Presentation Transcript

1. Private equity 1.01

   Brief introduction into private equity 6 April 2011
2. Introduction Roy Stegeman CARe Saval / Knowsley Royal Sanders Kirin Agribio Brunotti KPMG Corporate Finance KPMG Corporate Finance KPMG Corporate Finance KPMG Corporate Finance KPMG Corporate Finance acted as financial advisor to Bencis Capital Partners on the acquisition of Royal Sanders acted as deal manager and financial advisor to AAC Capital Partners on the acquisition of CARe from NPM Capital acted as deal manager and financial advisor to Bencis Capital Partners on the acquisition of Saval and Knowsley from Imtech acted as financial advisor to H2 Equity Partners on the acquisition of Kirin Agribio from Kirin Holdings acted as deal manager and financial advisor to the shareholders of Brunotti Trade Mark on the sale to Greenfield Capital Partners February 2010 January 2010 August 2010 March 2010 Pending HG International KPMG Corporate Finance acted as deal manager and financial advisor to Gilde Equity Management Benelux on the acquisition of HG International August 2009 Partner KPMG Corporate Finance since May 2009 Previously worked at ABN AMRO / RBS Corporate Finance Specialised in Private Equity related deals
3. KPMG Corporate Finance Independent KPMG Corporate Finance offers impartial advice, independent from financing sources Regional Investment Banks Professional Deep sector knowledge and specialist skills group provide high quality advisory services Boutiques Global offering As part of a global network, our clients benefit from global and local presence Commercial Banks Focus on mid market transactions “One-stop shop” Major Investment Banks KPMG is a “one-stop shop” – a single source for all transaction needs Leading advisor Consistent track record as leading advisor by number of deals globally Global Reach
4. Topics covered today How large is the private equity market in the Netherlands? What are the characteristics of a leverage buy out? Is it possible to acquire a 10% share in a company that is worth EUR 100 million for EUR 1 million? Which companies are suitable for a buy out? What is the current status of private equity in the Netherlands?
5. Question: How large is the private equity market in the Netherlands?
6. Key facts private equity the Netherlands 90 PE houses EUR 23.3 billion in funds 1,300 portfolio companies Combined revenue of EUR 81 billion, 19% of GDP Employs over 320,000 FTE, 6% of the total working population in the private sector In 57% of private equity investments the number of FTE grow 308 private equity transactions in 2010 Currently 3 to 4 billion available in equity
7. Contact with private equity in our daily life
8. Private equity landscape Global / incoming PE EV >300m Sector specific Food / Retail International PE EV 80m – 300 Healthcare Mid market PE EV 20m – 100m Power / Energy Local PE EV 0 – 20m
9. Different type of funds Independent funds Captive funds Family offices Investment horizon No unified investment horizon Investment period Divestment period 5 year 2 year 5 year 2 year
10. Investment structure of an independent private equity fund Limited Partners (LP) General Partners (GP) Fund Bank Management Bank Management Bank Management Portfolio company A Portfolio company B Portfolio company C
11. Funds flow of an independent private equity fund Limited Partners (LP) General Partners (GP) The returns for the GP consist of a management fee of 2% and proceeds of carried interest Fund Bank Management The bank is getting paid interest on the provided debt financing Portfolio company A
12. Investment structure of a captive private equity fund Bank / Insurance company Private equity house Fund Parcom Buyout Fund Portfolio companies
13. Structure of a family office Trust Family office Parent company Private equity Real estate Listed companies
14. Question: What are the characteristics of a leverage buy out?
15. Characteristics Leveraged Buy out (LBO) Acquiring company is Newco Acquisition price also determined by debt capacity Strong incentives to management (shareholding & envy) Different types of debt funding Specific investment period Pursue growth strategy Good leaver / Bad leaver clause Drag & tag along rights Recaps
16. Question: Is it possible to acquire a 10% share in a company that is worth EUR 100 million for EUR 1 million?
17. A numerical example of a leverage buy out Example I Without envy Example 2 Envy = 2 Example 3 Envy = 5 Senior debt 50 Senior debt 50 Senior debt 50 Management pays EUR 1 million to acquire a share of 10% in a company with an enterprise value of EUR 100 million Loan notes 40 Loan notes 25 Equity PE House 45 SH = 90% Equity PE House 20 SH = 80% Equity PE House 9 SH = 90% Equity management 5 Equity management 5 SH = 10% SH = 20% SH = 10% Equity management 1 EV = 100 EBITDA = 10 Multiple = 10x EV = 100 EBITDA = 10 Multiple = 10x EV = 100 EBITDA = 10 Multiple = 10x
18. Returns LBO when growth is assumed Enterprise value Return Management Equity management Investment management Equity PE house Investment PE Loan notes Return PE Mezzanine Debt Senior debt 4 0 Exit Entry Year
19. Returns LBO when no growth is assumed Enterprise value Investment management Return Management Equity management Equity PE house Investment PE Loan notes Return PE Mezzanine Debt Senior debt 4 0 Exit Entry Year
20. Internal rate of return (IRR) Entry year 1 Exit year 3 Senior debt 25 Senior debt 50 Loan notes 25 Equity PE House 64 Loan notes 25 IRR = 25.5% Equity PE House 20 Equitymanagement 16 Growth in EBITDA assumed Equitymanagement 5 No multiple growth IRR = 47.6% EV = 100 EBITDA = 10 Multiple = 10x EV = 130 EBITDA = 13 Multiple = 10x
21. Various debt instruments are used in a typical buy-out structure Senior debt instruments 2nd secured Subordinated debt instruments Highly subordinated Equity instruments
22. Other types of buy outs are based on the same principle Management buy out (MBO) Secondary Buy Out Leveraged Buy Out (LBO) Leveraged Buy Out (LBO) Equity Buyout (EBO) BIMBO 'buy-in management buy-out' Initial Buyout (IBO) Management Buy in (MBI)
23. Growth Capital Minority investments Drag and tag along rights Goal: achieve growth, restructure shareholdings, release equity, deleverage balance sheets Shareholders maintain control Both start-up as mature companies No complicated capital structure
24. Question: Which companies are suitable for a buy out?
25. Which companies are suitable for a buy-out Growth potential Financing capacity (asset base) Clear exit possibility Presence operational improvements Competent management Buy and build opportunities Attractive market position Limited investment requirements Limited operational risk
26. Typical MBO process Initial assessment of viability Opportunity Appointment of financial adviser Fund raising Business Plan Deal structuring Add-on acquisitions Negotiations Heads of Agreement Negotiations and legal agreements Completion Due Diligence Exit
27. Case study Catalpa Bencis, acquires 100% for ca. EUR 50 mln Waterland Private Equity acquires 50% for EUR 7 mln Acquisition B4 kids, Koetjeboe, de Muzikantjes, Elan Acquisition Unieke 2011 1976 2001 2003 2006 2007 2008 2009 2010 Acquisition Combiwel Providence acquires Catalpa forEUR 500 mln Foundation of Catalpa Waterlandacquires the remaining 50% Acquisition Astrid Lindgren Acquisition Octopus
28. Case study Catalpa
29. Question: What is the current status of private equity in the Netherlands?
30. Current status private equity market in the Netherlands Total funds raised in NL Total investments & divestments in NL
31. Questions