Pan-European GPs putting feet on the ground in Benelux

Oscar Geen
24 January 2018

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Pan-European private equity firms are hiring staff in the Benelux region as it posts record post-crisis buyout dealflow for 2017. Oscar Geen speaks to GPs about expanding their coverage of the region and its importance to European private equity more generally

unquote" recently explored the necessity for home-grown GPs to specialise their investment focus to compete with strategic players and family offices, willing to pay far higher multiples. But in addition to these challenges, they face intrusion from the larger, pan-regional or pan-European funds expanding into their space and recruiting their personnel.

IK Investment Partners opened a new office in Amsterdam in April 2017, and in December completed its first buyout in the region since that expansion when it acquired Optimum Group from local GP Mentha Capital for around €100m. IK's Remko Hilhorst heads up the office and led the deal, although he explains that he does not spend all his time there: "I am between the London and Amsterdam offices, but it is useful to have a physical presence in the region as there are a lot of good opportunities."

To the extent that they represent an exit route for the regional specialists, larger GPs will be welcomed to the region. However, it is likely that they will also come into competition. IK's Hilhorst explains that part of the motivation for opening the new office was to look more at the lower end of the market: "A nice thing about having an office here is getting access to the small-cap deals. We hired Sander van Vreumingen from Gimv to head up our small-cap team and this has given us good capability in that space."

Gimv has been the most active private equity firm in the Benelux region over the past two years and van Vreumingen was at the firm nine years before joining IK. In this time he worked on many notable deals, including the acquisition of CGI specialist Mackevision, which the GP sold to Accenture earlier this month, generating a 40% IRR.

Linguistic approach
Argos Soditic also continued to expand its investment capabilities in the region in 2017, though it has long been active in the French speaking parts. Co-founder Gilles Mougenot explains the importance of a multi-lingual approach: "We feel that the mix of French and Dutch native speakers that we have today is a strong asset to our investment team in Belgium. After our successful penetration of the Belgian market, we managed to close our first deal in the Netherlands in December 2017. We have been stepping up our presence there for a year and recruited for this purpose a new team member with an important experience in the Dutch M&A market."

Mougenot is referring to the management buy-in of business process outsourcing provider Future Groep, which Argos acquired from Dutch buyout firm Gilde Investment Management in December 2017 and announced early this year. The transaction was led by Mougenot, alongside Richard Reis, Maarten Meijssen and Arne Louwagie. Prior to joining Argos, Louwagie was an analyst at Dutch M&A advisory boutique Squarefield.

Argos had been preparing this for quite some time, at least since the Belgian office opened in 2013, says Mougenot: "We opened an office in Belgium in 2013 and quickly recruited a native Dutch speaker as we strongly believe within Argos that local presence is an important factor of success in the development of a new market.

"Given that both Belgium and the Netherlands are very open and export-oriented economies, we often come across companies looking for expansion abroad. Our international presence can offer real added value to the management teams looking to penetrate a new geographical market."

The importance of the region as an export economy cannot be underestimated and this, along with the uncertainty around Brexit, will surely be a factor that benefits all three countries as GPs consider where to hire new staff in 2018.