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Specialist Private Equity Firm Pemberton Capital Advisors to Launch European Services Fund I
Specialist private equity firm, Pemberton Capital Advisors LLP (“Pemberton”), today announces the official launch of Pemberton European Services Fund I (the “Fund”), which will be focused on the European Financial Services and Telecoms sectors. Pemberton Capital Advisors LLP is raising €500 million for the Fund to invest in a number of consolidation platforms to pursue buy-and-build strategies and exploit industry dynamics in European financial services and telecoms. Pemberton will identify opportunities for the Fund and advise the Fund on its investments. Pemberton’s Managing Partners have already invested in two businesses, one in each sector, and are looking at a number of other mid-market focused private equity investment opportunities for the Fund of circa between €25 and €75 million per platform. The two founders and Managing Partners, Symon Drake-Brockman and Jean-Pierre
Vandromme, each have more than 25 years’ of management experience in their respective areas of focus, transforming underperforming businesses in Europe, Asia and the USA. Drake-Brockman was former CEO of Global Banking & Markets at RBS Americas and Vandromme was the former CEO of Golden Telecom, which was sold to Vimpelcom where he became managing director for Russia. Symon Drake-Brockman said: The initial focus will be on Financial Services and Telecoms
because of these sectors’ economic importance, the availability of attractive investment opportunities and the potential to grow and consolidate businesses in these sectors. “Both sectors are undergoing a period of intense change due to changes in their regulatory regime and technology platforms, which are putting returns on equity of the larger incumbent companies and institutions under significant pressure. This is forcing these firms to examine their traditional business models and redefine their core businesses. Hundreds of businesses are expected to be put up for sale over the next few years as these sectors reinvent themselves.” Pemberton believes that the current downturn provides a significant buying opportunity for
firms that have the strategic insight and operational experience required to navigate the current environment, as valuation, financing, growth and exit strategies have become increasingly challenging. The Financial Services sector, in particular, the regulatory, tax, and accounting complexities, present formidable barriers to entry to investors without a deep understanding of the sector. Despite compelling opportunities for strong economic returns, Financial Services remains one of the most underpenetrated investment sectors by private equity funds. The firm’s analysis shows that the best opportunities will be found in the mid-cap segment of these markets, where it expects to find solid buy-and-build opportunities. This potential can be unlocked by teams who can deploy strategic knowledge, operational expertise and transformational capital in these sectors. Jean-Pierre Vandromme said: “Our key differentiator is our approach to investment which is
very hands on and operationally focused. The focus will be on identifying firms in these sectors which require growth or transformational capital, where we and our teams can create value through our strategic insight, operational expertise, change management skills and through building strong management teams.” With revenues of over €350bn, the EU-27 Telecoms sector is one of the most important and
dynamic in the world. While almost 70% of the market is controlled by large incumbent operators, the remainder of the market is highly fragmented. Mainly due to their substantial legacy infrastructure investment, the large incumbent operators
continue to be late stage adopters of new technologies such as VoIP compared to mid-size alternative providers. This provides these players, unburdened with legacy infrastructure, with the opportunity to gain significant market share and increase their margins. Advised by Pemberton, the Fund will focus on consolidating alternative providers which have demonstrated their ability to adopt new technologies and are typically focused on the SME customer segment. SMEs have historically been underserved by the large incumbents but, with the right technology, offer the highest margins and growth potential. In financial services, Pemberton will target wealth and asset management, trust and specialist
fund services, insurance and specialised lending and leasing. In respect to the highly fragmented European telecoms sector, Pemberton will focus on identifying consolidation platforms which have the ability to adopt proven technology such as voice over internet protocol (VoIP). Pemberton has decided to concentrate on Europe as the on-going economic crisis will
continue to drive larger firms to focus on core business activities, leading to disposals of mid-size businesses. This, together with the impact of greater regulation, will create opportunities for the Fund to buy controlling stakes in sound, mid-size growth businesses. Under the stewardship of Symon Drake-Brockman and Jean-Pierre Vandromme, Pemberton
will identify platforms for the Fund to acquire and increase their scale to achieve leading positions, thus maximising their strategic value. The firm will build value in the Fund’s portfolio by providing transformational capital and operational insight, while utilising its professionals’ deep knowledge and experience of applying technology to increase economies of scale and profitability in knowledge-intensive service companies.
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Julian Carreras joins Palamon Capital Partners as Principal
Palamon Capital Partners, one of Europe’s leading mid-market private equity firms, has appointed Julian Carreras as a Principal. Palamon’s pan-European team, which comprises professionals from eight different countries, targets service businesses across Europe with the potential to access significant top-line growth. This appointment marks the return to Palamon by Mr Carreras, a Spanish national, who was a member of the Firm between 2003 and 2006. Mr Carreras initially joined Palamon from Goldman Sachs and prior to that worked for McKinsey & Co. Between 2006 and 2011, he held positions with Cinven in London and Thesan Capital in his home town of Madrid. Mr Carreras obtained MSc degrees from Polytechnic University of Milan, École Centrale Paris and Polytechnic University of Madrid. He holds an MBA from Harvard Business School, where he attended as a Fulbright Scholar. Louis Elson, Managing Partner, commented:
“We are delighted to welcome Julian back to the Firm. His return is an endorsement of the strength of Palamon’s growth investing proposition as well as the breadth of our reach. With his extensive experience, Julian adds further depth to our investment capability across Europe in general and in Spain in particular, a country in which we have been an active investor and in which we continue to have very strong interest.” Commenting on his appointment, Mr Carreras said: “Having worked in a variety of roles across the private equity industry, I can see that Palamon’s pan-European investment proposition is unique. I am thrilled to be back at Palamon and I am very much looking forward to working with the team once again.” Palamon generates returns through driving revenue and EBITDA growth in its portfolio of carefully selected niche companies. The Firm targets service sector companies across Europe with the potential to deliver double-digit top-line growth. Over the past five years the Palamon portfolio has achieved revenue growth of more than 20% per annum and EBITDA growth of 40% per annum.
Its current
portfolio includes Spanish business Grupo SAR, which recently completed the acquisition of Mapfre Quavitae to become SAR Quavitae, the largest provider of elderly care in Spain with annual revenue of €300 million. The Firm recently also recently acquired
Barcelona-based EnGrande, a leading European on-line booking website focused on low cost accommodation. Palamon, with €1.1 billion of equity under management, is currently investing its second Pan-European fund, Palamon European Equity II, L.P.
OCTOBER 2011
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