Benelux open for business as trade sales recover

The exit market registered a marked slowdown across the Benelux region in 2016, according to unquote" data, with 48 divestments of private-equity-backed businesses, while previous years saw levels hovering around the 80 mark. In that wider context, trade sales in particular suffered: unquote" recorded 12 such transactions in 2016, against 31 the previous year (in line with the 30 or so deals recorded each year since 2012).

Trade sales have historically been a prominent exit route in the region, with local corporates and a number of strategic players in the neighbouring DACH and UK areas proving keen to acquire healthy assets from GPs. Up until 2015, such deals represented between 30-40% of all private equity exits in the region, while secondary buyouts were usually struggling to break the 25% mark. The dip in trade sales last year, even considered in the wider context of a seemingly slower exit market, meant this trend was reversed: just a quarter of private equity exits in 2016 were done with trade buyers, when nearly a third went to another private equity house.

Appetite from trade players for Benelux assets on the buy-side has not been mirrored by a buoyant level of private-equity-backed carve-outs

Nine months into 2017, the number of trade sales already exceeds 2016's, reflecting a trend of healthy levels of corporate M&A across Europe. So far, unquote" has recorded 17 such exits, including a significant number of cross-border transactions. In the context of a more buoyant level of divestments overall, this translates to around 34% of all exits in the region between January and September.

The standout transaction so far has undoubtedly been Bureau van Dijk. EQT Partners sold the Brussels-based business intelligence and company information provider to credit and risk analyst Moody's Corporation in May for an enterprise value of €3bn – by far the largest exit of the year in the region so far, never mind the most significant trade sale. The addition of Bureau van Dijk will offer a diversification of Moody's product offering, which has previously been debt-focused. Moody's initiated the sale, with EQT's Kristiaan Nieuwenburg telling unquote" at the time that the original plan was to hold onto the business for five years and make sure all exit options were left open.

Indian summer
Q2 may have been particularly rich in trade sale announcements, but the end of Q3 also brought its fair share of transactions – should this activity level sustain into the last quarter, the overall exit landscape in 2017 will look closer to the historical post-crisis average.

Among notable transactions, Infracapital sold Dutch telecom infrastructure operator Alticom to Spanish wireless communication infrastructure business Cellnex Telecom in September, in a deal valued at €133m. The transaction ends a six-year holding period for Infracapital, which first acquired the company in a buyout valued at $100m in June 2011. The GP wholly bought Alticom from French media service provider TDF Group. The acquisition of Alticom is expected to consolidate Cellnex among independent telecommunications infrastructure operators in the Netherlands and strengthen the firm's position as it plans to roll out a 5G network across Europe.

Main Capital Partners also sold its portfolio company Connexys to Boston-based Bullhorn, which is majority-owned by US private equity firm Vista Equity Partners. Details of the transaction were not disclosed, but Main Capital reported that the transaction is one of its "biggest exit successes". Connexys reports 40% year-on-year revenue growth; at the time of Main Capital's original acquisition in 2013, Connexys generated revenues of around €5m.

Appetite from trade players for Benelux assets on the buy-side has not been mirrored by a buoyant level of private-equity-backed carve-outs, though. Of all the buyouts recorded by unquote" in 2017 so far, only 10% were sourced from local or foreign parents, with standouts including Ergon Capital's acquisition of puzzle magazines publisher Keesing from Telegraaf Media Groep in July, in a transaction valuing the company at €150m. With the end of the year approaching, it is unlikely numbers will increase enough to match last year's peak, when spin-outs accounted for 15% of all deals in the region.

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