aims to continue expanding its portfolio of music catalogues.

Cairngorm Capital Partners' portfolio company Independent Builders Merchant Group (IBMG) has raised additional capital from Ares Management Corporation and Farallon Capital Europe.

IBMG is a building materials distributor. It operates five core divisions – builders’ merchants, timber, plumbing and heating, roofing, and electrical – and operates 182 branches across the UK.

Employing approximately 2,200 people, it had FY23A revenue of more than £650m.

Cairngorm Capital acquired Parker Building Supplies in March 2018 and has since made more than 12 additional investments between 2019 and 2021 to create what the investor says is the largest independent builders’ merchant in the south of England, operating under the IBMG umbrella brand. 

With the funding provided by Ares and Farallon, the portfolio company will look to expand its independent brand network with new branches and bolt-on acquisitions where strategically appropriate.

During 2024, IBMG will also be launching new customer propositions covering renewables and sustainability.

Martin Stables, IBMG’s CEO, said: "Looking to the second half of this year and beyond, medium-term macroeconomics look very favourable for our sector."

Adam Watson, investment director, who leads Cairngorm Capital’s investment, added: "Securing further investment from such respected partners will ensure the business is in an advantageous position as economic conditions improve during 2024 and competitors entrench."

Batteries and microgrids. Hydrogen and biofuels. Point-of-source carbon capture and low-carbon fertilisers. This is just a taste of climatetech’s investable universe.

Some of these technologies featured in the ‘Cleantech 1.0’ boom, which started in the late 2000s. That wave, however, fell off by the early 2010s, due in part to the technological maturity of these businesses. Many renewable energies and electric vehicles were simply not at the stage economically where they could be competitively produced with what was on offer at the time. 

Perhaps the main reason was that the policy environment to provide support for these businesses was not in place. The nature of many climate technologies is such that they need incentives or a compliance-based system to encourage people to use them, otherwise they are just an additional burden on top of existing conventional processes.

The most recent surge of interest in the broader climatetech space took off in late 2020, when there was an explosion in the number of climate pledges at a country, state and city level, as well as at a company level, thereby providing a market for many climate technologies.

“Five years back, impact investing was in one bucket with philanthropy. So, you do something and probably never see the money again, or maybe see it with close to zero interest rate,” says Dörte Hirschberg, general partner at Climentum Capital, a VC firm backing early-stage, hardtech companies addressing CO2 emissions.

“That has changed. Now, especially in climatetech, professional investors see that the mega trend is so strong, and so much is needed, that you can actually make money with it,” she adds.

Climentum is a case in point: it aims to achieve healthy financial returns while making a positive impact on climate. The VC’s terms are akin to a non-climate fund, maintaining, for example, carry and an 8% hurdle rate. 

Climatetech growth equity firm Blume Equity is similarly targeting market-rate returns with an eye on impact. “Our LPs recognise macro tailwinds are supporting the climate space and want exposure to that, because not only is it a good thing to do, but they recognise the financial market opportunity as well,” says Clare Murray, the firm’s co-founding partner.

To achieve those returns while helping the planet lower emissions through a scalable technological solution, Climentum has backed Continuum Composites Recycling, a company recycling end-of-life wind turbine blades, while Blume has invested in Dutch business Sensorfact, which develops products to allow manufacturers to monitor energy consumption.

But where else do opportunities lie? EV services continue to be popular as pressures on EV charging and grid infrastructures mount, while batteries-related opportunities have received high interest too.

Our LPs recognise macro tailwinds are supporting the climate space and want exposure to that, because not only is it a good thing to do, but they recognise the financial market opportunity as well
Clare Murray, Blume Equity

With a plethora of European regulations coming in, particularly related to Scope 3 emissions, carbon accounting businesses are set to remain desirable, while the EU’s Corporate Sustainability Due Diligence Directive has seen Blume look into supply chain decarbonisation. The firm is also doing a deep dive into biodiversity as a climate risk mitigant.

Venture

Climate technologies need early funding when they still have risks. That happens at the VC level, where firms can source businesses from angel investors or government grant programmes. 

With the number of ‘climatetech’ businesses around, many of which are hyped up depending on the month in the year, which do you pursue?

Justifying Climentum’s focus on more industrial businesses, Hirschberg says: “First of all, we look at the problem: we need to stop climate change. This is an atoms space. This is physics, chemistry, engineering. So, ultimately, you will need a lot of hardware. This was always our starting point: what has the biggest direct impact?”

The VC firm makes initial investments of €1-5m at the Seed+ and Series A stages, avoiding pure software businesses. “Whenever there is a good software solution in climatetech, many VCs would love to do that deal, because it’s their home turf. Generalists also always start with software. So, these rounds are crowded, valuations can be high and it can be relatively hard to differentiate as a young, new investor,” she says.

“That is very different the moment you have a more technical, hardware component that requires you to go into the chemistry or physics of whatever it is. Then, there are way fewer players. So, what we found as a new fund that wants to tackle this problem, is that it’s a way more attractive field to engage in.”

At this stage, investors look to bring their portfolio companies past their last technical risks, providing them with an appropriate manufacturing approach, their first real customers and revenues.

We need to stop climate change. This is an atoms space. This is physics, chemistry, engineering. So, ultimately, you will need a lot of hardware
Dörte Hirschberg, Climentum Capital

Holding its investments from as low as five years and up to eight, a firm like Climentum is open to multiple exit pathways, including IPO – an easier feat to achieve in Scandinavia – as well as trade sales to strategics.

A third option is selling to PE, which Hirschberg believes can work better for businesses in certain industries, such as recycling. “What you do is very replicable. If you have one recycling plant, you can build the next. There, it can also make sense to have a buy-and-build strategy and build a recycling consortium that doesn’t only recycle wind turbine blades, but also other items.”

Weighing in on one of the VC firm’s investments in green packaging, she added: “A lot will happen in this area, moving away from plastic to alternatives. And there are currently many small companies trying different things, so I'm relatively certain at some point there will be a consolidation of these businesses, and this could be run by a private equity player.”

Growth

Blume sits at the post-venture, growth equity stage, investing at a point when companies are revenue-generating, either at profitability or on a pathway to profitability, have proven product market fit and are looking to scale, usually across other European markets. The firm invests anywhere from €5-50m per business, also considering climatetech companies that have a hardware component.

“There has been a growing recognition that SaaS business models are not going to solve the climate crisis alone, so you need to be comfortable investing into hardware and product-led businesses,” says Blume’s Murray.

With more quantitative information available, a PE player operating at this level is better able to understand a company’s size, customer interest, cohorts, churn, market opportunity, cross-selling abilities and that pipeline for growth.

There has been a growing recognition that SaaS business models are not going to solve the climate crisis alone, so you need to be comfortable investing into hardware and product-led businesses
Clare Murray, Blume Equity

Like most PE firms here, value creation includes support with finance, strategy, talent and professionalisation. More common in the climatetech subsector, however, is the need to develop a robust sustainability strategy, which can comprise climate action plans and ESG reporting, as well as how to better communicate the brand’s narrative to customers, shareholders and regulators.

Regarding exits, pan-European and global PE firms typically begin to show interest as climatetech companies reach profitability, especially if there is a buy-and-build play.

In carbon accounting, for instance, or in the broader ESG tools and services space, we have already seen the buy-and-build playbook occur from Carlyle with Anthesis and Ares with SLR Consulting – both of which have made a number of acquisitions and continue to build their product offering.

“In the carbon accounting space, there's going to be significant consolidation in the coming years,” says Murray. “There have been a lot of players who have popped up and, unfortunately, not many of them have been able to reach scale. A number of them are going to get acquired, potentially from traditional consulting firms who are looking to bring on the capability to assess emissions as well.”

Buyout

At a level above is Nordic Capital, a buyout firm that has invested in climatetech with ticket sizes ranging between €50m and €400m.

“We avoid crazes and hype,” says Elin Ljung, managing director and head of communications and sustainability at the firm. “Our investments are based on a fundamental increase in underlying customer demand, for example, driven by a push to decarbonisation. The businesses at the ticket sizes we invest in are very stable. We wouldn't go into high-risk investments.”

Many of the firm’s climatetech investments, too, combine both hardware and software. One of its portfolio companies, Foxway, supports clients to recycle and refurbish IT hardware, while also offering them a decarbonisation tool to track and monitor their decreasing climate emissions.

Here, value creation involves addressing customer demand, scaling up offerings, driving top sales and cost efficiency across operations, as well as introducing other productivity measures.

On exit routes, Ljung says: “Looking at Nordic Capital’s history, we have always seen a lot of strategic buyers for our assets. And in greentech, we are seeing more and more strategic buyers and impact funds that want to scale, and fund the scalability, of this type of business model.”

The managing director notes that impact funds in particular are an “interesting” exit route for the firm: “We haven't looked at these much before, but over the last three years there has been considerable expansion in this area. They are still quite new but, by definition, they look purely for investments that have products and solutions that can enable the green transition or meet some of the climate challenges. They're accelerating heavily across the world.”

Fundamentally, the younger generation, the future founders, they care about the climate and they will continue to think more about these problems than about the next pizza delivery app or so on
Dörte Hirschberg, Climentum Capital

In addition, there is a growing number of infrastructure funds investing in, say, solar panel installations or other types of fundamental societal infrastructure. That is an exit option too.

Overall, the macro trend in climatetech is likely to stay strong as the climate change problem will not disappear in the next few years. “Fundamentally, the younger generation, the future founders, they care about the climate and they will continue to think more about these problems than about the next pizza delivery app or so on,” says Hirschberg.

With a growing number of firms that believe that they can do both profit and purpose, more and more money has flowed into climatetech in the past couple of years, and that trend is expected to continue.

Aksia Capital-backed The Italian Food Excellence Group (Ifex) has acquired Savi Alimentare.

Ifex is an Italian producer of gnocchi, fresh pasta, pesto, sauces and ready meals. 

Savi Alimentare specialises in the processing of raw vegetables for the food industry and ready-to-eat vegetable-based meals such as risotto, farro, vegetable burgers and salads, currently distributed in northern Italy. 

The deal was completed via the Aksia Capital V fund and represents the fourth acquisition by the vehicle. 

The investment aims to further strengthen Ifex’s product offering, with a particular focus on its expansion in the ready-meals category, the GP said in a statement. The group also aims to consolidate its presence in northern Italy. 

Ifex was launched by Aksia in 2022, through the integration of its 2021 investment in Italian firm Master. 

Master specialises in the production and marketing of high-end gnocchi (classic, stuffed, flavoured), produced directly from the processing of fresh potatoes, and other regional specialties such as spaetzle. 

In 2022, Ifex completed three acquisitions – gnocchi producer Buona Compagnia gourmet, food distributor Il Ceppo and fresh pasta producer Michelis – with the aim of creating an Italian leader in the production of fresh pasta, gnocchi and high-quality ready meals. 

Aksìa is a private equity fund management company that invests mainly in medium-sized Italian enterprises. Since its inception in 1997, the PE firm has carried out more than 60 operations in Italy and abroad, investing more than €500m through five funds.

ADVISERS

Aksia
Luigi Attardo Parrinello (buy-side adviser)
EY (financial aspects and ESG)
Giliberti Triscornia and Associates (legal)
De Luca & Partners (labour law issues)
Russo De Rosa Associati (tax due diligence)

AnaCap has acquired a majority stake in real estate consultancy business Yard Reaas.

Headquartered in Milan and with offices in Rome, Paris and London, Yard Reaas provides investment, property management and valuation services to institutional investors and banks.

The company has a track record of six acquisitions, including the recently announced Tecnit@lia deal in January this year.

Lower midmarket GP AnaCap typically invests across services, technology and software within the European financial ecosystem.

Since 2016, the PE firm has raised more than €1.7bn in capital and completed approximately 60 deals across Western and Northern Europe.

AnaCap will look to help Yard Reaas accelerate its international expansion strategy in Southern Europe as the portco seeks to execute a pipeline of acquisitions with a view to becoming a consolidation platform in its sector across Italy, Spain and France.

The GP will also defer to its track record in technology investments to offer a range of solutions to Yard Reaas's clients, such as automated valuation models and ESG ratings that align with the recent European ‘green homes’ directive, as well as optimising its internal processes.

ADVISERS

AnaCap
Vitale & Co
Allen & Overy

Ardian has sold its majority stake in Staci to Belgian postal operator, parcel and omni-commerce logistics provider Bpostgroup (Bpost) for an enterprise value of €1.3bn (pre-IFRS 16).

Founded in 1989, Staci provides B2B and B2B2C logistics services (including dealing with suppliers and delivery points, low unit volumes, and barcoded and non-barcoded products) for companies wishing to outsource all or part of their customer procurement operations. 

Under the terms of the proposed transaction, Bpost will acquire 100% of Staci's shares from Ardian and other minority shareholders.

As part of the transaction, Staci’s management will reinvest alongside Bpost.

Ardian acquired a majority stake in Staci from investment house Cobepa in 2019, alongside Paris-based PE firm Société Générale Capital Partenaires.

During its holding period, Ardian supported Staci with a particular focus on diversification and geographical expansion. The business completed the acquisition of Netherlands-based logistic provider Base Logistics Group (2021) and US asset-based logistics service provider Amware Fulfilment (2023).

As part of its value creation strategy, the firm also expanded its expertise into B2B logistics and e-commerce services to become a multi-channel logistics specialist across a range of diverse industries including healthcare, cosmetics and energy, both in private and public services. 

As a result, Staci currently operates in 10 countries with more than 80 logistics hubs in Europe, the US and Asia, Ardian said in a statement.

The GP added that during the past five years, Staci benefited from "increased international sales", thanks to a broader sector exposure and market position.

Staci has published normalised annual sales of €771m for 2023, while its Ebitda before IFRS 16 stood at €110m.

Ardian currently has $31bn of AUM in direct infrastructure activities. It has $6bn deployed across various subsectors of digital infrastructure.

Last month, the GP completed the acquisition of data centre platform Verne from Digital 9.

Sustainability has emerged as a critical consideration for private equity investors, not only for ethical reasons but also for its potential to drive returns and mitigate risks in an increasingly complex landscape.

Investments incorporating ESG factors perform better over the long run, with funds dedicated to environmental or social sustainability increasing during the past five years.

Research from CEE-focused private equity firm Abris Capital Partners shows that sustainable practices can bring an improvement of 3.4% in IRR growth for buyout and growth deals, partner Edgar Kolesnik tells Real Deals. 

Key drivers such as regulatory pressures, consumer demand and value enhancement are changing the way GPs prioritise ESG implementation within their portfolios, with risk mitigation playing a significant role in driving sustainable investments according to Jo Daley, director, head of impact at Clearwater. 

She says: “I think the risks are greater now than they ever have been with legislation, greenwashing and supply chain risk, with increasingly aware and conscious consumers, through to a workforce with higher demands than ever, which all have the potential to affect business continuity.” 

As ESG matures in both the investment space and community, a growing recognition that mitigating those risks can create value opportunities is pushing ESG to become increasingly embedded in value creation teams.

Updating perspectives

ESG is becoming the norm in seeking opportunities and adding value to businesses. During the last five years, PE firms have updated their perspectives to integrate ESG factors into their investment processes, from initial screening to due diligence and throughout the holding period.

I think the risks are greater now than they ever have been with legislation, greenwashing and supply chain risk, with increasingly aware and conscious consumers, through to a workforce with higher demands than ever, which all have the potential to affect business continuity
Jo Daley, Clearwater 

Fabio Ranghino, head of strategy and sustainability at Ambienta, highlights how GPs have begun creating dedicated sustainability teams responsible for ESG integration within their investment programmes. He notes: “Some teams are starting to focus on impact analysis and this is certainly a difference from five years ago – they have now become part of a common and necessary practice along the entire investment cycle.”

ESG factors are increasingly integrated into PE due diligence processes, with considerations such as environmental risks, social factors and governance structures becoming top priorities.

"If I go back 10 years, the order would be commercial, legal, financial due diligence workstreams, with ESG at the end. Today, ESG is much more fully integrated into an understanding of operational risks and opportunities, and after acquisition, which can be important in maximising value creation at the business,” highlights head of ESG at Triton Partners, Graeme Ardus.

ESG due diligence has become vital in almost every transaction. It allows the assessment of businesses’ ability to embed sustainability and ESG principles, particularly in areas such as analysis of risks in supply chains and diversification strategies, which are all key components in assessing how well managed and attractive a business is.

A blossoming regulatory environment that includes taxonomy regulations, SFDR and PRI reporting frameworks, to name a few, has increased transparency and disclosure, helping GPs to differentiate themselves in front of their LPs, and allowing more transparency on how GPs engage with their portfolio companies on ESG factors and the most material and critical topics for their businesses. 

Today, ESG is much more fully integrated into an understanding of operational risks and opportunities, and after acquisition, which can be important in maximising value creation at the business
Graeme Ardus, Triton Partners

However, accusations of greenwashing remain. To mitigate those accusations, the management at portfolio companies needs to align with the regulations and embrace transparency. Daley notes: “[This could be] quite scary for a lot of boards to hear, because it requires them to publicly acknowledge areas where they still have work to do. But by owning that and by being transparent, the risks are significantly reduced.”

To meet these regulations, materiality assessments have now become a crucial practice for a sustainable PE strategy. The practice helps identify the most significant ESG risks and opportunities facing the target company and its industry – no matter the sector they are in. 

Taking Triton as an example, Ardus says: “It’s about that materiality point. For example, we are invested in companies that handle personal data, so data management and cybersecurity are topics of high materiality. So rather than applying a one-size-fits-all approach, we focus on really aligning ESG considerations with a company’s business, its strategy and operations,” he explains.

Outside of the box

As sustainability integration gains traction across portfolio companies, innovations are emerging across various industries and resulting in high potential for returns in Europe.

Decarbonisation linked to renewable activities lies at the heart of European sustainability drivers and, according to Ambienta’s Ranghino, it will continue its acceleration trajectory of the past two years, having made such a “clear and compelling case” of how it can drive returns and innovations.

“Decarbonisation of heating is the topic of the future – when it comes to reducing emissions we have always focused on cars and buildings, but 20% of energy demand and 10% of global CO2 emissions come from combustion in industrial processes, ranging from food pasteurisation at 200 degrees celsius to industrial processes that run at over 1,000 degrees celsius,” highlights Ranghino.

Meanwhile, sustainable innovations in agriculture – including alternative inputs, recycling technologies, sustainable real estate, circular economy initiatives, eco-friendly consumer products and clean energy technologies – are also major sustainability drivers.

In terms of sectors, traditionally heavy production or manufacturing companies within industrials, consumer goods production and transportation have been focusing on environmental issues such as CO2 emissions. These sectors are striving to comply with regulatory requirements and meet stakeholder and consumer needs, positioning themselves ahead of the curve in areas such as energy efficiency, waste reduction, sustainable products and packaging, and water usage.

However, some sectors, including healthcare and technology, may face more challenges in sustainable implementation. On the other hand, a range of sectors including healthcare and tech might have a bumpier road to sustainable implementation.

“I think they see significant challenges, for example, workforce recruitment and retention is a huge issue to many sectors. Take tech for example, which is facing challenges around diversity, whether it's gender, ethnicity, or other areas. This is increasingly becoming important to investors because these areas represent risks to the growth and success of those businesses." Daley highlights.

Sustaining value

While most GPs see the link between sustainability and value creation, cynicism remains in some corners.

On this point, Ashim Paun, head of sustainable investing at Triton, pushes back and explains that during the deal origination phase, GPs must question the long-term future of a target company if its products and services are not supported by sustainability tailwinds.

Paun emphasises the importance of considering ESG factors early in the deal origination process, as they can be crucial operationally and thematically to understanding the true risk-return profile of a potential investment.

"Failure to address these early can simply waste time and effort during the investment process," Paun says. To illustrate this strategic approach, he cites the example of IFCO, a provider of reusable packaging solutions for fresh foods, which implemented a circular economy business model to optimise the food supply chain.

“IFCO worked to quantify the environmental benefit of using its reusable plastic containers using lifecycle analysis. To further optimise the food supply chain, digital tracking technology was added to the containers. This helps to preserve and reduce both food spoilage and the levels of waste associated with disposable packaging,” he explains. 

Ambienta also weighs the viability of a firm’s sustainability credentials at the deal origination stage. For example, the GP has backed Previero, a machinery specialist for the recycling industry, and Wateralia, a manufacturer of pumps and systems for water infrastructure and agriculture. For the latter, the GP approached the founding business seven years before investing.

Post-deal, sustainability can also be a key value driver. Abris accompanies its portcos towards success through internal initiatives that aim to consolidate value creation through a deeper understanding of ESG issues. Through its ESG Academy, the GP organises two-day workshops for portfolio companies where they learn more about sustainability, reflect on the best practices applied across its portfolio, and talk about new trends in ESG.

“Typically, it is not only bringing in external subject matter experts, but also engaging the C-level from our portfolio companies to share real-life cases, so the insights might be more relevant and applicable for the peer group,” Kolesnik explains. 

IFCO worked to quantify the environmental benefit of using its reusable plastic containers using lifecycle analysis. To further optimise the food supply chain, digital tracking technology was added to the containers. This helps to preserve and reduce both food spoilage and the levels of waste associated with disposable packaging
Ashim Paun, Triton Partners

An example of a successful collaboration between the GP and a portco management team is Poland-based stationery manufacturer Velvetcare, acquired by the investor in 2018.

During its five-year investment, the business grew sales by 2.5 times, Ebitda by more than five times and exports by five times, the investment professional highlights. Velvet Care was also accredited as a B Corp towards the end of its investment period.

Seeds of doubt

While there is evidence to suggest that integrating ESG factors into investment decisions can contribute to long-term value creation, the direct correlation between ESG implementation and higher returns is not always straightforward.

According to Ambienta’s Ranghino, who has been in the industry for more than 20 years, it might take more than five years for GPs to accumulate “meaningful evidence” that sustainability pays off when talking about returns compared to more traditional investments. 

“We all have a responsibility to demonstrate that it is possible to deliver great returns alongside environmental impact and it would be unfortunate should GPs who have committed to this objective not achieve this,” Ranghino highlights. 

Triton’s Paun, meanwhile, views things differently. He believes that questions about the value of sustainability are misguided. Paun states: “I would almost want the question asked the other way around: can anyone explain why sustainability wouldn't lead to better results and companies if we are de-risking and creating more value?” To him, the answer is self-evident.

This article first appeared in the Real Deals Sustainability Report 2024. Click here to read the report in its entirety, now free to non-subscribers.

Triton Partners has acquired VolkerWessels Verbindingen en Netwerken (V&N Group), a company indirectly owned by Koninklijke VolkerWessels.

Koninklijke VolkerWessels also controls the entities Visser & Smit Hanab, VW Telecom and Homij Technische Installaties, which together represent the VolkerWessels energy, telecom and technical installation companies cluster. 

V&N Group is a multi-utility service provider focusing on sustainable and digital solutions in the fields of energy and utility, connectivity and building installation services. The group’s 3,100 employees offer integrated solutions including feasibility studies, advice, design, installation, realisation and maintenance throughout the Netherlands and in Germany.

Following a strategic review, Rotterdam-based Koninklijke VolkerWessels decided to sell its energy, telecom and technical installation companies cluster since it aims to focus more on its activities in construction and real estate development in the Netherlands and Germany, and its infrastructure activities in the Netherlands, the UK and North America.

According to Triton, the GP was attracted to the deal since it has a strong growth potential on the back of the energy transition, the company has long-established customer relationships and because infrastructure services are less cyclical than other markets.

VolkerWessels earned a net profit of €192m and earnings before tax of €260m in 2022, according to its website. 

ADVISERS

ABN AMRO Corporate Finance
ING Corporate Finance
De Brauw (legal)
Clifford Chance (legal) 

Stanley Capital Partners has appointed Ewuradjoa Gadzanku to its strategy team as principal.

In her new role, Gadzanku will be tasked with strengthening the team’s origination strategies to identify high-value investment opportunities. 

Prior to this, Gadzanku was associate partner at McKinsey & Company, with a particular focus on sustainability and decarbonisation in energy and materials, industrials and private equity. Joining the firm in 2019 as an associate, she was promoted in 2021 to engagement manager. 

From 2017 to 2019, she was associate originator at oil industry firm BP, with a particular focus on West Africa. 

Gadzanku started her career as an analyst at Barclays Investment Bank.

During the past year, Stanley Capital has seen its team double in size to more than 20. Previous hires include recently appointed partner Kedar Gharpure, who last February joined SCP's transformation team to enhance business development, sales and marketing across its portfolio.

UK growth equity investor Kennet Partners has invested €15m in Fluid Topics.

Existing investors in the business include VC firms Ventech and Credit Mutuel Innovation.

Founded in 1999 and headquartered in Lyon, France, Fluid Topics' SaaS platform seeks to unify a company's product knowledge — including technical documentation, datasheets, marketing material, and multimedia — to then deliver it as actionable information tailored to the user in a contextualised way, via business applications and digital communication channels.

The company generates 60% of its sales in the United States and 40% in Europe, and claims to have an annual growth rate of more than 45%.

Kennet Partners' investment aims to help Fluid Topics leverage artificial intelligence in customer support applications and deploy a team in the US.

The portfolio company is aiming for sales of €25m over the next three years, while its workforce plans to grow from 80 to 150 employees by 2027.

Cillian Hilliard, director, and Hillel Zidel, managing director at Kennet, will join Fluid Topics’ board of directors, alongside current members Claire Houry, general partner at Ventech, and Maxence Valero, investment director at Credit Mutuel Innovation.

Eric Barroca, founder and former CEO of Nuxeo, a content services platform which Kennet backed between 2016 and 2021, will also be appointed as an independent board member.

Siparex Group, through its mezzanine fund Siparex Intermezzo 2, has structured the management buyout of Ecritel Group as part of a sponsorless operation.

The operation sees Ecritel’s directors, Audrey and Thierry Louail, take back 100% of the group's capital from minority shareholders, opening it to managers and employees.

Senior lenders in the latest operation include BNP Paribas, Caisse d’Epargne et de Prévoyance Ile-de-France, and Crédit Lyonnais.

Founded in 1985 and taken over by Audrey and Thierry Louail in 2007, Ecritel is a managed hosting and cloud-computing company based in Paris. The group employs 250 people.

LBO France acquired a minority stake in Ecritel via its Capdev FRR France FPCI fund in July 2019.

The 2019 transaction allowed Isatis Capital, along with French-based investment firm Nextstage AM, to exit their stakes in the business, while Audrey and Thierry Louai, majority shareholders at the time, increased their stake in the company.

Ecritel says it intends to grow organically while also seizing regional acquisition opportunities.

ADVISERS

Siparex Group
Agilys Avocats 
Peltier Juvigny Marpeau & Associés 
Mortier & Co 

Ecritel
Ryder and Davis 
EY Ventury Avocats

Turnstone, a relatively new private equity investor, closed its sophomore vehicle last month, merely 15 months after the firm's inception. 

It was spun out of Argentum, the Norwegian government-backed asset manager, in January last year, and seeks niche primary, secondary and co-investment opportunities within European private equity buyout and growth funds.

Turnstone Private Equity Fund II reached its hard cap of €170m in March and succeeds the firm’s maiden private equity fund which closed on €150m in October last year.

Speaking to Real Deals off the back of the fundraise, co-founder and chairman Joachim Høegh-Krohn shares that the vehicle held a first close on €120m in December last year.

Through its fund I, Turnstone has completed 18 deals and backed 80 underlying companies. The investor has made two distributions already. 

When asked why the firm raised two funds in quick succession, Høegh-Krohn explains: “Our funds follow a vintage structure and we want to deploy each vehicle in a calendar year. We raised our maiden fund last year, and our second vehicle started raising capital end of last year to deploy it in 2024. We are aiming to come back to the market with our third fund in October this year.”

Turnstone Private Equity Fund II succeeds the firm’s maiden private equity fund which closed on €150m in October last year

Investor base 

Across both of its funds, Turnstone now has 150-200 LPs. Høegh-Krohn reveals that the team had no relationship with most of the investors when it was at Argentum.

Most of the firm’s investors are from the Nordics since the firm enjoys a Norwegian heritage. 

“Having a common heritage, coupled with our pre-existing reputation, credibility and track record helped us in winning commitments in such a short period,” highlights the former Argentum CEO.

Turnstone’s LP base mostly consisted of endowments and family offices based in Norway, UK and Sweden. 

According to Høegh-Krohn, who is also a senior partner at Turnstone, the investor didn’t pursue pension funds because of their “lengthy decision-making processes”. 

Although Turnstone is technically a fund-of-funds, the firm doesn’t view itself as one. 

Turnstone’s LP base mostly consisted of endowments and family offices based in Norway, UK and Sweden

In its view, the firm is a hybrid between a buyout fund and a fund of funds, as it does direct investments together with other buyout funds, fund restructuring, LP-led secondaries, and occasionally primary funds, in search for "attractive" buy-and-build deals.

The investor’s strategy sees it doing deals in the small- and mid-cap markets where it believes its network and experience have a stronger impact. While largely being sector agnostic, Turnstone prefers investments that are less correlated with market factors such as interest rates, and commodity prices. Overall, these elements appealed to Turnstone’s investors, notes Høegh-Krohn.

When it comes to geographies, approximately 40-50% of Turnstone’s deals are in the UK with the rest in Benelux, Germany, Switzerland, the Nordics, and Spain.

The investment firm takes its name from the Turnstone bird, which breeds in the Arctic region, and is known for constantly turning over stones to find food wherever it goes.

Expedition Growth Capital has closed its second fund, Expedition Growth Capital II (Fund II), on its €250m hard cap.

Commitments to Fund II came from new and existing investors, including university endowments, charitable foundations, funds-of-funds, software entrepreneurs and family offices.

The London-based GP closed its debut fund on its €174m hard cap in 2021.

Fund II will continue its predecessor's strategy of targeting minority growth investments in European software companies that have achieved "significant" traction without external funding.

Expedition’s first fund comprises ten software companies that have, on average, more than doubled revenues since the GP's initial investment, according to the PE firm.

Akin Gump Strauss Hauer & Feld and Carey Olsen served as fund counsel.

Spanish private equity firm Miura Partners has raised a continuation vehicle worth €200m to extend its hold of dental distribution business Proclinic Group.

The GP-led deal has received commitments from Federated Hermes and Keyhaven Capital Partners. The transaction is backed by the founding Raneda family, and group CEO Manuel Alfonso who have reinvested in the business.

Founded in 1983, Proclinic Group is an Iberian business which received investment from Miura Partners in 2021. 

Since Miura’s initial investment in 2021, the company has reinforced its C-suite, completed four strategic acquisitions and implemented sustainability initiatives including the installation of photovoltaic panels, the reduction of plastic in packaging and the introduction of ESG clauses in its contracts with suppliers.

Under the GP’s leadership, Proclinic reached €256m in sales in 2023, with an annual growth of 29% since 2020.

According to Cameron Payne, principal and co-head of EMEA investment at Federated Hermes, the business represents a strong fit with its investment model, characterised by a resilient and growing end-market, strong customer value proposition and satisfaction, significant re-occurring revenues and further internationalisation and inorganic growth potential. 

For Federated Hermes this transaction represents the fifth GP-led secondary transaction completed in Europe dutring the past 12 months.

The fresh cash would support the asset in consolidating the market through strategic acquisitions in Italy, Germany, Benelux and the Nordics and the expansion of products and services, Miura Partners said in a statement. 

The Spanish sponsor has an AuM of €1.5bn and was established in 2008.

Continuation vehicles are becoming increasingly popular as an exit avenue as GPs struggle to find buyers. Read our recent coverage about the strategy here. 

ADVISERS:

Moelis & Company (corporate finance)

Baker & McKenzie and King & Wood Mallesons (legal)

PwC (due diligence)

LEK Consulting (commercial due diligence)

Sofindev has acquired coffee-machine distributor Hillewaert BV (Hillewaert).

Founded in 1997 and headquartered in Knokke-Heist, Belgium, Hillewaert focuses on the sale and maintenance of professional coffee machines, offering a range of complementary services  including installations, checks or repairs from its four branches: Knokke, Hasselt and Antwerp in Belgium and Zeewolde in the Netherlands. 

The deal represents third investment of the Sofindev VI fund, which was closed in January 2023 on €250m. 

Previous investments of the fund include Benelux SAP consultant Expertum Group (September 2023) and geospatial software, data and service specialist Merkator (December 2023). 

In terms of value creation, the transaction aims to accelerate the business' growth and international development of its activities with a particular focus on consolidating its client offering in the Benelux, Sofindev said in a statement.

Working closely with the management team, the GP's value-creation strategy also includes the acquisitions of complementary businesses in regions where Hillewaert plans to expand its presence, the GP added. 

The GP also aims to open a training and experience center, with the aim to improve Hillewaert's customer experience and product knowledge. 

With the deal, Hillewaert’s founders Kris Hillewaert and Patrick Hillewaere will remain shareholders and keep their responsibility as managing directors of the business.

Hillewaert’s client base currently includes a range of clients within the out-of-home coffee markets, such as gas stations, small and large offices, airports, retailers, coffee shops, canteens and hospitals.

Hillewaert’s turnover in 2023 hit €30m, the GP said in a statement.

Founded in 1991, Sofindev eyes small and medium-sized enterprises in the Benelux region, with a particular focus on buyouts and growth capital investments.

Since its inception, the firm has invested in over 50 companies through its five funds (Sofindev I, II, III, IV and V). Currently, the GP manages 3 active funds (Sofindev IV, V and VI), together representing more than €500m of committed capital, according to its website. 

ADVISERS

Hillewaert

Moore (financial)

Sofindev

Stibbe (law)

Finvision (financial)

Roland Berger (financial)

European fundraising had a "record" quarter raising more than half the capital it raised in 2023, according to PitchBook’s Q1 2024 Global Private Equity First Look report.

Within the top 10 funds closed in Q1, most were established buyout firms raising megafunds, including EQT’s tenth flagship fund which closed on €22bn. While the year has just begun, PitchBook anticipates EQT’s fund X to be the largest fund close for 2024, according to its data. 

Other players that managed to raise capital despite an overall lull included Cinven (which raised €14.5bn for its eighth fund) and Apax Partners (which amassed €11bn for fund XI).

All three vehicles have closed at a time when fundraising has proven to be disproportionately difficult for small and midcap fund managers. In light of this, PitchBook expects fundraising to slow in future quarters given the record activity witnessed by Q1.

Year-to-date in 2024, €62.6bn have been raised by 31 European private equity funds which compares with €113bn raised last year by 140 funds, according to PitchBook figures. 

Q1 2024 also saw European PE deal value and exit activity decline for the second straight quarter as the appetite for leveraged buyouts cooled given the continued high-interest-rate environment.

While there was a dearth of exit activity, some IPO green shoots were seen emerging in the DACH region in Q1 with the listings of Galderma, Douglas and Renk. In PitchBook’s view, sponsors will look at the performance of those listings “as a gauge for IPO appetite in 2024”. 

Similar to fundraising in Q1, which was dominated by larger and more experienced names, 2023 saw exit value sustained by a select few mega exits, with such deals driving more than 50% of total European exit value.

On a global level, PE deal value in Q1 declined by 23.8% year-on-year and 57.9% from its peak in Q4 2021, while exit value globally slid by 10.7% and is attempting to rebound from its lowest point in over a decade. 

BKL, an accountancy firm backed by CBPE, has merged with Wilson Wright. Both firms specialise in supporting owner-managed businesses, SMEs, entrepreneurs and high-net-worth individuals by providing accountancy, tax and business-advisory services.

Following the deal, the combined business will have two bases in London: BKL’s office in North London and Wilson Wright’s office in Central London. Together they will have a team of more than 400 people, including 39 partners, and a turnover of £46m.

CBPE invested in BKL in April last year and has since overseen three add-on acquisitions, namely Landau Baker, CFPro and Alan Heywood & Company.

BKL represents one of eight investments out of CBPE Fund X, which closed at the hard cap of £561m in November 2020.

The London-based sponsor recently exited Perspective Financial to US-based Charlesbank Capital Partners.

PSG Equity-backed Nalanda Global (Nalanda) is to be acquired by GTCR’s portfolio company Once For All.

Founded in 2000 and headquartered in Madrid, Spain, Nalanda Global is a supply-chain risk and compliance SaaS management software platform that aims to help contractors manage the compliance of sub-contractors in their supply chain.

Based in Basingstoke, UK, and Paris, France, and with over 400 employees and a client portfolio of around 150,000 customers, Once For All offers supply-chain risk management and sustainable sourcing solutions for the construction industry.

With the transaction, PSG Equity, which acquired a majority stake in the business in Nalanda in 2021, will retain a minority stake in the combined business. 

During PSG’s holding period, Nalanda grew both organically and through M&A, expanding its international presence while consolidating its product offering and client base within the Spanish market, Nalanda said in a statement. 

The business completed a number of acquisitions, including maritime and shipping specialist CTGA (July 2021), purchasing- and contracting-processes-management specialist Construred (January 2022), occupational and risk-management specialist 6Connecta (May 2022) and health-and-safety compliance platform Dokify (May 2023). 

Nalanda’s software is currently used by various sectors including construction, energy, retail, industry and logistics. Its presence currently extends across more than ten countries in Europe and Latin America, according to its website. 

Nalanda has a network of over 1,000 contractors and 45,000 sub-contractors as of December 2023, PSG said in a statement.

With the deal, Once For All aims to expand its European footprint into Spain and enhance its technology platform’s offering, providing a differentiated suite of products for its customer base, the business said in a statement. 

Chicago, Illinois-based private equity firm GTCR acquired Once For All in 2023.

Established in 2014, PSG Equity is a growth private equity firm that eyes software- and technology-enabled service providers. Since its inception, the GP has backed more than 135 companies and facilitated 479 add-on acquisitions, according to its website. 

Last January, PSG acquired a majority stake in Nordic hospitality and travel SaaS company Visit Group for €100m. The deal represented the eighth investment from the firm’s €2.6bn PSG Europe II fund, which closed in November 2023. 

Read more about the deal here.

CapMan Growth has invested in waste-equipment company Tana, marking its first investment from CapMan Growth Equity Fund III.

Elo Mutual Pension Insurance Company, the portfolio company's operative management, and Aaro Cantell, who is CapMan Growth's long-term industrial adviser and the main owner in mining solutions provider Normet Group, have invested in the business alongside the GP.

Tana's long-standing owner, Kari Kangas and his family, will remain the company’s largest owner.

Founded in 1971 and headquartered in Finland, Tana's product range includes material-recycling devices, such as shredders and screens, as well as landfill compactors. It also offers a range of spare parts, services, and digital solutions for its machinery.

CapMan Growth is a Finnish investor making "significant" minority investments in entrepreneur-led companies with revenues ranging between €10-200m.

According to the GP, Tana has maintained a compounded annual turnover growth rate of approximately 20% for "several" years.

It expects the portfolio company's turnover for the financial year ended this March to exceed €65m, and sees recycling and reuse of materials as a rapidly growing industry globally.

Kangas, a member of Tana's board, said the company's growth strategy required more experience and capital.

Through his expierence with Normet, Cantell has spent almost 20 years in a similar industry, and he is now set to take on an active role in supporting Tana’s growth as the chair of its board of directors.

Tomi Alén is the partner at CapMan Growth responsible for the Tana investment.

Helix Kapital has closed Helix Kapital Fund III on its hard cap of €135.9m (SEK 1.57bn).

The fund, registered as Article 8 under the EU's Sustainable Finance Disclosure Regulation (SFDR), was "significantly" oversubscribed, according to the firm.

Helix Kapital Fund III will continue the strategy of Helix’s previous funds, focusing on growth buyout investments in small-cap Nordic companies.

Stefan Lambert, partner at Helix Kapital, commented: "The exceptional interest in Fund III reflects the attractive investment landscape we see in Nordic micro-cap companies."

In particular, the latest fund will invest in tech-enabled businesses that specialise in the modernisation of traditional industries, by promoting industrial innovation, sustainable advancements and digital conversion.

Quest Fund Placement was the sole placement agent for the fundraise.

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

The sector agnostic investor typically backs UK-headquartered businesses generating Ebitda £1-5m.

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 include concept design, digital media content, West-End-style production shows and live entertainment activities.

Today, it has approximately 20 full-time employees, as well as north of 50 contractors that the business works with on an ad-hoc basis.

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

Literacy, which has an "evergreen" fund structure, was subsequently listed on the London Stock Exchange in June 2021.

Slick and swift

Speaking to Real Deals, CEO Richard Pindar says Live had recruited Quercus Corporate Finance, an advisory firm within Literacy’s network that predominantly works with founders of businesses of a similar size to Live.

The portfolio company sought to bring an investor on board with a view to secure more customers and work across new countries.

Literacy first met with the business in January, and the deal was completed within less than 10 weeks.

Though Live had spoken to other investors, the business seemed "quite smitten" early on with the offer put forward by Literacy, Pindar says.

"From the first meeting, we got on very well with the two founders," says Pindar. "We could see what a good job they had done. We could see ways in which we could help them to scale the business. It was a pretty swift process."

Well-trodden path

The Literacy CEO says Live is similar to other deals the GP routinely completes, which are minority stakes into 100% founder-owned businesses that have previously not had external shareholders.

We could see what a good job they had done. We could see ways in which we could help them to scale the business. It was a pretty swift process

A well-trodden path for the PE firm, it looks to help founders attempt initiatives they might not have been able to do by themselves, giving them some added confidence.

Pindar likened the Live deal to Literacy's 2023 acquisition of a minority stake in formely 100% founder-owned Cubo, which has "tripled in size" in less than nine months. He also referenced Kernel, a business Literacy backed in 2018 and sold last year, making a 10x return on its money.

In the case of Live, Pindar notes that the business currently has long-term contracts with customers.

"Those customers are growing, they're spending more money, opening new holiday resorts, hotels, or new cruise liners are being delivered. So, there's a good pipeline of additional revenue and growth that will come just as their clients expand their own activities," he adds on the deal angle.

There are "nice" trends within Live's end-markets, particularly within the cruise liner space, with the CEO mentioning that medium- and long-term metrics suggest there will be more boats on the water.

"There's more customers to go after – new names that Live don't currently work with – which will add additional growth."

Given these trends, and Live generating "good" margins and being relatively capex-light, Pindar says that the portfolio company should turn its profits into cash.

Value creation

Live's two relatively young co-founders, Mark Dixon and Dan Lock, are keen to remain with the business, according to Pindar, as they continue in their current roles at the forefront of the business's activities.

The two wanted a partner with Literacy’s offering, which includes supporting the business on the quality of its service offering. 

That said, one of the immediate priorities for Literacy will be helping the portco with its financial reporting, as well as greater visibility and insights over how the business is trading and performing with particular customers, in order to keep up with the scale of the business.

To that end, an interim FD was appointed within a couple of days of Literacy completing its investment in Live, and there are likely to be more hires and investment into the portco's finance team.

The GP may also seek to leverage other businesses from its portfolio to help Live with additional customer introductions and relationships.

One of the immediate priorities for Literacy will be helping the portco with its financial reporting, as well as greater visibility and insights over how the business is trading and performing with particular customers

"In time, it will be about us helping to open the right doors so that Live can expand their client base that way," Pindar says.

"But in the short term, it's allowing the founders and the team at Live to just keep on doing exactly what they've been doing, because they've been doing a lot really well, while also making sure that the team has a structure that means that they don’t become overly busy and get run ragged by trying to continue doing what they're doing. So we’ll help to just bring in a bit more bandwidth at the senior level."

Literacy associate Will Baker supported Pindar on the deal.

Brera Partners has acquired a 70% stake in GBSapri. The deal value is confirmed to be below €100m.

Eurazeo provided acquisition financing for the transaction, while London-based Headway Capital Partners backed Brera Partners with equity financing.

Founded in 1951 and headquartered in Rome, GBSapri is an Italian commercial lines insurance broker.

The brokerage has grown its offering by acquiring local insurance intermediaries across different verticals and sectors, including: marine, cargo, aviation, financial institutions, employee benefits and affinity groups, reinsurance, risk management and claims management.

The company has nine offices and more than 130 employees. Brokered premium in 2023 exceeded €210m.

Brera Partners is a PE firm investing in the financial services sector, with a particular focus on businesses in western Europe and with an EV range of €25-300m.

The GP said it will help GBSapri to acquire a series of businesses with a view to drive consolidation in Italy’s "fragmented" insurance broking sector.

GBSapri's managing director Carlo Maria Bassi will become the new CEO as part of the deal, while current CEO Guilio Spagnoli will become chairman.

ADVISERS

Brera Partners
Chiomenti
PwC
LEK Consulting
Rosedge Capital

Eurazeo
Ahsurst

GBSapri
Kitra Advisory
KPMG
Lener & Partners
Lexia
Andpartners

Scottish Equity Partners (SEP) has sold Intelligent Reach to US-based ecommerce search and personalisation platform Searchspring.

Headquartered in London, Intelligent Reach provides SaaS solutions for retailers and brands, aiming to help them improve their online product visibility.

SEP first invested in Intelligent Reach in 2014 in a "multi-million pound" venture capital investment. With the deal, the GP planned to support the company's expansion in the UK, Europe and wider international markets, according to a statement by the firm.

According to the SEP website, during the holding period Intelligent Reach expanded internationally, particularly growing its presence in the Australian and Japanese markets. The investment also enabled Intelligent Reach to build out its senior management team, expanding its product development, data quality and customer success functions.

Currently, the company’s software is used by more than 150 global brands, including UK companies Currys, Carphone Warehouse, Asda and Debenhams.

According to Intelligent Reach's website, US-based Searchspring plans to work closely with Intelligent Reach to enhance their advertising effectiveness, improve conversion rates, and increase merchandise value, 

Tech investment firm Accel-KKR has acquired a majority stake in Aico Group (Aico).

Established in 2018 in Espoo, Finland, Aico is an end-to-end financial close software platform for large enterprises, which aims to help businesses’ finance departments achieve automation and standardisation of processes, faster month-end financial reporting, and compliance and data accuracy.

In terms of value creation, the GP will support the business’ market expansion across Europe, with a particular focus on the DACH region, as Aico continues to strengthen and develop its SaS platform to broaden its client offering, the GP said in a statement.

With the deal, Accel-KKR joins Finnish investor Juuri Partners, who first invested in Aico in 2016. During its holding period, the GP worked with Aico to support its expansion across Europe with a particular focus on the UK and Germany, the GP said in a statement.

Since Juuri Partners’ investment, Aico expanded its ARR base almost tenfold, according to the GP website.

Aico has offices in Finland, Germany, the UK and Latvia, and currently serves a range of European businesses including Dutch paint and coatings manufacturer AkzoNobel, Anglo-Spanish multinational airline holding company International Airlines Group (IAG), Swiss based agricultural science and technology provider Syngenta and Finnish steel produer Outokumpu.

With $19bn in capital commitments, Accel-KKR focuses on midmarket companies through a range of solutions, including buyout capital, minority-growth investments, and credit alternatives. 

Accel-KKR also invests across various transaction types, including private company recapitalizations, divisional carve-outs and going-private transactions.

Last November, Accell-KKR sold its majority stake in commercialisation platform for pharmaceutical manufacturers IntegriChain to Nordic Capital. Read more about the deal here. 

Netherlands-based software investor Main Capital Partners has raised €2.44bn across two vehicles

Main Capital VIII & Main Foundation II have closed at their respective hard caps of €1.9bn and €500m after spending about six months on the road.

According to the private equity firm, both funds were “substantially oversubscribed” and are double the size of their predecessors.

Speaking to Real Deals in November last year, founder Charly Zwemstra revealed that the funds were looking to hold a first close in February. At the time of the interaction, the sponsor was targeting €1.6bn for Main VIII and €400m for Main Foundation II.

The two funds take the GP’s AuM to €6bn. 

Headquartered in The Hague, Main Capital Partners enjoyed a re-up of 115% and attracted close to €1bn in commitments from new investors, including APG (on behalf of its client ABP), Tecta Invest and Texas County and District Retirement System. Existing investors, such as Hamilton Lane, increased their commitments.

The short timeframe in which both fundraises were achieved despite an overall difficult fundraising climate is a testament to Main’s special focus on enterprise software investing, the firm said in a statement. 

Main did not use a placement agent. Loyens & Loeff acted as legal counsel.

Gyrus Capital has exited Intellera Consulting in a sale to Accenture following a three-year holding period. 

According to a source familiar with the situation, the sale has reaped a 7.8x return to Gyrus and comes a year after the sponsor sold DSS to Inflexion for a 8x return. 

With offices in Rome and Milan, the Italian consultancy firm operates in the public administration and healthcare sectors. 

According to Accenture, the acquisition aligns with Accenture’s ongoing focus of helping Italian public-service organisations enhance and transform their citizen services.

Carved out of PwC Italia in 2021, Intellera Consulting employs a team of more than 1,400 to facilitate the use of EU funds allocated under the bloc's economic support scheme, the National Recovery and Resilience Plan (NRRP).

The deal represents Gyrus' second exit overall. The Swiss sponsor recently raised €310m for its second fund. 

ADVISERS:

Equita & Rothschild (corporate finance)

PedersoliGattai and Herbert Smith Freehills (legal due diligence)

OC&C (commercial due diligence)

Chiaravalli Reail & Associati (financial due diligence)

Allen & Overy (legal)

Intermediate Capital Group (ICG) has held the final close for its debut LP-led secondaries fund, ICG LP Secondaries I (LPS I), on its $1bn hard cap.

Including co-investment special purpose vehicles and separately managed accounts, the total commitments are $1.6bn.

The first-time fundraise for a pure LP secondaries strategy was "significantly" oversubscribed, according to the global alternative asset manager.

LPS I specialises in acquiring buyout fund interests from limited partners, investing on a global basis.

The new vehicle has already closed seven LP stakes transactions, acquiring more than $1.5bn of assets.

The team, led by Oliver Gardey, Ryan Levitt and Vivien Blossier, is comprised of specialised LP secondaries investors based in London and New York.

As of 31 December 2023, ICG manages $86.3bn of assets, and operates across four asset classes: structured and private equity, private debt, real assets and credit. It is a member of the FTSE 100 and listed on the London Stock Exchange.

Roycian has backed backed the £7m MBO of McAndrew Martin, seeing the portfolio company's management team acquire the business from its retiring founder, Bill McAndrew.

Founded in 1989 and headquartered in Cosham, UK, McAndrew Martin provides property services, including building surveys and inspections, architectural CAD, structural and civil engineering, mechanical and electrical engineering, building information modelling, security consulting and project management. The business has approximately 60 employees.

A deal-by-deal investor, Roycian has about 35 LPs involved in this deal. The firm added that it offered the opportunity, which would normally only be accessible to institutional investors, to private investors and family offices.

McAndrew Martin’s executive chairman, Jason Marshall, joined the portfolio company in 2021 as Bill McAndrew’s chosen successor.

Regarding the MBO, he said: "We have an ambitious new five-year strategy which will see the business maintain the quality of our core offering and embrace new services, including the development of advanced digital platforms and AI tools and processes that continue to define the future of our industry and an information security consultancy offer that will support organisations in protecting their data in an increasingly unpredictable world."

Roycian invests in companies and management teams based predominantly in the South of the UK. It supports businesses with a minimum profitability of £1m and a valuation range between £5-30m, with a typical investment size of £3-15m.

Considering most sectors, the GP prefers to become the majority shareholder, but will also look at minority shareholdings where there is an opportunity for significant influence. In addition, the firm focuses on retirement sales or equity-release opportunities.

Moore Kingston Smith provided corporate finance advisory on the deal. 

Inflexion-backed CNX Therapeutics has acquired two CNS products from Eisai, the French sales subsidiary of international pharmaceutical company Eisai Co, for €56.5m, excluding inventory and working capital.

The two acquired medicines, Loxapac (loxapine) and Parkinane LP (trihexyphenidyl chloride), are used to treat psychological disorders and Parkinson’s disease, respectively.

Headquartered in London, CNX Therapeutics is a pharmaceutical company with a portfolio of medicines for the treatment of central nervous system (CNS) disorders and hospital emergencies in more than 40 countries worldwide.

The business was formed in August 2021 when Inflexion acquired Sunovion Pharmaceuticals Europe Limited, the European operations of US-based Sunovion. The carve out included the pan-European licensing rights to a patent-protected medicine used for the treatment of schizophrenia.

The acquisition of these products adds to the portfolio company's portfolio of CNS products and further expands its presence across Europe.

ADVISERS

CNX Therapeutics
Trowers & Hamlins
UGGC Avocats
BDO
Alira Health
Grant Thornton

Eight Advisory, a European consulting firm that assists companies with transactions, restructuring and transformation processes, has opened a new office in Paseo de la Castellana in Madrid, Spain.

The opening aims to further strengthen the firm’s geographic reach, the firm said in a statement.  

Established in 2009 and headquartered in Paris, France, Eight Advisory has been active in Spain since 2012 and has established a dedicated team to cover Spanish projects.

Its Spanish client base currently includes small and large companies, family-run businesses and private equity funds, the firm highlighted in a statement. 

The firm added that the Spanish market currently presents interesting opportunities within a range of sectors such as business services and software, education, agri-food, and healthcare.

Since its inception, Eight Advisory has launched presences in Marseille, Nantes, Rennes, Lyon, Amsterdam, Brussels, Hamburg, Munich, Cologne, Frankfurt, Zurich and London. 

Last December, the firm launched its first North American hub to further strengthen its American offering. 

With more than 600 consultants, Eight Advisory provides a range of services including M&A transaction services, digital transformation, strategic valuation and modelling and real estate services. 
 

ESquare Capital Partners has invested in Smart Servant, a Dutch provider of service and cleaning robotics.

The business is particularly focused on helping hospitality and leisure companies manage their service and cleaning operations.

Founded in 2022, ESquare Capital Partners is a PE firm focused on Benelux companies active in software, IT, platforms and smart hardware.

The GP said Smart Servant’s founders were looking to attract a partner to support it in expanding the team, professionalising the organisation, while providing the financial means to expand its fleet of service and cleaning robots.

ESquare supports the portfolio company’s aim to make service and cleaning robotics affordable for every company, adding that it sees opportunities to expand into care and warehousing niches.

Preservation Capital Partners has closed its PCP Fund II on €459m.

The close represents a 30% increase from its predecessor fund, PCP Fund I, which raised €350m in 2019.

The new fund received support from both longstanding and new investors.

With the closing of PCP Fund II, Preservation Capital Partners now manages approximately €1bn in assets under management across its three active funds.

Preservation Capital was founded in 2017 and is based in London. It specialises in deals in the financial services sector.

In September 2023, the firm closed fundraising for its inaugural continuation vehicle, securing €175m for reinvestment into BMS.

Mentha has sold its majority stake in Paradigma Group to Castik Capital. 

The portfolio company’s founder, Rudo Vissers, and the existing management team will remain shareholders in the business.

Founded in 2003 and headquartered in Nieuwegein, the Netherlands, Paradigma Group offers services aimed at the health, wellbeing, and job satisfaction of employees. The business has approximately 1,000 employees across nine offices.

Mentha, the Amsterdam-based lower midcap private equity firm, first invested in Paradigma Group in 2020.

Since then, the portfolio company has quadrupled its number of employees, professionalised, and expanded its service offering.

Castik was formed in 2014 by former Apax Partners dealmaker Michael Phillips and closed its debut fund the following year at €1bn.

The buyer will look to support Paradigma Group by exploring opportunities abroad, strengthening its service portfolio and expanding its digital offering.

The portfolio company will continue to be led by CEO Peter Kruissen.

Nexxus Iberia has held the first and final close of its Nexxus Iberia Private Equity II fund on €241m.

Launched in April 2023, the fund reached an initial hard cap of €230m in November, and saw an increase to €241m in response to “very strong demand from investors”, the GP said in a statement. 

The fund started its deployment phase in November, with a strategy to support the international expansion of Spanish and Portuguese SMEs into European and American markets.

The GP has no stated preference for particular investment-targeted sectors, but has a track record of investing in healthcare and in subsectors such as nutrition and clinical specialist firms with a technological component, CEO and co-founder Pablo Gallo told Real Deals last November.

The GP added that Southern Europe presents an abundance of opportunities as it seeks to invest in firms with Ebitda between €5m and €15m.

Fund II aims to complete between eight and ten investments, and will allocate at least between 15% and 20% of its size to companies with business models which have a positive impact on sustainability and climate, the GP added. 

The amount of Fund II exceeds the size of the predecessor fund, Nexxus Iberia Private Equity Fund I, which closed on €170m in 2020.

Nexxus Iberia launched its first fund, Nexxus Iberia Private Equity Fund I, in 2018 with a final closing at €170m. In 2023, Nexxus Iberia raised €54m for OFG Continuation Fund. Total commitments raised since inception amount to €465m. 

Established in 2016, Nexxus Iberia has since inception invested in 12 companies in various sectors, both in Spain and Portugal, which in turn have completed 13 add-on acquisitions through the deployment of buy-and-build strategies. 

ADVISERS

KWM (legal) 

Cornerstone Fund Placement (fundraising)

Germany-based Nordwind Growth has invested in Stackfield.

Founded in 2012 and headquartered in Munich, Stackfield is a digital collaboration platform with tools including team chat, video telephony, screen sharing, tasks and projects, joint editing of documents and appointment management.

The business said it prioritises privacy and its platform is therefore particularly relevant for industries that work with sensitive information, such as law firms, public authorities or banks.

Nordwind Growth said it was impressed by Stackfield’s commitment to innovation, security and customer satisfaction.

The GP believes that its experience in scaling companies in regulated industries will help Stackfield to penetrate markets with a high security awareness in the DACH region and other European countries.

Stackfield added that the PE firm’s experience in scaling technology companies, its understanding of the DACH market and a “shared vision” for the portfolio company will be invaluable.

France-based Sagard has entered exclusive negotiations with Primelis’s management and Initiative & Finance to invest in Primelis.

The deal is the 10th investment from the Sagard 4 fund.

Founded in 2012 and headquartered in Paris, Primelis is a digital marketing business with about 120 consultants and aims to achieve sales of €35m in 2024.

The company acquired Haskn, which is focused on content, in 2020 and launched its US operations in 2021.

Initiative & Finance, a former subsidiary of the Natixis group, invested in the business in December 2018, at which point the portco had €5m in turnover.

Established in 2003, Sagard’s Paris-based team of 12 professionals have invested in 44 industrial and service companies in France.

The investor said it has been particularly impressed by the historical development pace of Primelis.

It added that Primelis’s growth is driven by the structural trend of increasing investments in digital media and the increasing complexity of the digital ecosystem that brands need to master to reach their targeted customers.

Further, the context of shortage in expertise drives the demand for marketing services from third-party specialised agencies, according to the buyer.

Sagard’s investment alongside the founders and management team will allow Primelis to pursue its development in Europe and North America, and further invest in its suite of technological tools, including its SaaS offer.

Sagard will also support Primelis in its selective M&A strategy to accelerate the group’s development in new geographies and complement its capabilities and tech tools.

Sagard’s team for the deal comprises Antoine Ernoult-Dairaine, Maxime Baudry, Charlotte Kitabgi, Augustin Perrin, Célia Kanoui Cressey and Federico Gallenzi.

ADVISERS

Sagard
Cambon (corporate finance)
8Advisory (financial due diligence)
Kearney (commercial due diligence)
Mayer Brown (legal)
D’Ornano et Associés (legal)

Primelis
Amala Partners (corporate finance)
eCAP Partner (corporate finance)
Alvarez & Marsal (financial due diligence)
KPMG (tax)
Lamartine and Dumon Partners (legal)

One Equity Partners has acquired a minority stake in CBM for an undisclosed amount. 

Founded in 1967 and headquartered in Modena, Italy, CBM is an Italian tractor attachment equipment manufacturer, specialising in designing and manufacturing systems for coupling, towing and lifting implements predominantly for agricultural tractors, with products including three-point linkages, trailer hitches, pickup hitches and hydraulic power lifts. 

The GP said in a statement that it will seek to grow CBM’s industrial expertise, supporting the expansion of the company’s product portfolio and geographic reach, both organically and through acquisitions. 

The transaction represents the latest investment in Europe for One Equity Partners.

Its current portfolio includes healthcare equipment provider AdaptHealth, tech manufacturer specialist Allegro MicroSystems and aluminium squeeze tubes manufacturer Alltub.

CMB currently employs about 1,800 individuals and operates six manufacturing sites across Italy, Poland, India and China. 

Founded in 2001, One Equity Partners spun out of J.P. Morgan in 2015. With more than $10bn of AUM, it is a midmarket PE firm focused on the industrial, healthcare and technology sectors in North America and Europe. 

The firm has offices in New York, Chicago, Frankfurt and Amsterdam. 

ADVISERS

CBM
Studio Bagni Fiorcari Huller (tax)
Studio Sutich Barbieri Sutich (legal)

One Equity Partners
KPMG (tax)
Freshfields (legal)
Malk Partners (environmental, social and governance)
Eidos Partners (transactional advisory)

Pemberton Asset Management has closed its third direct lending fund on €2.3bn.

The Strategic Credit Fund III brings the strategy’s total AUM across the three vintages to €4.9bn and is one of Europe’s largest opportunistic direct lending funds, according to Preqin. 

The vehicle’s predecessor banked €1.75bn in 2021. 

Pemberton’s strategic credit strategy was launched in 2017 and targets alpha generation by looking at first lien-focused capital solutions.

The strategy invests in sponsor-led transactions across non-cyclical businesses and deployed more than €1bn in 2023.

The vehicle won commitments from new and returning LPs, including public and private pension funds, and insurance providers across Europe, North America, Asia and the Middle East.

Robin Challis, partner of strategic credit at Pemberton, said in the current cycle of inflation, high interest rates and retrenching capital markets, they have seen increasing demand for European direct lending funds from both new and existing investors.

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

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.

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)

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)

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.

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)

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.