Corporate Finance

Guillaume Jacqueau (Equistone) : "In certain cases, we think exit multiples are more important than IRR"

For Equistone France's President, a good transaction is not always seen through the light of the IRR, but can sometimes lay on the exit multiple.

For Equistone France's President, a good transaction is not always seen through the light of the IRR, but can sometimes lay on the exit multiple.


Leaders League. You raised your last fund in 2015. What was the context of the fundraising and what type of companies are you going to support?

Guillaume Jacqueau. Our last vehicle, Equistone PEF V, abounded for €2bn, exceeded its initial hard cap of €1.75bn. This amount is also more significant than the one we had reached for its predecessor in 2012, the fund IV (€1.5bn). We could have netted more money but we rather chose to reduce a few LPs so as to stay close to the hard cap. Historically, as a former subsidiary of Barclays, we have a real proximity with the English market. But we are fundamentally European : our business model is equally spread across France, Germany and UK. We do not plan to expand somewhere else for now. This six-month led fundraising is quite special because it is the first that collected a majority of non-European commitments (53 %). We plan to invest in companies valued between €50m and €300m.

 

Leaders League. How do you evaluate the past year regarding the few acquisitions and numerous exits you made?

G. J. Nine buyouts and fifteen sales were made since January 2014. This is a strong activity for the mid-market. In France especially, three acquisitions were done, which shows how equally shared is our business among the countries we are in. Averys, Sicame, and Mecaplast constitute the last addings to our portfolio. Actually, we were already present in Sicame but only as a minority shareholder, so we decided to sell and reinvest as a lead partner.

 

Sicame is a very interesting case which had all the requirements to be a good primary LBO: a long work was handled by the company founders and the first investors on the business operations, the globalization was initiated, then a new management full of ideas came in, and the sponsor, Equistone in this case, decided to support Sicame with financial leverage. Dealmaking is sometimes surprising, even for ourselves: you discuss with external industrialists and investors until you realize you are actually the best backup for the company. We had that awareness momentum last summer. The firm, Sicame, specialized in carrying electricity and sensitive material, generated €360m in revenue in 2015.

 

Leaders League. On the sell side, what should be remembered these last months?

G. J. Our most successful exits are undoubtedly La Toulousaine (manufacturer of grids, portals, electric gates...) and Coventya (specialized in chemical solutions for cleaning floors), whose multiples were highly satisfying. A sale process is now in progress for Fläkt Woods (invested in 2007). We stay very pragmatic on the sell side : some portfolio companies are quickly sold while others, as this latter, need more time. In certain cases, we think exit multiples are more important than IRR.

 

Leaders League. You also have companies from the fund 3 to offload, Compin notably?

G. J. Yes, this group is a good example. Having suffered a lot in 2010-2011, it is now back on its feet and in a very good way. Build-up definitely helped him to strenghten its European position on the market dedicated to passenger seats and luggage carriers manufacturing in city buses and trains. Although Compin is not for sale, we have already received a few calls from potential acquirers.

 

Firmin Sylla

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