Take-privates are the opening theme today, as we look at another private equity bid for a company that only listed a fairly short time ago. This time it’s a portfolio company of Accel-KKR looking to buy.
We then have an exit in the facilities management sector by Soho Square Capital, before we hear the thoughts of Battery Ventures’ Zak Ewen on generative AI as an investment and as an internal tool.
One theme we’ve seen this year among take-private deals is that the target company hasn’t been public for that long. A lot of sources have told me that after going public, many businesses have found that their expansion plans are stymied by the limits on raising extra equity or debt when on an exchange.
We’ve got another example this morning of what might be termed lister’s remorse.
A portfolio company of Accel-KKR has made a take-private offer for an Irish accounts payable automation and analytics provider that only went public just over two years ago.
Basware, a Finnish invoice processing and accounts payable automation platform, is offering £0.3342 per share for Glantus, which is headquartered in Dublin but listed on the AIM market of the London Stock Exchange via an IPO in May 2021. The Glantus board has unanimously recommended the offer.
The offer price values Glantus’ total share capital at around £18 million ($23 million; €21 million) on a fully diluted basis and gives an enterprise value of £29.5 million. It gives a premium of 197 percent to Glantus’ closing price on 4 July, a day before the company’s board announced it was in talks with Accel-KKR and Basware about a possible bid.
That already chunky premium gets even bigger when looking back over the month up to that day (289 percent), three months (303 percent) and six months (315 percent).
Glantus has expanded across Ireland, the UK and the US over the last few years, according to a statement from Maurice Healy, CEO of Glantus. But he added that the company has faced an “extraordinarily challenging period” since its IPO in 2021, with 2022 particularly difficult, forcing a restructuring and talks with its lenders due to low levels of cash on hand.
“While trading has improved in FY23 so far and Glantus is much better positioned following the restructure, the Company has significant levels of debt in a higher interest rate environment and low levels of cash resources and confidence with public market investors take a significant time to rebuild. These factors are all reflected in the Company’s current market capitalisation.”
He concluded: “Despite recent challenges, the business has significant scope to further expand its footprint, which we believe will be best achieved in the private arena where Glantus can benefit from the experience and capital of Basware as its partner, whilst maintaining the management and wider team which have driven the business forward to date.”
Other recent take-private moves involving fairly recently listed firms include Inflexion’s bid for UK legal services provider DWF Group, which went public in 2019, and Antin Infrastructure Partners’ move for Spanish renewable energy company Opdenergy – which only went public in July last year.
Soho Square Capital has exited its investment in Churchill Group, a UK-based facilities management company, to an Employee Ownership Trust (EOT).
Churchill is headquartered in Luton, England. The company provides cleaning, security, catering and environmental consultancy services across the education, rail and transport, public sector, corporate and property management sectors.
Soho Square invested in Churchill in 2020.
Churchill’s EBITDA almost doubled under Soho Square’s ownership, according to a release.
“When Churchill’s founding team explored early exit options, Soho Square’s minority equity structure enabled the company to have greater choice of exit routes than would be the case with more traditional private equity structures,” said Stuart Hamilton, principal at Soho Square.
Battery Ventures partner Zak Ewen spoke to PE Hub Europe’s Irien Joseph last week about his outlook for the second half of the year, including that he sees international appetite for European technology businesses.
One part of the interview that didn’t make it into the article was Ewen’s thoughts on generative AI, and Battery’s views on the technology as an investment and as a tool.
Here’s that snippet for you now:
Is generative AI on your dealmaking radar?
The generative AI market is still young, so we’re unlikely to see private equity investments in that area for a while, but given Battery’s stage-agnostic stance we are able to look at AI through our venture and growth lenses. We’re interested in generative AI as it relates to specific business processes and vertical use cases. For example, using it as a software application that can empower efficiency and decision making, rather than pure AI engines on a standalone basis. Wrapping that tech into a business application and applying it to a specific industry or a specific workflow process is where we’re really focused.
In terms of deal origination, we use internally built tools, and we couple that with our existing analogue origination efforts. Leveraging tools and data, not just within the portfolio but internally, is an area where we are heavily focused.