GP Profile: Egeria

Opening an office in the DACH region and establishing Egeria’s presence during the coronavirus lockdown presented both challenges and opportunities, says partner Hannes Rumer. "We moved to Munich in April, in the prime lockdown period, but we were able to come together as a team in the office, in line with health and safety measures. At the beginning we did a lot of business development, which was quite easy to do as most active transactions were on hold so a lot of people in the M&A community were available."

"At Egeria, we like to work with entrepreneurs in complex situations such as buy-and-build strategies, repositioning, digital transformation or carve-out situations; situations that require time and work," says Rumer. "The aim was to put a team on the ground in the DACH region and stick to this approach. We have been successful in this strategy in funds one to four so far and have generated superior returns to our investors applying this investment strategy."

Netherlands-headquartered Egeria was founded in 1997 and currently has around €2bn of assets under management. In addition to its private equity strategy, Egeria also invests via its listed evergreen structure, targeting investments with holding periods of 10 or more years. The GP also manages Egeria Real Estate Development, which focuses on investments in the Netherlands, the DACH region and the US. The firm’s recently opened Munich office focuses on the deployment of its private equity strategy and intends to build the GPs presence in the DACH region in the coming years.

Egeria is currently investing via Egeria Private Equity Fund V, which held a final close in December 2017 on €800m. Its LPs include Schroder Adveq and Nordrheinische Ärzteversorgung (NAEV), according to Unquote Data. The fund writes equity tickets of €50-350m and initially invested only in Netherlands-based companies.

Egeria V made its first platform investment when it acquired gardening products producer and online retailer Tuindeco Group in September 2019.

Egeria’s current portfolio has not suffered significant damage during lockdown, Rumer says. "Our portfolio has fared extremely well and has grown in LTM EBITDA during this time. We have no direct retail, travel, leisure or events business, so we are not exposed there," he says "We do have wholesalers in our portfolio, but they have enough online exposure and so the accelerated shift to digital during the pandemic compensated the potential losses."

Building on experience
"Fund V now will be deployed in Benelux and DACH," says Rumer. "Our objective is to establish Egeria successfully in the DACH region in the long term; we have no immediate pressure in the next six months. We are aiming to do one to three deals in DACH in the next three years, before our next fundraise."

The GP has experience in investing in the packaging sector, having acquired Clondalkin Group via its fourth fund in an SBO from Warburg Pincus that valued the company at $455m in September 2016. Rumer says that the GP will consider investments in DACH-based packaging companies that fit certain criteria: "We will look at packaging companies, but it depends on the type of packaging – we have one German company that is active in hygiene and food protection packaging."

Clondalkin’s Höxter, Germany-based subsidiary, Wentus, produces products including biodegradable packaging such as films and laminates. "We are further developing the asset and investing in this business. We would also look at new investments in the space, but it must be in the circular economy and sustainable solutions," says Rumer.

The GP also plans to continue its B2B focus in the DACH region, says Rumer. "In general, we see consolidation potential in the B2B services sector, with interesting buy-and-build opportunities and a continued push for digital transformation. We have a full-time digital director on board who can help our portfolio companies develop digital business models."

The digital focus also covers B2B IT companies, says Rumer: "One strong segment in B2B is of course IT. We are not a tech investor looking at innovative or risky tech investments, but rather for tech enabled services businesses, and we have such companies in our portfolio in the Netherlands." These companies include Ilionx, which acquired market peer QHN with Egeria’s backing in March 2018.

Such companies have been popular among sponsors in recent years and Rumer says that Egeria continues to see opportunities in the market: "The market is huge and still very fragmented, so we are seeing a lot of interesting candidates and we see a strong deal pipeline in the next six to 12 months."

Asked about the GP’s current DACH deal-making plans, Rumer told Unquote: "We are looking at two carve-outs and an add-on, and we can see that the market is getting busier."

Egeria also plans to target add-ons for its Benelux-based consumer-focused companies. "On the consumer side, further back in the value chain, we see opportunities to internationalise Benelux-based businesses in the market and develop them through add-ons in Germany and help them grow into pan-European category leaders."

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