Benelux activity strengthens despite controversies

One of the main points of discussion in 2014 for the Benelux region was undoubtedly LuxLeaks and its consequences. Two sets of secret tax agreements from Luxembourg were leaked in November and December by the International Consortium of Investigative Journalists in a 500-plus dossier of documents that included several from GPs across the globe.

However, it was not the publication of the actual tax agreements that irked the asset class, but more the fact that private details regarding transactions, strategies and structure charts were made public, according to Gérard Neiens, a tax partner in Hogan Lovells' Luxembourg office, speaking to unquote" about the issue in December.

The trust implications that may stem from the leak – between the asset class and its service providers – could prove to be an issue well into 2015.

Another topic likely to crop up this year is the implication – which has arisen from the media's reports on LuxLeaks – that Luxembourg is alone in its position as a domicile for vehicles owing to its favourable tax regime. While undeniably a long-time favourite for both corporates and private equity, this is not the case. Nearby neighbour the Netherlands is re-emerging as an increasingly popular location to structure vehicles, for instance.

Fund administrator Aztec Group set up shop in the country in 2014, and the new office's head, Andreas Dimmel, called the Netherlands a "pioneer" in the history of fund structures when speaking to unquote" about the firm's new onshore base. Following LuxLeaks, perhaps 2015 will see more firms crossing the border from Luxembourg to set up structures.

From strength to strength
In terms of dealflow in the region last year, buyout activity experienced a slight increase in quantity on 2013, rising from 45 to 51, according to unquote" data. However, this was offset by a €200m-odd decrease in value – no doubt due to the boost received in 2013 by two €1bn-plus take-privates executed in the region.

A trend across 2014 in Benelux's buyout space was investment in the consumer sector. The industry – comprising both consumer goods and consumer services – saw a €500m increase in capital invested compared with 2013, according to unquote" data.

In April, TDR Capital paid €355m for Delek Europe, the Benelux- and France-based petrol station and convenience store division of Israeli energy company Delek Group. In October, Antea Participaties bought Dutch cheese company Uniekaas from Parcom Capital, while November saw Karmijn Kapitaal acquire iconic Dutch shoe and accessory brand Fred de la Bretonière.

And with rumours that Waterland Private Equity is on the brink of acquiring Napoleon Games, a Belgian online casino games and sports betting company, the interest in Benelux's consumer offerings looks set to continue this year.

Venture capital investment in the region dipped slightly in terms of the number of deals, but value skyrocketed by more than €100m compared with 2013. This is no doubt due to the massive $250m funding round achieved by Dutch payment technology firm Adyen in December, which firmly bolstered capital raised in the Netherlands just before year-end.

Predictably, biotechnology retained its perennial status as a favourite investment area in the region, despite dealflow dipping and less money being pumped into the sector. This may be due to the fact that healthcare investors in the region were in exit mode. Last year saw a large increase in exit value for healthcare investments – the 12 exits recorded in unquote" data returned almost €5bn to investors in 2014. However, the bulk of this came from the sale of Omega Pharma by Waterland for €3.6bn in November.

But the region's GPs made healthy returns themselves. Also in November, a consortium of backers including Gimv, Life Sciences Partners and Idinvest Partners sold Dutch biotech Prosensa to BioMarin Pharmaceutical for $840m.

Overall, the Benelux region and its private equity industry is getting stronger, and 2015 looks set to continue this gradual but steady increase in dealflow and capital invested into the region. And not only from local players – international firms are investing more in the region, highlighting its importance as a European business hub. Expect big things in 2015.

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• Topics
• Benelux
• Benelux
• Top story
• Netherlands
• Luxembourg
• Belgium
• Hogan Lovells
• Aztec Group
• Waterland Private Equity
• Gimv
• Life Science Partners
• IDInvest Partners (AGF Private Equity)
• Karmijn Kapitaal
• TDR Capital
• Unq2015Feb