Private equity’s interest in listed UK companies is in the spotlight this morning as we delve into some of the take-private action from the past year. PE Hub’s Craig McGlashan compared similar take-private deals on both sides of the Atlantic to find out whether bargain prices found in the UK market affected the premiums PE firms had to pay.
We continue with another look-back, this time featuring European service providers and the key trends driving activity in the segment. Firms such as Blackstone, Nuveen and Carlyle have been busy in the sector in 2024.
We have a fresh European services deal this morning, with Mutares acquiring a Swedish environmental and recycling services provider from GDL Transport Holding.
To finish, we have a scheduling note, as PEI Group is closed for the holidays.
Bargain hunt
Private equity firms have once again found the UK stock market a happy hunting ground in 2024, making a series of take-private acquisitions, writes PE Hub’s Craig McGlashan.
Part of the attraction is due to “uncharacteristically low levels” of price-to-earnings ratios, according to a report from investment bank Peel Hunt that we covered at the start of the year. It found that the FTSE 250 was trading on a 12-month forward price-to-earnings ratio of approximately 11x versus around 15.5x in January 2022.
That tallied with what Searchlight Capital Partners founding partner Oliver Haarmann told us: “So long as very large-cap tech companies continue to drive stock market indices, while more medium-sized healthy yet moderate-growth companies continue to trade at significant discounts and receive less attention from analysts, take-private activity will be of interest.”
But with bargains on offer in the UK, did that affect the kind of premiums that private equity had to pay when compared with the US, where many of the PE buyers were based?
Below is an example of the deals Craig looked into:
US tech investor Thoma Bravo completed its take-private of Cambridge-headquartered cybersecurity company Darktrace at a valuation of around $5.3 billion in October. The offer price, agreed in April, was a multiple of approximately 34x London-listed Darktrace’s adjusted EBITDA for 2023.
It was also a premium of 20 percent over Darktrace’s previous closing share price of 517p, and 44.3 percent over the last three-month average.
Around the time of that agreement, in May, Austin-based Haveli Investments completed its take-private acquisition of ZeroFox, a Baltimore-based and Nasdaq-listed provider of external cybersecurity. It was a much smaller deal – an enterprise value of around $350 million – but offered a similar premium, of 45 percent over the previous 90-day trading average, a price agreed in February.
Take a look at the full story for more take-private analysis.
Service, please
As this is the last Europe Wire of the year, let’s continue to look back at key trends of the past year. Next up, we have European service providers – a segment that saw plenty of activity in 2024.
‘Tariffs’ might become the word of the year in 2025 if the incoming US administration goes ahead with its plans to levy goods coming into the country – sparking concern for exporters in Europe and beyond, writes Craig McGlashan. But none of the rhetoric so far has mentioned any tariffs on services – making private equity investment in European service providers with a global presence over the last year looking like a safe bet, whatever happens in the US.
Below is a management consultancy deal – one of the sub-sectors Craig highlighted in his story:
Blackstone agreed in December to invest up to €250 million into Sia Partners to boost the company’s growth in the US and support M&A.
Founded in 1999, Sia is a management consulting company headquartered in Paris. It works in sectors such as energy, banking, consumer, luxury and retail, and TMT.
It marks the company’s first partnership with a financial investor since its inception.
Sia has achieved close to €500 million in revenue, 40 percent of which is in France and 30 percent in the US, according to a statement.
“Sia is a fast-growing leader in the space, benefiting from a differentiated service offering given their deep expertise across industry defining megatrends such as energy transition and AI,” said Lionel Assant, global co-chief investment officer at Blackstone, in a statement.
Take a look at the full story here to learn about other key trends driving activity in the services sector.
Environmentally conscious
Let’s stick to the topic of European services. Mutares has this morning agreed to acquire GDL Anläggning & Miljö from GDL Transport Holding.
GDL Anläggning & Miljö offers a range of services including waste collection, sanitation, sludge suction, recycling sites, construction transportation and machine rental and transportation. Headquartered in Helsingborg, the company operates with around 60 employees across 16 locations in Sweden. GDL Anläggning & Miljö generated revenues of around €100 million in 2023.
“By acquiring GDL Anläggning & Miljö AB, we are further strengthening our goods and services segment,” said Johannes Laumann, CIO of Mutares, in a statement. “With its wide service offering and extensive geographical reach, the company is very well positioned to deliver great value and efficiency to its clients.”
The acquisition is Mutares’ 17th for 2024. The firm’s other recent deals include the acquisition of home care services provider Alcura France and the carve-out of VR Road Logistics business from VR Group, a logistics and maintenance service company owned by the Finnish state.
Holiday closure
To finish, we have a quick scheduling note from the PE Hub editors: There will be no daily PE Hub Wire newsletters from December 25, 2024 until January 2, 2025, as PEI Group is closed for the holidays. On behalf of all of us at PE Hub, we’re wishing you happy holidays!
