GP Profile: Waterland backs UK with new office

With Waterland Private Equity further establishing itself in the UK with a new office in London, Ryan Hallworth – an investment director and Waterland UK board member – told Unquote that this was a natural expansion of the GP's UK strategy: "Waterland became present in the UK at the end of Fund VI and we are about to deploy Fund VIII. We are looking ahead to the phase where we will supercharge the deployment here, since the UK is a big economy and a PE hotbed."

Waterland held a final close for Waterland VIII in December 2020 on €2.5bn, as reported. The fund continues Waterland's strategy of deploying tickets of €10-200m, targeting mid-market companies based in Europe and operating in fragmented markets, implementing a buy-and-build strategy to consolidate these sectors.

"We've made a number of platform investments to date, as well as 34 add-on acquisitions, and we are hopeful of generating returns via successful exits during the coming months," Hallworth told Unquote. "But for the new €2.5bn Fund VIII, the ambition is to deploy a significant chunk of this in the UK. We will probably have a steady state of six to eight portfolio companies at any one time in the UK, with two or three new investments and exits annually. We're currently building the pipeline of new opportunities for Q3 and Q4."

Alongside the office opening, Waterland announced the recruitment of a new managing director, Oli Bevan, who joins from his role as a partner at Dunedin, where he had worked on deal sourcing and execution in the UK since 2007.

Investment director Ryan Hallworth and managing partner Hans Scheepers co-founded Waterland's UK operations in January 2017 via the opening of an office in Manchester in 2017.

Dominic Graham will also be based in the London office and will be joined by Marc Lutgen as head of investor relations. Lutgen spent 12 years at MVision prior to joining Waterland in 2020 and will now be officially integrated into the London team.

The GP is headquartered in Belgium, and the London office is to be its 11th, following the opening of its Paris office in September 2020.

Back to normality
Hallworth told Unquote that the coronavirus pandemic had accelerated the GP's UK expansion plans, in spite of the lockdown restrictions. "Like everybody else, we have been working from home for a period of time," he said. "As things started to reopen, we decided it would be an opportune time to find a suitable location in London, and at the same time accelerate our UK recruitment strategy. We see a clear opportunity to build out the team in both London and Manchester as the economy reawakens, and we aim to reach a team of 25 people within the next couple of years."

Hallworth added that the expansion will bring additional capacity for the expansion of new and existing portfolio companies. "We can add more value to portfolio companies that are following buy-and-build strategies, as we will have more reach and more people on the ground to assist with sourcing, execution and integration of acquisitions. We will also have more opportunity to help our European colleagues with acquisitions in the UK, assisting them with sourcing and executing opportunities and also access to our network of trusted advisers."

Waterland views the UK as a key source of opportunities for several of its areas of focus. "In a post-Brexit environment, we are expecting a lot of investment back into the UK economy, especially in areas where there has previously been offshoring, such as food and beverage manufacturing," Hallworth told Unquote. "There are also significant trends around digitalisation and data, which was another reason to accelerate the London office. A lot of the market work we are doing at the moment around digitalisation is happening in the south-east."

Healthcare, and in particular multi-site healthcare, will also be a key focus for the GP in the UK. "It's a sector we understand deeply, and we want to continue investing significantly into care sectors to increase capacity of high-quality care," Hallworth said.

Waterland has invested significantly in this sector in Europe, and particularly in Germany, where the GP has two offices. The GP acquired care group The Priory in December 2020 via Germany-based rehabilitation clinic Median. Waterland also acquired residential childcare provider Sandcastle Care, which is based in Blackpool, in January 2019.

Although coronavirus and Brexit uncertainty are still key topics in the UK market, Waterland is not fazed by the current climate "Waterland has always viewed Brexit as an opportunity, since certain industries will be coming back to the UK," Hallworth explained. "The strong entrepreneurial mindset of UK businesses is also attractive for Waterland. We are seeing a resolve from UK-based entrepreneurs and family businesses who are looking for a like-minded and supportive partner, so they can not just survive but thrive though the pandemic and Brexit. Many of them are looking to expand internationally and that's what we are about at our core – we can help these businesses to accelerate their growth story."

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