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Online edition 22 February 2021 The news and analysis powering European private equity
15 March, 2021 – Issue 858 penews.com
The Bright Alternative in
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www.penews.com • 15 March, 2021 News 3
CONTENTS Charterhouse to sell drugmaker
Cover
DANILO AGUTOLI
Cooper to CVC in €2.2bn deal
Elisângela Mendonça reinvestment” in Cooper and over 35 years of activity. Its main
continue to support the growth targets are transactions with an
London-based private equity firm and international expansion of the enterprise value of between €75m
Charterhouse Capital Partners business alongside CVC, it said. and €1.5bn in services, health-
said it has entered into exclusive Headquartered in Paris, Cooper care, specialised industrials and
talks with CVC Capital Partners manufactures and distributes a di- consumer sectors. Since 1994, its
to sell a majority stake in French versified portfolio of branded and more than 50 investments have
l Michael Moore: The BVCA boss
and former MP on why private equity drugmaker Cooperation Phar- basic products on an international generated €19.7bn of proceeds at
must create public value maceutique Française, known as basis, to 30 export markets. Its a return of 2x multiple of capital
– Pages 6-7 Cooper. products offering includes over- contributed and a gross internal
The deal, which could value the the-counter medicines, dietary rate of return of 39%.
business at about €2.2bn, would supplements and medical devices. Throughout 2020, the pharma-
News deliver a three times return to Under Charterhouse’s ownership ceutical sector has been resilient
l Six Nations Rugby and CVC seal Charterhouse, according to peo- since 2016, the company has more to Covid-19 financial impacts and
£365m deal ple familiar with the matter. than doubled in size and posted many PE firms have also taken
As part of the transaction, Lux- revenues close to €500m, accord- advantage of investor appetite to
embourg-headquartered CVC will ing to the firm. offload businesses to peer buyout
partner with Yvan Vindevogel, The deal is still subject to work- groups.
the founder of consumer health ers’ council information and con- CVC itself agreed to sell a ma-
company Vemedia, as well as the sultation and to the approval of jority stake in French clinic chain
specialised healthcare invest- relevant regulatory authorities. Elsan to KKR and Ardian for
ment firm Avista Capital Partners One of the longest-established about $4bn. Ardian also exited a
l EU sets out guidance on and Cooper’s management team, private equity firms operating in pharma business, Envision Phar-
sustainability funds according to a statement. Char- Europe, Charterhouse has com- ma Group, in November, to GHO
l Deals and company news
terhouse will make a “significant pleted more than 150 acquisitions Capital, for example.
– Pages 4-5
Analysis
l Emerging markets outlook for
Gender balance progress stalls in Europe
private equity in Africa
l Technology sector shines across
Elisângela Mendonça noted the industry is “finally She believes “women will be
continent’s deal landscape discussing diversity as a busi- attracted to work on firms that
l Private equity closes more but
Improvements to the gender ness imperative”, but stressed take diversity seriously”, which
smaller deals so far this year balance in private equity have more needs to be done in a Pre- may contribute to pushing the
– Pages 8-10 almost stalled, a new report has qin webinar to present the report agenda forward.
found. on 11 March. “There is positive Momentum for improving
At the end of 2020, 20.6% momentum, but we have to keep women’s representation in pri-
People of people employed by buyout on pushing this topic…. to con- vate equity may have stalled be-
l KKR eyes groups in Europe were women, tinue to drive the change cause of the pandemic. A
Europe’s just slightly up from 20.4% at the we want to see,” she report this week by
fertile hunting end of 2019, according to Preqin’s added. professional servic-
20.6%
ground for 2021 Women in Alternatives re- Women in lead- es firm PwC said
tech deals port, released last week, which is ership positions, that due to the
– Page 11 a follow-up to last year’s study. such as Simon “disproportion-
Preqin’s research used data continue to be ate effects” of
from all the alternative invest- a rarity in pri- Proportion of people employed coronavirus pan-
Comment ments industry, including private vate equity. They by buyout firms in Europe in
demic on women,
How do buyout firms protect returns 2020 that were women
l
equity, venture capital, hedge account for only progress on gen-
in an over-hyped technology market? funds, private debt, real estate 11.8% of senior pri- der equality in the
l Digital transformation is giving
and others. But even when look- vate equity roles glob- workplace in developed
private equity managers a competitive countries is set to be back
ing into alternatives more broadly, ally, against 11.5%, according
edge
progress is still slow. In 2020, to Preqin’s previous annual re- to 2017 levels.
– Pages 12-13
20.3% of people working in the port. A more visible improvement Some firms, however, are
whole alternative assets sector was seen at junior and mid-levels, making improvements to diver-
Venture Capital were women – up from 19.7% in where women now occupy 32.2% sity. Last week, Equality Group
l How to build diversity in venture 2019. and 24.7%, respectively, versus launched its first Inclusive Top
capital “Achieving gender equality 30.6% and 26% a year ago. 20 PE & VC Index, shared exclu-
l VC-backed Deliveroo plans London in alternative assets is slow, but “Female representation among sively with PEN (See issue 857,
IPO listing progress is being made in most senior roles remains low. How- pages 6-7). The London-based
– Page 14 parts of the industry,” said Shifra ever, women’s presence in the consulting firm analysed 400
Ansonoff, global head of research alternative assets industry is global PE and VC groups to rank
Data and data operations at Preqin.
Ivelisse Rodriguez Simon,
slowly growing, registering gains them according to their recent
that will hopefully hold over the efforts on improving diversity.
l Latest Deals Pipeline
– Page 15 managing partner at Los Angeles- longer term,” Preqin’s Ansonoff “How to build diversity in
based Avante Capital Partners, added. venture capital”, page 14.
4 News in Brief 15 March, 2021 • www.penews.com
PRIVATE EQUITY NEWS
Deals of the week
The News Building,
1 London Bridge Street, Nordic Capital invests in waste
GETTY IMAGES
London SE1 9GF, recycling and AI companies
Sweden’s Nordic Capital has
United Kingdom
agreed to acquire recycling and
waste handling company Sortera.
The Stockholm-based company
Editorial engages in collection, recycling,
processing and broking of unused
Editor materials from the building
Mark Latham and construction sector and
+44 (0) 20 3426 1254 operates in Sweden and Finland.
mark.latham@dowjones.com
The company has around 420
@mark_latham_
employees and generated about
Reporter 1.4bn Swedish kronor (about
Elisângela Mendonça €138m) last year. The Swedish
+44 (0) 203 426 1161 private equity firm is also backing
elisangela.mendonca@dowjones.com artificial intelligence company
@lilimendonca Boost.ai. The Norway-based
company’s products are designed
Sub-editor to let users develop computer
Keith Sellick programmes using natural Six Nations Rugby and CVC seal £365m deal
keith.sellick@dowjones.com
language instructions. Nordic Six Nations Rugby, which runs the annual European Six
Capital is investing alongside Nations Rugby Championships and Autumn Internationals,
existing backers. has entered into a long-term strategic partnership with the
SVP of Barron’s Group, Dow Jones Luxembourg-headquartered private equity giant CVC. CVC’s
Mae Cheng Preservation Capital acquires seventh fund will invest up to £365m in Six Nations Rugby
mae.cheng@dowjones.com Parmenion in £102m deal in return for a one seventh share in the organising body. The
Standard Life Aberdeen has sold rugby unions of the competing countries – England, France,
Editor, Financial News its financial advisory business Ireland, Italy, Scotland and Wales – will together retain the
Shruti Tripathi Chopra Parmenion to London-based remaining six-sevenths share. Under the agreement the six
+44 (0) 758 433 6897. private equity firm Preservation national rugby unions will retain sole responsibility for all
@shrutitripathi6 Capital Partners in a deal worth sporting matters as well as majority control of commercial
£102m. Parmenion, which decisions, the statement said.
Art Director, Barron’s Group EMEA
Standard Life Aberdeen put up for
Barry Ainsle
+44 (0) 203 217 5299
sale in November, manages more
than £8bn in assets on behalf of $1.4bn. EQT Mid Market Europe acquired Humvee maker AM
about 2,500 advisers, with more acquired 40% in Epidemic Sound General from MacAndrews &
than 68,000 clients. Parmenion in 2017 and through this deal is Forbes.
Advertising and was acquired by Aberdeen Asset partially exiting its stake but will
sponsorships Management for £50m under remain Epidemic Sound’s largest Thoma Bravo to acquire
Massimo Valeri the leadership of former chief shareholder. Epidemic Sound French data company Talend
Client specialist executive Martin Gilbert just provides a subscription service Talend has entered into a
+ 44 (0) 778 066 2327 before Aberdeen completed its that gives customers royalty-free memorandum of understanding
max.valeri@wsjbarrons.com landmark merger with Standard access to a library of music for to sell itself to private equity firm
Life Investments in 2017. use on social media, in online Thoma Bravo for about $2.4bn.
Corporate licences/subscriptions videos, TV and films. As a private company, Talend said
Niall Hickey Ardian makes first investment it would continue investing in its
Relationship Manager
in Germany via growth fund KPS carves out aluminium unit cloud transition. Talend reported
+ 44 (0) 217 5130
niall.hickey@dowjones.com
Ardian is investing in online of Norway’s Norsk Hydro a fourth-quarter net loss of about
fashion retailer Kapten & Son, KPS Capital Partners is $19.6m on revenue of $78.9m,
making its first investment in acquiring the global aluminium compared with a nearly $11.7m
Germany through its growth arm. rolling business of Norwegian loss on $67.5m in revenue in the
No part of this publication may
Acquiring a minority stake and energy company Norsk Hydro year-earlier period.
be reproduced or used in any
form of advertising without prior investing alongside the company’s for €1.38bn. The transaction
permission in writing from the founders, Ardian said it will help includes seven plants, one CIP offloads stake in Spanish
editor. All rights reserved. the business expand into other research and development wind farm portfolio Monegros
ISSN 1741-9085
parts of Europe. Cologne-based centre, global sales offices, and Copenhagen Infrastructure
Kapten, which also operates six around 5,000 employees of which Partners has agreed to sell
retail stores, generates more than 650 employees are in Norway a 49% stake in Monegros,
Printed by: Pureprint Group
€50m in revenue. and the remaining mainly in a wind energy portfolio in
Distributed by: Citipost Germany. In 2020, Hydro Rolling Spain, to Arjun Infrastructure
Published by: eFinancialNews Ltd©2021 EQT and Blackstone put $450m contributed 24 billion kroner Partners. The assets include 12
into Epidemic Sound (€2.37bn) in revenue, 17% of generating sites in Aragon with
Private equity firms EQT and Hydro’s total. KPS has a history capacity to produce as much as
Blackstone Group have together of acquiring business units of 487 megawatts of power. The
invested $450m in Swedish larger companies and growing seller invested in the project
music platform Epidemic Sound those units before selling them. through its €3.5bn Copenhagen
in a deal valuing the company at Last year, for example, the firm Infrastructure III fund.
www.penews.com • 15 March, 2021 News in Brief 5
EU sets out guidance on sustainability funds
Anna Hirtenstein its cleaner gas-fired power stations, a banker
involved in the deal said. The kingdom was
The European Union has brought in rules that able to raise money at a negative interest rate
seek to regulate the fast-growing sustainable for the first time, although it didn’t label the
finance industry for the first time. bonds as green. Some money managers have
Managers of funds that invest in line with included Saudi debt in ESG funds.
environmental, social or governance consid- The rules dictate that all financial firms that
erations, known as ESG, will have to put for- have investors in the EU, including US money
ward a tangible, measurable plan for how they managers, will have to put forward a new kind
will do so. This applies to all asset managers of disclosure to investors: how environmental,
that raise money in the EU, whether they are social or governance issues such as climate
GETTY IMAGES
based within its borders or not, from 10 March. change or poor corporate ethics could affect
“Today there’s quite a bit of variability, too the value of their investments. They will also
much variability” in how ESG investments have to put out a statement about the impact of
are defined, said Jeff McDermott, managing their portfolios on the wider world such as the
partner of Nomura Greentech, a sustainable The rules will give investors clarity on ESG funds carbon emissions of companies they contain.
infrastructure-focused investment bank that is Private market funds are also included,
part of Japanese financial services conglomer- a consistent basis,” McDermott said. “This is marking a shift in the regulation of an opaque
ate Nomura Group. “Investors think they’re going to, I think, make it much more difficult corner of finance that sells directly to inves-
investing behind a manager doing ESG, but to greenwash.” tors without exchanges or public disclosure.
when you peel back the onion, it’s a different Sustainable investing has attracted huge “When deciding what assets to buy or build,
story.” volumes of capital as the financial services in- we will want to make sure that they work with
The rules, known as the Sustainable Fi- dustry has come under greater scrutiny for its these standards,” said Anthony Gordon, a part-
nance Disclosure Regulation, or SFDR, ad- role in pollution and climate change. Investors ner at Avaio Capital, a New York-based private
dress a long-running concern for the industry: directed $152bn into investments marketed as equity fund. “If not, it could create a liability.”
ESG’s lack of supervision. There is no hard ESG in the fourth quarter of 2020, an 88% rise This is the latest in a series of EU legislation
definition of what constitutes a sustainable in- from the previous one, according to data from with a wide-ranging impact, a list that includes
vestment and no watchdog to enforce it. Fund Morningstar. the GDPR data-privacy law and the Mifid rules
managers and ESG ratings firms have been ESG is cropping up in corners of finance that that govern securities markets.
free to set their own definitions, which has aren’t sustainability-focused at first glance. In this case, the rules won’t be directly en-
sparked concerns that claims may be exagger- When Saudi Arabia held an investor call ahead forced by EU authorities in Brussels. Instead,
ated, a practice known as greenwashing. of a euro-denominated government-bond sale it will be up to the regulatory authorities in
This “is a first step in really trying to get to last month, it touched on topics such as the each member state.
a place where companies are reporting data on rising number of women in its workforce and From The Wall Street Journal
Company news
Apax Partners starts pitching mid-market fund. The vehicle, businesses in Africa and Asia that Avenir Growth Capital and Tiger
for mid-market digital fund PAI MMF, was raised entirely have a positive impact. Global Management. Although
Buyout firm Apax virtually and surpassed deal volume in Africa has slowed
Partners is pitching its original €800m BlackRock to raise $4.5bn for during the coronavirus pandemic,
its second digital hard cap, the firm renewable power fund technology startups have
1.5bn
fund focused on said. Its main BlackRock’s global renewable remained a bright spot.
mid-market targets will be power group expects to collect See pages 8-9 for more on Africa.
technology
companies just
$ companies sized
between €100m
between $4bn and $4.5bn for its
third flagship fund which it aims Goldman to invest $10bn in
Amount Apax is seeking
weeks after
for its second digital fund
and €300m in to close by the end of March. Black women initiatives
collecting $11bn sectors such as The fund, BlackRock Global Goldman Sachs plans to invest
for its latest main business services, Renewable Power Fund III, has $10bn over the next decade in
investment pool. food and consumer, raised $3.7bn so far for the fund businesses and organisations
London-based Apax is industrials, and from 85 investors, according that benefit Black women.
seeking $1.5bn for Apax healthcare. to documents presented to the The plan includes investing in
Digital II and expects to hold a Connecticut Retirement Plans housing, healthcare and other
first close for it in May or June, Temasek forges $500m tie-up and Trust Funds. At $4.5bn, the programmes with the ultimate
according to documents with impact investor LeapFrog new fund would be more than 2½ goal of narrowing the wealth
presented to the Pennsylvania Singapore state investment firm times as large as its predecessor. gap between Black women
Public School Employees’ Temasek announced its largest- and others. The bank also will
Retirement System. Apax raised ever commitment to an impact African fintech Flutterware commit $100m to philanthropy.
$1bn for its debut Apax Digital investor, forging a half-a-billion gathers $170m
fund in 2017. dollar partnership with impact Flutterwave has joined the ranks
private equity firm LeapFrog of African financial technology Contributors
PAI Partners pockets €920m Investments. Temasek, which companies attracting private- Elisângela Mendonça, Mark
for debut mid-market vehicle manages a portfolio of about equity investments. The Latham, David Ricketts, Dave
France-headquartered private $232bn, will make a $500m payments technology provider Sebastian, Dominic Chopping,
equity firm PAI Partners has multi-fund investment in has received $170m through a James Booth, Fabiana Negrin
collected €920m for its inaugural LeapFrog, which invests in Series C financing round led by Ochoa, Preeti Singh
6 Cover Story 15 March, 2021 • www.penews.
The former MP wanting
to put the industry at the
heart of the UK recovery
An MP for 18 years before becoming the head of BVCA, Michael Moore tells Mark
Latham about his journey into and out of politics, his return to the financial sector and
how the private equity industry can help the UK economy emerge from the Covid freeze
For an industry where the motivation of many backed by PE and VC across the UK and that that he represented as an MP in Westmins
is often perceived to be personal wealth, it is £43bn has been invested in 3,230 firms over for 18 years.
refreshing to hear the head of the BVCA, the the past five years. He also cites the fact that After training as an accountant in Edinbur
UK trade association for the PE and VC indus- 90% of industry backing was directed at small and at the age of just 29 he was first elec
try, talk about the public and social functions and medium sized businesses in 2019. as Liberal Democrat MP for the former co
of the sector and how it can help the country’s On the impact of Brexit on the UK’s finan- stituency of Tweeddale, Ettrick and Lauderd
post-pandemic economic recovery. cial services industry, Moore says that, follow- in 1997, succeeding David Steel, and was
Michael Moore, a former Scottish MP and ing the UK’s departure from the EU, he is he turned again at the 2001 general election.
government minister, admits that his appoint- is open to engaging in a debate on “how Following a boundary change,
ment as director general of the British Private we can make things smoother and was returned as MP for the n
Equity and Venture Capital Association in 2019 easier”. constituency of Berwickshi
90%
had more to do with his political and public pol- “If we’ve got a free hand Roxburgh and Selkirk in t
icy experience than his experience of finance. on some aspects of regula- general elections of 2005 a
With unemployment rising, the 55-year- tion, let’s do what we can to 2010 before losing his seat
old father of two says that private equity and make that better,” he says. 2015 to the resurgent Sc
venture capital are well placed to address the “But our message consist- The proportion of industry backing tish National Party.
country’s priorities over the coming months ently is that the industry in the UK directed at The highlight of his We
and years, as the country’s economy emerges wants to retain world class small- or medium-sized minster career, he says, w
from the Covid-19 pandemic. standards.” companies in 2019 during the coalition gove
These priorities include, he says, the gov- The fact that nearly 90% of ment when he became Sec
ernment’s much-hyped “levelling-up” agenda the capital raised by firms in the tary of State for Scotland in t
to tackle regional disparities as well as meas- UK is sourced internationally and run-up to the 2014 referendum
ures to strengthen the competitiveness of the not just from the UK means that foreign Scottish independence, during which ti
UK’s post-Brexit economy. investors don’t want a regulatory regime that he negotiated with Nicola Sturgeon on
they feel is watered down or not equivalent to rangements for the plebiscite.
Dynamic businesses international regulatory standards, he says.
“My sense at this stage is that the message Defining moment of life
“What attracted me to the role at the BVCA is has been logged with government. There’s a
that, whether you look at early-stage venture lot of consultation going on now so it maybe As a cabinet minister he also piloted the Sc
or large-scale buyouts from the global firms, another few months before we know what the land Act 2012 which saw tax-varying pow
or any point along that spectrum, you’ve got shape of that future regulation really looks transferred from Westminster to Holyrood.
some of the most dynamic businesses in the like.” “Being in the frontline of the emerging
UK economy investing to make them grow,” he “Let’s go for generic compliance: calibrated bate over the future of Scotland was amaz
tells Private Equity News on a Zoom call from divergence down to a level that doesn’t go be- and was a defining moment in my life,” he sa
his home in southern Scotland. low world class standards, and not burden our- Moore is also proud of a private memb
The BVCA currently has over 750 member selves where we don’t need to.” bill he sponsored which put the UN’s tar
firms and lobbies on behalf of the PE and VC On the issue of the recent boom in the US of developed countries donating 0.7% of gro
industry. of private equity-backed special purpose ac- national income as overseas development
“When I was offered the job I thought this is quisition companies (Spacs), Moore believes it on the statute book: a coalition pledge that t
a really interesting part of the economy to be would be surprising if Europe “missed out on current government said recently it will redu
focused on.” the phenomenon”. to 0.5%.
“There is a need for us to demonstrate the “Historically, an IPO was the most obvious By the time of the 2015 general elect
public value that we’re creating. The indus- way for businesses to provide an exit to inves- and with dire poll predictions, Moore said
try can support government in some pretty tors but the market is more mature and sophis- was resigned to losing his seat in a vote t
important areas and create public value – and ticated these days,” he says. “My guess is that saw the SNP win all but three of the 59 Sc
we are best able to do that if there’s a good people will look carefully at all the different op- tish constituencies. “At least it felt it wasn’t
competitive climate in which we can make that tions and Spacs are one of them.” personal,” he recalls.
investment.” Moore has spent the pandemic lockdowns Asked about the financial track record
Moore points to the fact that 4,290 firms em- holed up in the tiny village of Darnick, close the 2010-2015 coalition government, Moo
ploying almost one million people are currently to Melrose in the Scottish Borders in the area points to the creation in 2012 of the Green
.com
www.penews.com • 15 March, 2021 Cover St
“The industry can sup
government in some p
important areas and c
public value – and we
best able to do that if t
a good competitive cl
in which we can make
investment”
e. Michael Moore, BVC
ster
rgh
cted
on-
dale
re-
he
new
ire,
the
and
at in
cot-
est-
was
ern-
cre- vestment Bank, set up to address market fail-
the
on
ure in providing funding for renewable energy
projects and which helped to provide essential
Michael Moore’s CV
ime finance for a number of offshore wind projects
ar- before being spun off to the private sector in Born: June 1965
2017.
“I think it was a major achievement and Education
moved green finance towards the mainstream
1977-1982: Strathallan School, an independent school in Perthshire
which I felt was an important part of what the
cot- coalition was about, as well as spreading eco- 1982-1983: Jedburgh Grammar School
wers nomic development around the whole of the 1983-1987: MA (Hons) in Politics and Modern History, University of Edinburgh
UK,” he says.
de- Moore adds that the global move towards net
zing Career
zero CO2 emissions means that there will be a
ays. 1987-1988: House of Commons researcher for Archy Kirkwood, the then Liberal M
continuing role for government to finance large
bers infrastructure projects, whether through green constituency of Roxburgh and Berwickshire.
rget bonds – as recently announced by the Chancel- 1988-1997: Chartered accountant, Coopers & Lybrand.
oss lor – or other vehicles. 1997-2015: Member of UK Parliament for Berwickshire, Roxburgh and Selkirk. Du
aid Asked whether he would consider a return
the a Liberal Democrat MP, Moore served as Secretary of State for Scotland 2010-13,
to politics, Moore is adamant that his days as
uce business adviser to the deputy prime minister Nick Clegg from 2013-15, and was
an elected politician came to an end in 2015.
While he misses friends in politics he says he of the Smith Commission on the future of Scottish devolution in 2014.
tion won’t miss the massive pressure on politicians 2016-2019: Adviser to PwC on Brexit, UK devolution and Scottish independence.
he to campaign on an almost daily basis via social time, visiting professor at the International Public Policy Institute, University of Stra
that media – something that politicians did not
cot- August 2019-Present: Director General of the British Private Equity & Venture Ca
have to think about when he was elected in the
too nineties.
“By the time I left, I had bagged pretty well Other current roles: Chair of the Borders Book Festival, advisory board member
d of everything that I thought I was going to get to Business School at Heriot Watt University.
ore do in politics, so I was in a contented place as
In- far as politics was concerned,” he says. “On the Hobbies: Watching rugby, hill-walking, cinema. Favourite films: A bridge too far, H
8 Analysis 15 March, 2021 • www.penews.com
Emerging markets outlook for
African private investment experts discuss the region’s road to recovery
from the coronavirus pandemic. By Preeti Singh and Isaac Taylor
The coronavirus pandemic dampened private the deep operational capabilities necessary of telecoms infrastructure such as fibre,
equity fundraising and dealmaking around the to drive value creation. towers or data centres as we increasingly
globe in 2020. But in some emerging private Attracting investment capital into Africa work from home.
equity markets, general partners say they has always been a challenge, but there are
continue to see plenty of opportunity despite encouraging signs that capital is flowing back What surprised you most about private
the challenges created by the pandemic. into emerging markets. investments in Africa last year?
(Responses have been edited for space and TL: Clearly the pandemic has made for a
clarity). How has your firm adjusted its strategy more “bumpy” ride not just across Africa but
to deal with the effects of Covid? world-wide. But the outlook for Africa PE
TL: Our strategy has remained consistent continues to be very attractive. We see real
Tope Lawani, co-founder and managing since we started the firm. We invest in potential for earnings growth underpinned
partner, Helios Investment Partners sectors that underpin the modern economy by compelling macro trends such as
What are the biggest challenges private such as telecoms and internet infrastructure, increasing urbanisation and technological
investment professionals will face in financial services and technology, consumer innovation.
2021 in Africa? nondiscretionary, and clean energy and
TL: As a PE investor in Africa, it is power businesses. Because African Abi Mustapha-Maduakor, chief executive,
particularly important to be a hands-on consumers and businesses rely African Private Equity and Venture Capital
business builder. The market is not on the products and services Association
heavily intermediated and therefore our portfolio companies To what degree will Africa recover in
the skills required to succeed are much provide, if anything Covid 2021 from last year’s disruption caused
broader. In certain instances, this may has reaffirmed our strategy by the pandemic?
mean investing at an early stage or even of backing businesses AMM: In many ways, Africa’s economic
creating companies where there’s a gap that benefit from secular recovery from the disruption caused by
COMPANY PHOTOGRAPH
in the market. The source of returns growth trends. Covid in the pandemic has already begun, aided by
in Africa is growth rather than financial many ways has propelled the fact that Africa was significantly less
engineering, which means that it is these trends, be it the impacted by the Covid-19 virus than the rest
important to exercise control and have increase of digital of the world, with the exception of South
transactions Africa and parts of North Africa. At the
Tope Lawani: Hands-on business or the zenith of the pandemic, Africa’s PE and VC
building is key for investors in Africa importance industries demonstrated their resilience by
Technology sector shines across continent’s deal landscape
Isaac Taylor digital infrastructure, private equity and on Africa. Some fintech companies benefited
venture capital firms continued to find from the pandemic, which forced many
Africa’s technology sector has remained attractive investment opportunities. businesses to shift their operations online.
a bright spot across the continent’s Fintech accounted for 31% of all African But the sector’s strong performance world-
private investment landscape even as the funding in 2020, according to a recent wide also prompted many global venture-
coronavirus pandemic dampened overall report from Briter Bridges, a London- capital investors to look for opportunities
investment volume along with many based research firm. The total amount of in emerging markets, Nkontchou added.
of the region’s economies. capital deployed across investment
Overall, venture deal activity and acquisition activity that Fintech’s popularity
31%
in Africa fell to $544m in Briter tracked in the region
2020 from $925m in 2019, hit $2.4bn last year, down Africa Capital Alliance, an Africa-focused
according to data provider from a little more than private equity firm, in late November, agreed
PitchBook. Africa’s $2.5bn in 2019, according to invest $20m in the parent company
economies have been hit hard to the report. Briter’s data of electronic payments provider Global
Proportion of all African
by the coronavirus pandemic includes equity, debt, grants, Accelerex. The company said it plans to
funding in 2020 that
and the global economic went to fintech mezzanine financing and use the capital to further expand beyond
contraction associated with it, certain convertible securities Nigeria into other African countries.
investment professionals say. Financial technology companies Meanwhile, Chipper Cash, an African
Economic growth across much had been attracting increased cross-border fintech startup, raised $30m
of the continent has contracted. Sub- attention and dollars from private investors in a Series B round in late 2020. The round
Saharan Africa experienced a 2.6% decline in Africa even before Covid, driven partly by was led by Ribbit Capital but also garnered
in gross domestic product in 2020, a lower steady economic growth and an expanding the attention – and capital – of Bezos
drop than that of the US and many European middle class across many African nations. Expeditions, the personal venture capital
countries, according to January data published As the pandemic hit some sectors hard, the fund of former Amazon CEO Jeff Bezos.
by the International Monetary Fund. fintech sector remained buoyant, according Fintech’s popularity may also stem from
In the technology sector, however, to Cyrille Nkontchou, co-founder of Enko the healthy investment multiples fintech
particularly financial technology and Capital, an asset management firm focused companies have been able to attract. Nina
www.penews.com • 15 March, 2021 Analysis 9
private equity in Africa
What are the upcoming investment GO: Over the past few years, private equity
AVCA PHOTOGRAPH
trends you’re expecting to see in 2021? activity in Africa has increased notably.
AMM: Financials and information technology More experienced GPs have raised their
continue to dominate PE and VC investment third or fourth generation funds, new GPs
in Africa. Financials and information have emerged, and some of the larger global
technology each accounted [for] 19% of VC PE players have invested in the continent.
deals by volume between 2014-2019 and were There’s also been an increase of industry-
also two of the most active sectors by both specific funds as well as geography-focused
PE deal volume and PE deal value in 2020 funds. Funds focused on specialist strategies
H1. Information technology has substantially like private debt, mezzanine, impact and
impacted the growth of other sectors. venture capital have also been established.
Development finance institutions have played
How is Covid affecting the overall an important role in funding the growth of the
investment landscape of Africa? ecosystem. More recently, the industry has
AMM: The normalization of remote-working seen increased interest from commercial LPs,
practice and corporate digitalisation has been including asset managers and pension funds
a significant shift in the investment landscape, from Europe, North America and Africa.
creating opportunities to perform due
diligence online as well as host LP and AGM What do you view as opportunities for
Abi Mustapha-Maduakor: Financials and information meetings virtually. Crucially, this digital turn your region in the coming years?
technology continue to dominate PE and VC has also made it possible for more African GO: The pandemic has created new
investment in the continent PE and VC fund managers to solicit more opportunities in sectors that provide
international or cross-border fundraising. essential services such as healthcare, food
developing several homegrown financing Considerations of sustainability and and agriculture, and education; offer support
solutions to support businesses adversely environmentalism are increasingly being services including distribution and logistics;
affected by the health and economic crisis. integrated into the investment philosophies and leverage on technology (eg fintech,
Secondly, Africa is not a stranger to of large global institutional investors. It e-commerce). We also see opportunities in
crisis and volatility. Historically, many is likely that ESG targets will become an traditional high-growth industries through
African markets have continued to grow essential component of investment strategies investments to help them operate in the “new
in adverse conditions, such as during the in Africa as the continent begins its recovery. normal” environment (eg, cashless and digital
global financial crisis and through periods solutions for banks). Businesses that are
of political instability…Africa has already George Odo, senior partner and managing adept and prepared for cross-border trade can
begun to rehabilitate itself and shows signs director, AfricInvest East Africa also present opportunities given disruptions
of making a modest recovery in the first few How has the market for private equity in the global trade supply chain.
months of 2021. evolved in Africa in the past few years? From WSJ Private Equity Pro
The emerging markets-focused firm also
GETTY IMAGES
Cell towers and announced a $250m Pan-African data-
data centres have centre platform in March 2020. Actis has
been a big theme completed at least one investment out of the
for investors across vehicle, taking a controlling interest in Rack
Africa as access to Centre, a Nigerian data-centre operator.
the internet widens Meanwhile, the International Development
Finance, the US government’s development
finance institution, allocated $300m to
support Africa Data Centres’ acquisition
and expansion of existing data centre
assets in South Africa and Kenya.
Continue to thrive
Investors expect technology deals to
continue to thrive into 2021 despite
what some predict will be a slow
recovery for overall deal activity.
Professionals believe a recovery for the
region in 2021 will depend on the speed
at which other nations around the world
can bring the pandemic under control and
Triantis, who heads telecoms, media during a panel as part of the African bolster their own economic recoveries.
and technology at Standard Bank Group, Private Equity and Venture Capital Early signs suggest that “this will not
said multiples for fintech companies Association’s 2020 Focus podcast series. happen significantly before Q3 2021,” Enko
held up well despite the pandemic. Additionally, digital infrastructure assets Capital’s Nkontchou said. “On that basis,
“Now, we’re seeing some pretty thrived during the pandemic. Toward the the recovery in 2021 is likely to be slow,
hefty valuations being considered for end of 2020, Actis acquired Octotel, a fibre and more of an L shape than a V shape.”
some of these assets,” Triantis said network operator in South Africa, for $140m. From WSJ Private Equity Pro10 Analysis 15 March, 2021 • www.penews.com
Private equity closes
GETTY IMAGES
more but smaller
deals so far this year
Mark Latham sectors fuelled by investors seeing
ever greater convergence of technol-
Global mergers and acquisition deals in Janu- ogy and healthcare and their importance
ary and February of this year have exceeded on the world stage, coupled with the shadow German sandal maker Birkenstock was sold to a
those of the first two months of last year, with from the Spacs hunting for M&A opportuni- consortium including Financiere Agache, Catterton
331 buyout deals announced compared with ties, which is undoubtedly playing its part on Management and L Catterton for $4.2bn last month
317 in 2020 – before the coronavirus pandemic valuations,” he said.
took hold in most developed countries. Meanwhile, Sunaina Sinha Haldea, man- ly” to make predictions about the rest of year
Nevertheless, the combined value of global aging partner of the advisory company Ce- based on two months of data, the UK has had a
buyout deals fell in the first two months of bile Capital, says that, while deal flow within positive year so far.
this year to $82.5bn compared with $108.5bn the private equity industry has been “very “The UK is set for a robust first six months
in January and February of 2020, according to healthy” over the past six months, “the best is at least while Europe will probably be patchy
data from Dealogic. yet to come for these big deals in the coming – dictated to a large extent by the rollout of
The 10 largest global buyout deals in the months and years if the recovery takes hold vaccines and how quickly countries can open
first two months of this year totalled just short and there is a return to economic normalcy”. up properly,” he told PEN.
of $51.5bn, including debt, of which six of the The record $2.9tn of dry powder (commit- “The focus on technology investments in
targeted companies were European, three ted but unallocated investment capital) parked particular across the value chain will continue
were US-based and one was Australian. Of the in the private equity industry now “needs to to be a core investment theme in 2021. The
10, half the deals were in healthcare or tech- be put to work”, she says. ESG agenda is also becoming an increasingly
nology, as was also the case with the top ten “That’s an enormous amount of money and important investor priority.”
deals in the first two months of 2020. it has to go somewhere,” she says. “It cannot Private equity firms are now, said McCrea-
The largest deal, announced on 23 February, get just sit around making no return.” nor, cashing in on the investment opportunity
saw the Ardagh Group spin off its metal pack- presented by a decade’s worth of tech inno-
aging business through a merger with Gores K-shaped recovery vation “that took place last year as the world
Group in a deal valued by Dealogic at $9.3bn adapted to remote working.”
Luxembourg-based global packaging group Sinha Haldea describes the current boom in
Ardagh operates 56 metal and glass production private equity as a “great example” of a K-
facilities in 12 countries, employing more than shaped recovery – whereby some parts of an Global financial sponsor
16,000 people. economy pull out of a recession while others buyout M&A deals (all stakes)
stagnate.
Investment trends “Folk that are cash rich, private equity and
GPs, continue to be in the driver’s seat, but Month Deal value ($bn) Deal total
Stephen Rosen, who heads the corporate prac- there are also many companies that are strug- 2020 Jan 31.5 179
tice in London of the US law firm Cooley, said gling, don’t have an easy path out of this, are
2020 Feb 77.0 138
that the trend of investing in technology and facing very difficult challenges and need state
healthcare will likely continue for the rest of support,” she said. 2021 Jan 30.8 171
the year and is set to “move into majority ter- Phillip McCreanor, head of the UK and Nor- 2021 Feb 51.7 160
ritory by the end of the second quarter.” dics for the investment bank Lincoln Interna-
“Pricing is on the increase again in these tional, said that, while it is “probably too ear- Source: Dealogic. Data as of 9 March 2021.
Top 10 global private equity deals, January-February 2021
Target Acquirer Value ($bn) Target nationality
Ardagh Metal Packaging (100%) Gores Holdings 9.3 Luxembourg
CoreLogic (100%, Bid No 3) Stone Point Capital, Insight Venture Management 7.5 US
Naturgy Energy Group (22.69%) IFM Investors Pty, IFM Global Infrastructure Fund 6.1 Spain
Birkenstock (Maj%) Financiere Agache, Catterton Management, L Catterton 4.8 Germany
Lonza Group (100%) Bain Capital, Cinven 4.7 Switzerland
Nestle Waters North America (100%) One Rock Capital Partners, Metropoulos 4.3 US
Independent Vetcare (28.46%) Nestle, Silver Lake Group 4.2 UK
Aggreko (100%) TDR Capital, I Squared Capital Advisors 3.4 UK
Vocus Group (100%) Macquarie Infrastructure & Real Assets, Aware Super 3.6 Australia
Cubic Corp (100%) Veritas Capital Fund Management, Evergreen Coast Capital 3.0 US
Source: Dealogic. Data as of 9 March 2021.www.penews.com • 15 March, 2021 People 11
KKR eyes Europe’s fertile
hunting ground for tech deals
The firm’s partner and veteran investor Jean-Pierre Saad sat down with
Elisângela Mendonça via Zoom to share what his team is bringing to the table
when spotting and negotiating deals in the region’s booming TMT sector
As Europe’s tech industry blooms with the choosing to stay in Europe, as they are able expertise is key for any investor to be able to
pandemic-induced shift to digital, heavyweight to hire great talent, get smart funding and differentiate the long-term sustainability of
names in private equity are ready to gain more eventually list in Europe, if they wish to. growth from the short-term “Covid bump”.
ground in the continent. KKR is one of them, In most cases, those European champions
the firm’s partner, Jean-Pierre Saad or just are looking for a global partner to help them EM: What do you think will drive the
“J.P.”, as he introduces himself, told Private expand beyond their local markets and this is future of the tech space in the post-
Equity News in an exclusive interview. where we can bring something differentiated pandemic world?
The head of the technology, media and as a truly global tech franchise. JPS: The increased focus on ESG, both
telecom team for the Emea region says that in Europe and globally, as well as on data
2020 was KKR’s busiest-ever year for tech EM: How do you search for and select the governance and regulation will play an
deals in Europe. In total, the firm closed six companies you want to invest in? What increasingly important role in 2021 and
tech investments, of which the €3bn buyout is more important: growth potential or beyond for the tech sector.
of Spain’s telecom MasMovil in June was the an attractive price? Beyond the mere regulation, we are seeing
largest. JPS: In an ideal world both! But realistically an increased focus from companies and
While KKR tends to be more of a general- as the tech market is becoming more consumers on data sovereignty, transparency
ist, Saad, a 40-year-old computer engineer by competitive with valuations increasing and more generally being in control of
training, believes you can’t be a “one-trick steadily for many years – especially for the one’s data. We expect this to impact all tech
pony” if you want to invest in a sector such as strong growth businesses where we focus. companies in Europe in terms of the way they
technology. We are increasingly picking our battles and conduct their business.
This is why Saad, who has been at KKR for focusing on companies and sectors that we
more than 12 years, helped set up a 15-strong know well and where we believe KKR’s EM: What are your expectations for 2021?
team to spot the best deals in the tech sector, resources and experience can have a real JPS: Technology is increasingly and
the London-based investor says. positive impact on growth. This allows us to undoubtedly the growth driver in our
Saad expects the tech momentum to accel- price the upsides that we can help deliver and economies – Covid-19 has proven that.
erate still further in 2021, as the pandemic in- hence be competitive. Almost all industries have seen a dramatic
creases “convictions” about software or digital acceleration in their digital transformation,
businesses. EM: The pandemic accelerated several with many businesses and consumers
His division can write equity cheques from trends in the industry and tech deals accelerating their use of digital tools. We
€50m to “several billion” from KKR’s fifth became even more attractive last year. Is expect this trend to accelerate even more.
€5.8bn European fund, the firm’s $2.2bn next this sustainable or will the bubble burst? I expect more investments in 2021 where
generation growth or its $10.6bn long-term JPS: The pandemic just accelerated trends we combine our sector expertise with the
core private equity strategy. that were already happening, such as the underlying industry experience.
(This interview has been edited for space and digital transformation of traditional industries,
clarity). an explosion of digital services and transition EM: What do you wish you knew before
to the cloud. We do not think this will change you started working in private equity?
EM: The investment landscape in any time soon. JPS: I trained as a computer engineer but
Europe is crowded and several PE The pandemic has also proven to soon after my graduation the tech
firms – KKR included – are expanding many sceptics that most software bubble burst and I thought it was
in other regions, such as Asia. Why is it businesses, with their highly smart to shift to finance and
still a good idea to invest in Europe? recurring revenue and in many banking. This seemed more
JPS: We’re seeing an evolution compared cases mission critical nature, attractive at the time, but many
to a few years back when there was less are quite resilient to disruptions of my classmates stuck to
capital available to back growth companies. and hence should deserve a tech and went to work for
With more capital and bigger tech hubs and premium. Not all software or Amazon, Microsoft and later
ecosystems as in Paris, Berlin, London, digital companies are created Facebook and Airbnb! No
Stockholm or Barcelona, more founders are equally and that is where tech further comments needed…
COMPANY PHOTOGRAPH
“Technology is increasingly and
undoubtedly the growth driver in our
economies – Covid-19 has proven that”
Jean-Pierre Saad, KKR12 Comment 15 March, 2021 • www.penews.com
How do buyout firms protect returns
Having the right people with the necessary
skills and expertise can help find the best
opportunities, writes Mark Corbidge
Tech investing is now part of the private equi- ples for “hope” companies or going after uni-
ty mainstream; it is no longer the preserve of corns within the tech space. For some tech
venture capital or tech specialists. Almost a companies it is almost a badge of honour how
third of the top 10 European buyouts by value much cash they’ve burned; private equity
were technology companies in 2020 ($17.4bn investors view that very differently. Private
out of a total of $59bn). Across the pond in equity tends to be interested in the compa-
the US, private equity firms invested some nies that are more resilient in a downturn –
$161.13bn in technology companies across for example, tech companies that can assist
560 deals last year compared with $138.66bn SMEs in terms of digitalisation or enterprise
across 692 deals in 2019, according to data software companies. These types of compa-
provider Dealogic. nies usually have strong revenue growth and
Even with increased valuations, investors solid fundamentals because their customers
flocked to tech companies of all kinds last are rapidly digitising to stay competitive.
year, with a surge in tech stocks also help- At Sun European Partners, for example, Firms need the skills to
ing to keep the public market’s surprisingly we look at companies demonstrating 10-25% cut through the hype
buoyant and resilient amid the Covid-19 pan- growth, and these growth rates are typical of
demic, and this trend shows no signs of slow- the types of deals that private equity look for
ing down in 2021. in the tech space. that is over-valued. Deep sector knowledge
As appetite for the sector increases, valua- However, these deals can only be found within private equity firms enables the team
tions are soaring. To protect returns, private if you have the people with the right skill to build a strong investment thesis to take to
equity companies must differentiate them- sets and sector expertise to seek them out. investment committees.
selves to still be able to generate desired re- As private equity is a people business, it is These specialists have a clear understand-
turns in an “over-hyped” tech sector. vital to have the best people around to spot ing of the key drivers, opportunities and chal-
Private equity tends to avoid the most opportunities in the market. Sector expertise lenges within the industry and have the abil-
talked about tech segments – as most are not is crucial to find the companies that have a ity to focus and go after the best businesses.
in the business of paying stratospheric multi- competitive relative valuation in a market Unsurprising, there will be premiums to pay
Digital transformation is giving private
George Ralph flow has evolved, some PE managers have technology to transform business operating
grasped the opportunity and as their models, such as replacing manual processes
The private equity industry has been growing competitors start to see the tangible benefits, with automation across businesses. At its
rapidly over the past decade, driven by they will also follow in search of an edge in a best, digitisation helps PE managers oversee
attractive returns and low interest rates. Total hyper-competitive market. their investments and key decision making.
assets under management hit a record Collaboration tools such as Teams and Slack
$4.11tn in 2019, as investors committed more Correct strategy are able to automate manual processes
than half a trillion dollars, further boosting the around investor relations. For example, it is
pile of available dry powder. Moreover, For those PE managers, it is crucial that any possible for a firm to automate checklists
inflows into the asset class are increasingly digital transformation is approached correctly, that have traditionally been tasks carried out
coming from institutional investors. as a poorly executed strategy can lead to in spreadsheets by using a tool such as
As this new type of investor has been significant business disruption and even Microsoft Flow. Investor reporting, which
attracted to the industry – and with it inhibit the ability to generate alpha. can take a person several days within any
increasing scrutiny from regulators – private Digital transformation is the use of given month can now be fully automated and
equity managers have been under increasing
pressure to “institutionalise” their technology
and operating models to meet the greater “Private equity managers have
demands put on them by both traditional and
institutional investors. been under increasing pressure to
Digitally transforming business operations ‘institutionalise’ their technology
COMPANY PHOTOGRAPH
can create efficiencies, increase the visibility
of data and reduce costs and so increase the and operating models to meet the
ability to generate alpha, but the actual greater demands put on them by both
process of transformation can be disruptive to
business and deal flow. Consequently, the PE
traditional and institutional investors”
sector has been reluctant to embrace George Ralph, RFA
digitisation. However, as business and dealwww.penews.com • 15 March, 2021 Comment 13
in an over-hyped technology market?
“For some tech
companies it is almost
a badge of honour how
much cash they’ve
burned; private
equity investors
view that very
COMPANY PHOTOGRAPH
differently”
Mark Corbidge,
Sun European
Partners
have tech sector expertise, they may not
have all the required skills that are needed to
generate attractive returns.
So, what is the secret to protect returns
in an over-hyped technology market? It’s all
about having the right people to navigate the
for tech deals, but it is about finding the best tech companies may also increase due to an over-hyped market and find attractive deals
GETTY IMAGES
businesses with good relative valuations in increased understanding of the sector. A vi- in a sweet-spot that still enables private eq-
the space. This is almost impossible to do cious cycle some may say! The rise in sector uity to deploy its operational excellence to
without key individuals with specific skills specialism, and an increased focus on similar increase the company’s value, help fuel its
and knowledge that will still be able to gen- sectors, will undoubtedly push prices up. In growth and ultimately generate attractive
erate desired returns within the tech bubble. 2021, analysts at PitchBook expect 20% of returns.
With increased sector expertise and spe- buyouts to be priced above 20x Ebitda. The Mark Corbidge is managing director Sun
cialists within private equity firms, the rise in valuations will probably deter general- European Partners, the European arm of
valuations and the valuation expectations of ist investors as, unlike those PE firms that US private equity firm Sun Capital Partners.
equity managers a competitive edge
instantaneous. Also, with the current focus on ESG, phase two of their delivery now, and we are
In the beginning of any digitisation journey, investors are keen to see that ESG data seeing firms data scraping into their data
a firm should look at all the manual processes management plans have been put in place for warehouse to review the KPI’s in order to
within their business, the teams and investments, built around key performance see how that impacts their funds’
departments involved, and their roles. The indicators and related targets. A robust data performance.
next step is to complete a Proof of Concept, strategy can help a manager automate this.
which allows a firm to check the outputs of Also, using data and analytics, a manager can Business burdens
the newly digitised process over a period of benchmark and monitor the ESG issues that
time, making sure the automation is correct. are material to ESG performance. This strategy also continues around
An emerging manager and established collaboration. If a firm has multiple systems,
Data strategy manager might use different tools for their the answer isn’t to integrate those systems,
data and digital transformation journey, but it is to pour all the data from every system
Successful digitisation is built on an effective the principle is the same. The great thing into a data warehouse. From here, a firm can
data strategy. An end-to-end managed data about public cloud and data warehousing is assess where the burdens to their business
solution is usually the most effective approach that it is scalable. At RFA we don’t have lie and what can be automated.
for a PE firm. A data warehouse will separate clients using the same technology two years The longer picture suggests a firm will
the layers of data via any public cloud after launch as they did on day one, but the need less people to deliver the same
provider such as AWS, Azure or Google Cloud journey is seamless as we scale firms up to performance, if not better. So certain roles
and then companies can scale their data and manage increased assets under management. within a fund will shift and the end result is
separate processing and storage to harness In today’s environment, the key trend that automation can buy people more time to
that data for dealmaking and key investment continues about how we manage data. As focus on tasks they really need to focus on,
decisions. more and more people get involved in their such as investor relations and the alpha
Data governance, ingestion and analytics data journey, they will discover more generation that has caused this seismic shift
solutions are built to meet the standards of anomalies in the behaviour, operation and in the prominence of the PE industry.
institutional investors and global financial functions of their business. George Ralph is global managing director at
regulators, automating the processes that Meanwhile, firms that have already RFA, a cybersecurity provider to the
have been lengthy in the past. embarked on their digitisation journey are in alternative investment industry.You can also read
