AnaCap in advanced talks for two deals; has 'exciting' financial services and tech pipeline

The sponsor is negotiating one minority and one majority stake purchase involving a services and software company respectively in the coming months, he said.

The minority stake could still be a chunky one, involving 40-45% ownership in the services business, he added.

Both companies are headquartered in Western Europe, and the deals will be worth around EUR 50m respectively, he added.

The sponsor declined to comment on which fund the GP will use to deploy equity to support its planned acquisitions. 

The sponsor held a final close for its third flagship fund in 2016 on EUR 850m. It registered a Luxembourg-domiciled vehicle for its fourth fund in May 2023, as reported.

Financial services and insurance in focus
Over the past eight years, AnaCap has sharpened its sector focus and is now looking at financial services and the insurance brokerage software space, including regtech, as well as the pure services space, he said. AnaCap is not focused on balance-sheet intensive investments, as they are difficult to predict given changing interest rates, he added.

AnaCap is evaluating what Cherchali described as an “exciting pipeline”, adding that the sponsor closes around three to four deals a year. 

The firm's investment targets are usually founder-backed or owned, with EUR 5m-EUR 15m EBITDA and a management team that needs partners to accelerate its growth, expand in new markets or pursue M&A strategies, he said. 

The firm usually invests in profitable businesses and does not usually target early-stage venture capital-style investments or companies with high capital burn, he said.

The sponsor is also engaged in a few smaller add-ons for existing portfolio companies that will be pursued before the end of the year, he added.

Caution on exits
As part of its investment strategy, AnaCap is also taking care in prepping exits, lining up financing solutions for a prospective buyer, ensuring the full suite of vendor due diligence, and making the process as easy as possible, he said.

Financing is more expensive than usual, but when it comes to the size of deals it analyses there has not been lack of appetite from lenders – these efforts have just become more expensive due to the higher base rate, he said. “Less sponsors are coming to market proactively,” he noted.

Companies in AnaCap's portfolio with Likely-To-Exit (LTE)* scores of more than 50 include France-based payment processing platform Market Pay. The company has a score of 53, according to Mergermarket's predictive algorithm, with the amount of recent ION Analytics intelligence related to the company the highest contributor to the score.

AnaCap has been operating for 15 years and invests exclusively in Western Europe, especially in countries including Germany, UK, Spain and Italy, he said.

In January, Cherchali and fellow partner Tassilo Arnhold were promoted the position of co-managing partners. The two have been leading AnaCap’s execution of its overall investment strategy, focused on lower mid-market founder-owned financial services, technology and related business services companies in Europe since 2016, according to a release.

*Mergermarket's LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.

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• AnaCap Financial Partners