NautaDutilh Q2 2015 Private Equity & Venture Capital Barometer Belgium This is NautaDutilh Belgium’s third Private Equity & Venture Capital Barometer. After our spring 2014 Interim Report, we submitted a questionnaire to a select group of private equity and venture capital players, asking about trends in their practice in the last two quarters of 2014 and the first quarters of 2015. Our first two barometers presented respectively the Q3-Q4 2014 and Q1 2015 results. This publication shares highlighted results from the second quarter of this year.
For more information on NautaDutilh’s Private Equity Team: http://www.nautadutilh.com/Documents/Images%20and%20publications%20for%20news/ Private_Equity_report_Benelux_2014_US-format.pdf Elke Janssens T: +32 2 566 81 50, M: +32 478 99 63 45 E:
[email protected] Pascal Faes T: +32 2 566 86 12, M: +32 477 93 10 92 E:
[email protected] Sophie Jacmain T: +32 2 566 81 94, M: +32 497 51 47 73 E:
[email protected] The 2013 Report refers to «NautaDutilh’s 2013 Belgian Private Equity and Venture Capital Market - An Outlook», available at http://www.nautadutilh.com/PageFiles/10051/Private_Equity-Report_Belgium_2013%20UK.pdf. The 2014 Interim Report is «NautaDutilh’s 2014 Outlook on the Benelux Private Equity, Venture Capital & Leveraged Finance Market - An Interim Report», available at http://www.nautadutilh.com/Documents/Images%20and%20publications%20for%20news/Private_Equity_report_Benelux_2014_US-format.pdf. The Q3-Q4 2014 Barometer refers to NautaDutilh Belgium’s first Private Equity & Venture Capital Barometer, available at http://www.nautadutilh.com/en/home/news-events/news-publications/news/2015/4/q3-q4-2014-belgian-private-equity-venture-capital-barometer/. The Q1-2015 Barometer refers to NautaDutilh Belgium’s second Private Equity & Venture Capital Barometer, available at http://www.nautadutilh.com/en/home/news-events/news-publications/news/2015/6/belgian-private-equity-venture-capital-barometer-q1-2015/.
Challenge the obvious
Acquisitions Q3 and Q4 2014 Q1 2015 Q2 2015 Q3 and Q4 2014 Q1 2015 Q2 2015
Exits A significant drop in the number of acquisitions
spots for Q3 and Q4 2014. In the Q1 2015 report, we pointed out shrinking profit margins and the fact that many Belgian retail and wholesale companies are for
For the first time since we started our survey, the
sale. This trend was confirmed by our Restructuring
reported number of exits has exceeded the number
and Insolvency Team and by the first-place ranking of
of acquisitions. This is in line with data from Merger-
retail & wholesale transactions in Q1 2015. However,
Market, according to which in Q2 2015 53% of deals
by Q2 2015, this trend seems to have petered out,
involving private equity players related to exits. In Q1
with the retail & wholesale sector finishing in fourth
2015, the exit and acquisition numbers were equal
place (non-distressed asset deals included acquisi-
(most exits by a single PE/VC player were acquisitions
tions by AS Adventure and Fiets!).
by another PE/VC player). Respondents mentioned this trend, which we predict will most likely be confir-
The Q2 2015 Barometer reveals a new trend, however.
med by the Q3 2015 results.
First place is now held by the healthcare sector (20%
With respect to exits, private equity players were not
of all deals mentioned by respondents). This data has
the only ones who cashed out on earlier investments.
not been confirmed by MergerMarket, however, which
Family shareholders and private individuals also sold
did not report private equity or venture capital activity
important stakes. Notable transactions involved
in the healthcare sector for the reference period.
Verlinvest, Korys and Mark Coucke. You can read more about these deals below.
In second place is the technology & IT sector. In this
With respect to acquisitions, more acquisition activity
regard, Avalara Inc.’s bid for VAT Applications (a Belgian
by corporates was reported in Q2 2015.
developer of automated applications to provide VAT
The number of weeks needed to sign/close a deal
solutions), Clarabridge Inc.’s bid for Engagor (a Belgian
held steady at approximately 18 (from receipt of the
designer and developer of web-based social media
information memorandum).
management tools), and Duo-Med Instruments’ bid for Acertys Group (a provider of medical technology, consultancy, sales, integration, training and technical
Sectors with the most PE/VC activity
support) are all worth mentioning.
In the 2013 Report, 2014 Interim Report and Q3-Q4
In third place is the life sciences sector. One note-
2014 Barometer, the technology & IT, retail & whole-
worthy transaction which received substantial press
sale, life sciences, and healthcare sectors held the top
coverage was the bid by Agilent Technologies Inc.
1
1
The information is either based on press coverage or obtained from www. mergermarket.com.
Private Equity & Venture Capital Q2 2015 Barometer | Highlights
2
(a US-based measurement company providing
uninterruptible power supply systems), Montebi
bioanalytical and electronic measurement solutions) for
(watches), Bekaert Textiles (bed-cover solutions),
Cartagenia (a Belgian provider of web-based software
Smurfit Kappa (paper-based packaging solutions),
and database platforms to genetic labs and clinicians).
and Fedrus (roof coverings and insulation).
In the last quarter, we assisted the VIB, a leading life
Distressed company deals
sciences institute, with the establishment of Oncurious NV, a new oncology company which will develop an antibody for the treatment of paediatric
The Q3-Q4 2014 Barometer showed that investors have
brain tumours, and Confo Therapeutics, a spin-off fun-
little interest in distressed assets. Indeed, for the most
ded by Capricorn Health-Tech Fund, Qbic and SOFI.
part, the abovementioned acquisitions did not involve
Finally, in fourth (but obviously not last) place in Q2
distressed companies. The Q1 2015 Barometer confir-
Retail & wholesale Energy & utilities Chemicals Healthcare Telecom Financial products & services Real estate/construction Infrastructure Media & entertainment Manufacturing (excluding automotive) Automotive Life sciences Technology/IT Transport & logistics Cleantech Agriculture Business & professional services 0
10
20
30
40
50
60
70
Percentage of respondents (normalized, multiple answers allowed)
Q3 and Q4 2014 results Q1 2015 results Q2 2015 results
2015 is the manufacturing sector. The deal that
med this trend, with nearly no respondents mentioning
received the most press coverage in Belgium was the
distressed company deals. Heightened risk adversity and
acquisition by US-based Lone Star Funds of Balta
the fact that weak companies with structural issues are
Industries, a Belgian company which is a world leader
likely to increasingly underperform if market conditions
in the floor coverings industry. Other deals involving
worsen both influence the choice of target.
Belgian companies included Euro-Diesel (diesel rotary
3
Private Equity & Venture Capital Q2 2015 Barometer | Highlights
The Q2 2015 figures, however, demonstrate a 50%
sale in several start-up and more mature companies),
increase in the number of deals relating to distressed
Jurgen Ingels (Smartfin) and Korys (a holding company
assets, a trend which was predicted by Sophie
of the Colruyt family).
Jacmain of NautaDutilh’s Restructuring and Insolvency Team, when commenting on the Q1 2015 results. She
Who are the sellers?
witnessed an increase in both involuntary restructuring procedures and silent debt restructuring activities
In most cases (respondents were allowed to give
(i.e. companies trying to renegotiate and modify their
multiple answers), respondents mentioned a transac-
agreements with banks).
tion in which a PE player or family was on the selling side (few corporates and no financial institutions were
Investment partners
mentioned). This was in line with the findings of our 2013 Report and 2014 Interim Report, both of which
Both the Q3-Q4 2014 and Q1 2015 Barometers
identified family owners and PE players as the most
confirmed that most respondents invested either
likely sellers over the next twelve months.
with a co-investor or current management (the Q1 2015 Barometer confirmed our findings that players
We were somewhat surprised by the Q3-Q4 2014
usually team up or invest with current management,
Barometer results, according to which PE/VC players
an increase from 30% to 50% between Q3-Q4 2014
were the most active sellers (which could be explained
and Q1 2015). The Q2 2015 Barometer confirms that
by the fact that closed-end funds are obliged to exit
management’s stake tends to be around 20%. Most
and deal activity on the sell side was lower than in
respondents reported a figure of up to 20%, in line
previous years). However, the Q1 and Q2 2015 results
with the findings of our 2013 Report, our expectations
confirmed our earlier findings that the shareholders of
for 2014 and the Q3-Q4 2014 Barometer, even though
family-owned enterprises lead the sellers’ pack.
a management stake of up to 50% was reported in specific deals sponsored by venture capitalists or
A deal which received substantial press coverage
business angels in both Q1 and Q2 2015.
was the acquisition by the Belgian private equity fund Down 2 Earth Capital of Trafuco, a Belgian transporta-
In Q2 2015, the press highlighted the PE activities of
tion company and leader in the distribution of marine
high net worth individuals and family holding compa-
lubricants, for an undisclosed price. According to
nies such as Verlinvest (the family holding company of
the company, the funds should allow it to realise its
de Spoelberch and de Mevius), Marck Coucke (rein-
long-term strategy to provide more high added-value
vestment of the proceeds from the Omega Pharma
services to customers.
33
%
7%
51%
8%
13
%
47
Q3 and Q4 2014 results
39% 33%
%
30%
Corporates Financial institutions Family-owned enterprises Other
25%
8% Q1 2015 results
Private Equity & Venture Capital Q2 2015 Barometer | Highlights
Private equity/venture capital/sponsors
6%
Q2 2015 results
4
Multiple answers allowed Percentage of total answers
Who are the buyers?
Post-closing issues
As mentioned above, for the first time since the start
No respondents reported post-closing issues, stating
of our survey, the reported number of exits in Q2 2015
that in principle they do not encounter claims under
exceeded the number of acquisitions. However, in
the representations and warranties. Our daily practice
most reported transactions, PE/VC players are still on
confirms little post-closing litigation. Therefore, it’s in-
the buying side. One trend in the past few quarters
teresting to note that respondents to the 2013 Report
(which must still be confirmed by future barometers)
and the 2014 Interim Report indicated that represen-
is that PE/VC players are increasingly teaming up with
tations and warranties are the most important factor
strong companies also interested in the takeover.
when negotiating acquisition documents. In most cases, however, disputes can be settled amicably.
18%
Private equity/venture capital/sponsors
13% 39%
32% Q2 2015 results
Corporates Financial institutions Family owners Other
Multiple answers allowed Percentage of total answers
5
Private Equity & Venture Capital Q2 2015 Barometer | Highlights
