Benelux sees summer uptick

This year's buoyant Benelux deal activity was driven in part by the buyout market, where eight such transactions in the region made July the second busiest month for buyouts this year, falling just short of January's nine.

July saw several buyouts in the upper mid- to large-cap price range, including the €399m acquisition of Luxembourg-headquartered Lombard International Assurance and Lombard Insurance Development Holdings from Friends Life Group, which comprised a €320m upfront cash payment, €9m interest equivalent in cash and a deferred €70m payment in the form of a vendor loan note.

There was also the €240m buyout of SPGPrints Group, a Dutch manufacturer of printing systems for graphics and textiles, by Investcorp, which acquired the business from Bencis Capital Partners.

Veteran Netherlands
Deal activity in the region remains heavily weighted towards the Netherlands, but Belgium has certainly been busy over the early summer months. And Luxembourg surprisingly experienced an uptick in dealflow with two buyouts: Astorg Partners' and Providence Equity Partners' acquisition of M7 Group, alongside Blackstone's purchase of Lombard.

Despite an impressive month for deals, the future prospects for the Netherlands' economy are still shaky. The country saw a 0.5% increase in GDP in Q2 compared with Q1, according to Eurostat, but it comes after a quarter of contraction in the country. Still, it fared better than Belgium, which saw a growth rate of just 0.1%.

According to the Dutch Central Bureau of Statistics (CBS), consumer confidence remained stable in the Netherlands in July. Based on a survey of 5,000 households, the index aggregates positive and negative responses to questions regarding the national economy and personal wealth. At minus two points, there has been no change from June in the Netherlands. However, the same questionnaire in Belgium yields considerably lower results, reaching minus 10 points in July from minus seven the previous month.

Belgian boon
Despite low confidence in Belgium, Bencis acquired frozen shrimp supplier Morubel and Waterland Private Equity provided growth capital to Bosteels Brewery in July. Market research by Euromonitor into Belgium's beer market suggests that tradition is an important factor to the future success of the industry, particularly with smaller brewers. This is highlighted by Waterland's decision to back a business that is currently being run by the seventh generation of the same family.

But trouble is brewing in the consumer sector across the region. According to CBS, 621 Netherlands-based businesses and institutions were declared bankrupt in Julyalone, nearly 160 more than in the previous month.

This trend has already driven dealflow for HIG Capital, which rescued Estro Group from bankruptcy in July through the acquisition of a 75% stake. HIG took over 250 of the 360 centres run by Estro; these centres have been relaunched under the new name Small Steps.

However, CBS also noted that while turnover in the Netherlands' retail sector decreased by 1.9% in June, it experienced a slight growth of 1% overall in the second quarter of the year when compared with the same quarter in 2013. This marks the first quarter in 24 months that has experienced growth in the country's retail sector.

Similarly in Belgium, prior to Bencis's acquisition, Morubel broke away from its former parent company Heiploeg and began trading as an independent company after Heiploeg's Dutch activities went bankrupt.

Deals to be found
Despite current uncertainty with the economic conditions, the region's private equity players are succeeding in finding deals. Low consumer confidence may be bringing better value, while opportunities are being created by companies feeling the threat of bankruptcy.

But larger deals are still being carried out, and the current pace of dealflow in the region points towards a busier year overall than 2013, possibly signalling further recovery for the region's private equity industry on the horizon.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Send to  

• Topics
• Benelux
• Buyouts
• Benelux
• Netherlands
• Luxembourg
• Belgium
• HIG Capital
• Top story