Ipcom swaps private equity hands, 12 dealmakers advise on deal

20 November 2017 Consultancy.uk

Private equity firm Waterland has sold its stake in Belgian insulation company Ipcom to Alpha Private Equity, in a deal advised by 12 firms from the professional services world. The deal will conclude for an undisclosed fee, upon approval from the German competition authority.

Waterland formed Ipcom in 2010 through the acquisition and merger of Waeyaer-Vermeersch Isolatie and Isowill. Following an extended international buy-and-build strategy executed by Ipcom, the Ghent-headquartered group provides insulation products to installers, contractors, wholesalers and retailers. It has more than 50 outlets across Europe and generates turnover of around €285 million.

During its seven year hold on the company, Waterland supported more than 20 bolt-on acquisitions, but the private equity (PE) firm has now sealed its exit. Waterland has relinquished its grip to Alpha Private Equity, which has invested in the insulation company through its seventh fund, which closed at €903 million in June. Alpha signed a sale and purchase agreement with Waterland and its co- shareholders for the acquisition of 100% of the share capital of Ipcom, and the new shareholders intend to continue to support IPCOM as it looks to further expand its activities, and continuously strengthen its position in the European insulation market. The terms of the transaction, which is subject to approval by the German competition authority, were not disclosed.

Ipcom swaps private equity hands, 12 dealmakers advise on deal

The buyers were advised by Alantra – who recently completed a £30 million acquisition of their own with the purchase of Catalyst Corporate Finance – along with Netherlands-based Nielen Schuman, The Boston Consulting Group, Big Four firm KPMG and Cataly Partners, while receiving legal advisory services from Cleary Gottlieb Steen & Hamilton. Debt for the deal was provided by ING, Belfius, Rabobank, Siemens and Barings, who were given legal advice by Linklaters.

Waterland was meanwhile given M&A advisory services on the deal by Rothschild, and received legal advice from Allen & Overy. ERM meanwhile provided vendor due diligence, alongside advisors from professional services giants McKinsey & Company and Deloitte.

Frank Vlayen, CEO of Waterland, commented on his firm’s successful exit, “We are proud of the leading position that IPCOM has achieved in the European insulation market... We wish the entire IPCOM management team great success in the realisation of the next growth phase of the company.”

12 dealmakers

Bernard Vercaemst, CEO of IPCOM Group, added: “After a very exciting first period in which we have been able to build, with the support of Waterland, a solid European group with a strong backbone and a clearly defined strategy, we are very happy to welcome Alpha as our new shareholder and partner. Based on the cultural match, the people and business driven approach of Alpha, the strategic alignment and the available resources for further acquisitions, we are strongly convinced that Alpha is the right partner for IPCOM in the future.”

Meanwhile, Patrick Herman, Partner at Alpha, said of the PE firm’s new asset, “Alpha has been eager to sign this transaction ever since it has had access to IPCOM’s performances. The interactions with the outstanding management team and the exciting growth prospects for the years to come have greatly fuelled Alpha’s decision to acquire this unique company.”

Private equity firms have enjoyed strong growth in assets under management last year, hitting a record $2.5 trillion, while investors have enjoyed strong returns on their investment. The industry is seeing increasingly larger numbers of active PE firms, while investors are becoming increasingly active themselves in the investment process. M&A activity by private equity firms across Europe had been projected to see a smaller increase in activity going into 2017 than into 2016, as political instability, from Brexit to the new US administration, had caused hesitation within the market.

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Consumer goods start-ups grow interest from venture capital

23 April 2019 Consultancy.uk

Funding the latest consumer goods start-up has been a real money-spinner for venture capitalist firms, with a number of $1 billion companies – or unicorns – having emerged in the space in recent years. New analysis has explored the resulting corporate consumer products activity in the acquisitions space.

Consumer products have enjoyed years of strong growth as new markets opened in developing Asia. China in particular has enjoyed strong growth across a range of consumer good types as the country’s middle class expanded. Private equity firms have been keen to pick up targets in the space as they expand their portfolios to include additional local capacity as well as customers in new markets.

As a result, a study from Bain & Company has found that interest from PE firms in the consumer product space grew sharply in 2018, hitting 6.1% of all invested capital for the year, and making it the third most sought-after category. It is now only behind financial services (23.9%) and advanced manufacturing and services (13.9%).

Corporate venture capital investment

The ‘M&A in Disruption: 2018 in Review’ research found that growth in the segment reflects key changes in the segment as a whole. This is particularly true of insurgent brands, which often leverage local expertise in order to take on international giants in domestic markets.

Short change

The market changes have led to shifts in motivations for consumer goods company investments from PE firms. The number of strategic investments stood at 50% in 2015 compared to deals that increased scope. This has shifted significantly, with 34% of deals focused on strategic outcomes in 2018 compared to 66% for scope. The move towards scope reflects companies seeking out fast-growing products that enable stronger revenue growth streams.

Acceleration in scope-oriented M&A in consumer products

However, there were other motivations for deal activity in the space. Activist investors have put pressure on companies to expand their portfolios in recent years, with the trend expanding from just US targets to Europe.

Further trends

The other key shift in the space regards outbound deal activity. The study found that outbound deal activity has increased significantly in the Americas (up 363%) with total deal volume up only slightly (15%). Key deals included Coca-Cola and Costa, Procter & Gamble and Merck’s consumer health unit, and PepsiCo and SodaStream. In the Asia-Pacific region, outbound deal activity rose 195% while total deal activity fell sharply, by -36%. The EMEA region saw both a sharp decline in outbound deal activity, at -68%, as well as lower overall deal activity, which fell by 32%.

Cross-regional deal making

Deal-making in the current environment is increasingly fraught with uncertainties, as business models change on the back of new technologies, new consumer sentiments and wider market changes from new entrants. As such, acquisitions are increasingly useful as possible hedges on changes in market direction. As such, companies are increasingly pressed to take a future-back position, making sure to incorporate a vision of how the company needs to look in five years into acquisition strategy.

The firm notes that certain acquisitions which enhance a remembrance of a nobler mission, revive a sense of entrepreneurialism and engage directly with consumers may be necessary qualities in acquisitions that transform a company to fit market expectations in the coming decade. While going forward, focus on innovation, partnering with retail winners, reducing cost base and constantly reallocating scare resources will be necessary to protect market share in areas where insurgent local and strategic competitors are active.

Related: Private equity asset growth top priority for 2018.