Good morning Eurohubsters, Nina Lindholm here with Thursday’s Dealflow.
I’m on newsletter duty this morning instead of my usual Friday, as Craig McGlashan is enjoying a day off. Today we get a deeper look at one pharma reinvestment, and there is a big potential energy deal brewing. I’ll also recap my thoughts about the first day of the PEI Women in Private Markets Summit, which I attended yesterday.
Healthy dose. Pharma has been a busy sector lately, to the point that in October I wrote a round-up of some deals we’ve seen. Ardian seems to also trust the sector, as in early November, the firm announced a reinvestment in Milan-based pharmaceutical firm Neopharmed Gentili, alongside NB Renaissance.
Craig McGlashan spoke with Giacomo Forti, a director on Ardian’s buyout team, to learn more about the reinvestment.
“The company had already started to look at international opportunities, but clearly after four years it was a kind of a turning point and clearly international development may require additional equity,” Forti told Craig. “Having a fund with already four years of holding period was not the right time to deploy additional capital. This is also why we decided to exit with the previous fund.”
Paris-based Ardian first invested in Neopharmed in 2018 – the first private equity investment in the firm. Ardian implemented an organic growth and buy-and-build plan that led to six M&A transactions in Italy.
International growth will likely come via M&A but the choice of target companies will depend on the opportunities available.
There are some markets where “the competition is more intense, like Germany” and “sometimes there are niches where some specific products can have a great success”, said Forti. That means any international M&A will depend “on the quality of the assets rather than a specific market”.
To learn more about Ardian’s plans for Neopharmed, which include a pipeline of new products, read Craig’s full interview with Forti here.
Conference. Yesterday I attended PEI’s Women in Private Markets Summit at the Royal Lancaster in London. My first thought after entering the main conference area was just how incredible it was to see that many women who work in the sector together in one room. That thought was echoed by everyone I spoke with during lunch or networking, although many pointed out it would be great to see more men there too, as the event is open to all genders.
In a panel about finding growth in a challenging environment, Elly Thio, managing partner at EQT, pointed out that taking minority stakes allows firms to be “creative”, therefore helping to navigate the difficult market conditions. Thio also pressed the importance of staying disciplined to one’s strategy, in her case EQT Future, a fund that targets “mature market leaders for impact”.
Thio’s peers on the panel echoed her sentiments. Amandine Ayrem, managing director at Eurazeo, summed up her key focus for 2023 with the line: “Discipline, discipline, discipline.”
While the panel discussion was about the challenging environment, the speakers still expect “mega-deals” to be on the table. KKR’s recent acquisition of the French insurer APRIL Group got a mention as one example.
I also listened to panels about digital infrastructure and energy security. At the digital infra panel, underlying trends such as urbanisation and ageing population were highlighted. For these, the panellists stressed the importance of finding smart city solutions, which can also work in tandem with sustainability efforts.
At the panel on aligning energy security with energy transition, Federica Cristina, managing director at Macquarie Capital, said there is “no silver bullet” to fix the issue – a single asset class alone within energy is not the key to solving energy transition. “There is opportunity to diversify,” she added.
Cristina, alongside her peers, also said that a lot of the technology needed for the transition is there, such as hydrogen, but it “just needs scaling up”.
Karisma Rawat, senior associate at Impax Asset Management, added that the task at hand is building the grid – without it, energy transition won’t be achieved.
I’ll be attending the conference today. If you’d like to meet for a chat, drop me an email at email@example.com.
More power. Speaking of energy, Eni is in preliminary talks to buy PE-backed gas and oil producer Neptune Energy for approximately $5 to $6 billion, a source with knowledge of the matter told Reuters. No official bid had been submitted.
London-headquartered Neptune is owned by CVC Capital Partners, Carlyle Group and China Investment Corporation (CIC).
A banking source confirmed talks had taken place in recent weeks, according to Reuters. The outcome was “far from guaranteed” however, as valuations differed.
Back to school. Lastly, we have an education related deal to look at. Brookfield Asset Management acquired a 49 percent stake in the social infrastructure portfolio for public education of Sweden’s SBB. The deal, via Brookfield’s open-ended core infrastructure fund Super-Core Infrastructure Partners, was for around Skr9.2 billion ($867 million; €840 million) in cash up front and around Skr1.2 billion in cash through earn-outs.
SBB’s Skr44.9 billion portfolio will move to the newly formed SBB subsidiary EduCo, in which Brookfield has taken its minority stake. SBB holds the remaining 51 percent.
The portfolio includes preschools, elementary schools, upper-secondary schools and universities.
SBB is a social infrastructure asset manager headquartered in Sweden.
Brookfield is an alternative asset manager with over $750 billion of assets under management across infrastructure, real estate, renewable power and transition, private equity and credit. It is headquartered in Toronto, Canada.
To find out Brookfield’s thoughts on the asset class, take a look at our full coverage on the deal here.
That’s all from me. Craig McGlashan will write the final Dealflow of the week tomorrow.