In Profile: Vendis Capital

Vendis Capital traces its roots back to Belgium retailer Mitiska, where the GP's co-founders Michiel Deturck, Cedric Olbrechts and Willem Van Aelten first met. The company was turned into an investment holding floated on Euronext in 1990.

Recruited between 1998-2003, Deturck, Olbrechts and Van Aelten moved to Mitiska's executive board and helped the owners steer the firm towards private equity investments. "Mitiska was a hybrid between an operational and an investment company. We believed that the firm had to commit to either path, either fully integrate the portfolio companies as a corporate or develop and sell them as an investor would," recalls Olbrechts.

Mitiska eventually opted to focus on investments; however, internal developments then provided the Vendis trio with a chance to spin out. "Towards 2009, we had sold AS Adventure and Brantano, and Mitiska was full of cash, which made it possible for one of the co-founders to buy the other one out and de-list the firm," says Olbrechts. "Mitiska began to focus more on real estate, which gave us our opening to take the specialist strategy we'd worked on and create a new player. We'd seen very successful consumer-specialised funds in the US, but there were none in mainland Europe with a focus on small-caps."

LP leanings
Mitiska, Deturck, Olbrechts and Van Aelten quickly worked on a private placement memorandum to test the fundraising waters for the new firm. The trio did not have to look far for supporters: having closely followed Mitiska's listed track record, four families from the consumer goods segment came on board right away. Chief among them were the Colruyts, the Belgian owners of a supermarket network, which provided a €40m commitment for Vendis's maiden buyout fund.

This was 2009, a difficult environment for fundraising. We were a first-time fund and a relatively small one at that. We found ourselves having to convince investors that our sector specialisation made sense" – Cedric Olbrechts, Vendis Capital

Institutional LPs were not so easy to sway, Olbrechts says: "This was 2009, a difficult environment for fundraising. We were a first-time fund and a relatively small one at that. We found ourselves having to convince investors that our sector specialisation made sense." Although only the European Investment Fund (EIF) and a Belgian bank were persuaded, the support from the consumer families was enough to take Vendis Capital I from its €80m target to a €111.5m final close in December 2010.

According to the Vendis co-founder, reluctance from institutional investors has subsided since then. Indeed, for its second fund, which reached a €125m first close in February 2015, Vendis Capital II has already broken its €150m target and is expected to hit its €180m hard-cap by Q3 2016. So far, the LP base features familiar names – the Colruyts have committed a fresh €20m, while EIF has increased its commitment. But the fund also boasts new investors like Morgan Stanley.

Brand power
Vendis targets consumer businesses and retail brands valued at €20-80m with revenues of €10-120m and EBITDA in the €2-15m range. With its larger fund, the GP's ticket sizes have also increased; from €5-15m in its first vehicle to €5-25m in the second. As an example, Vendis Capital II's maiden deal – the MBO of Dutch fashion brand Petrol Industries – featured a cheque closer to the upper end of that bracket.

For Olbrechts, while sector-specialist GPs gain popularity, of all industries he believes consumer goods is a profitable one: "Often, being a sector specialist means you're more exposed to certain cycles, you're missing out on opportunities in other areas. However, consumer goods is a large sector with many different dimensions to it; there is never a shortage of quality assets here."

We're very readable. Unlike with our generalist competitors, M&A advisers and other intermediaries know exactly when an asset fits our sector criteria and will therefore be of interest to us" – Olbrechts, Vendis

According to Olbrechts, the GP's narrow focus enables a more efficient origination process. The smaller, more defined pool of businesses makes it easier for Vendis's analysts to spot opportunities and lay the groundwork for meetings with managers. In addition, being sector-specific can mean their pipeline is filled more quickly. "We're very readable. Unlike with our generalist competitors, M&A advisers and other intermediaries know exactly when an asset fits our sector criteria and will therefore be of interest to us," says Olbrechts.

In spite of the apparent strengths, relying on consumers in stifled, post-crisis Europe comes with risks; Sun European Partners' recently bankrupted retailer V&D acts as a warning. According to Olbrechts, the key to survival lies in successfully managing the online transition: "The obvious challenge for retailers is e-commerce. As with many other Dutch big retailers, V&D did not go through a full transformation." In any case, he believes the real prize within the consumer sector is the brands and not the retailers that distribute them: "When backed by a strong concept, a strong team, brands are a gateway to future cashflows, a formidable asset that is there to stay among consumers."

 

Portfolio

Although it is the sector and not the country that guides Vendis's hand when seeking assets, Olbrechts believes the local touch is essential in European private equity. As a result, the GP has built a portfolio that gravitates around its Brussels, Paris and Utrecht offices.

Vendis has found differences between its Benelux base and a more intermediated France, where one pays a higher price in return for a far larger consumer market.

The GP recently moved the headquarters of portfolio company Eyes + More from the Netherlands to Germany, which for Olbrechts was the obvious next stop due to cultural proximity and a lack of players running a proposition similar to Vendis's.

 

Team

After a busy 2015 in terms of recruitment, Olbrechts explains that the Vendis team is now complete with no further additions expected, barring a possible reinforcement in Germany. According to the co-founder, being a sector specialist can be advantageous when attracting recruits: "Many people understand the challenge that comes with working in private equity, especially in France, and they look at ways to differentiate themselves. Going for a specialist approach is one of them."

Michiel Deturck, partner
After stints as a university lecturer and director at energy-to-waste corporate Vyncke, Deturck went into consulting in 1995, when he became an associate at McKinsey & Company. In 1998, he joined Mitiska, where he founded internet-focused VC scheme Net Fund Europe.

Cedric Olbrechts, partner
Olbrechts started out as a consultant at Accenture from 1996-1998. After six months as an M&A associate at Merrill Lynch, he was recruited as an executive director at Mitiska's Net Fund Europe in 2000 and was appointed to the same role by Mitiska itself in 2003.

Willem Van Aelten, partner
The third of Vendis's co-founders, Van Aelten was first employed as audit manager at industrial multinational General Electric and then as engagement manager at McKinsey & Company. In 2000, he joined Mitiska as an investment manager and was successively appointed to CFO of portfolio companies Carpetland and E5-mode.

Vincent Braams, partner
Having joined Vendis in April 2015, Braams oversees the GP's operations in the Netherlands. After 11 years at dairy products company FrieslandCampina, he joined Nestlé in 2004 and was successively employed as sales director, executive manager and managing director. Between 2010-2015, he was CEO at Smartwares Home Essentials. 

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