The appetite for GP stakes investment opportunities in Europe has grown in recent years as new firms have begun to explore the market. Today, we hear more on that as PE Hub Europe’s Craig McGlashan speaks with GP stakes firm Armen’s CEO Laurent Benard and deputy CEO and COO Renaud Tourmente, who revealed that they are gearing up to announce Armen’s second investment this month.
Technology was a prominent trend throughout 2023 and now into January as evidenced by a slew of deals announced in the sector since the beginning of the year. The newest addition to the list is Main Capital Partners’ acquisition of a majority stake in a Danish enterprise information management software provider.
Wrapping up today’s Dealflow is a new report from Datasite on the dealmaking outlook for 2024, and trends and sectors to look out for.
GP stakes strategy
Europe is lagging the US when it comes to adoption of the GP stakes model, but the strategy is picking up with more deals being signed.
GP stakes firm Armen expects to announce its second investment by the end of January, CEO Laurent Benard and deputy CEO and COO Renaud Tourmente told PE Hub Europe’s Craig McGlashan, as European interest in the strategy picks up.
“There is a lot of pipeline, but it takes time for LPs to get comfortable with a new strategy,” said Benard. “If you are in the US, it’s much easier because you have more than 100 transactions in the past, so everyone is aware of what GP staking is. It’s like a traditional private equity allocation.”
But as Armen tours European LP offices, investors from family offices to institutional investors have become interested, said Tourmente. First because of the gross cash yield of the business model, which corresponds to what LPs seek in private debt or infra funds, he said. The strategy also offers “strong diversification” because of the numerous underlying companies, akin to what secondaries funds can offer. Lastly, the strategy offers asymmetric risk, with “good downside protection and a strong upside scenario”.
While lagging the US, European GP stakes have been “increasing sharply” over the last three to four years, said Benard. Armen’s first GP stake was a minority investment in independent French investment company RGreen Invest in April, in line with the firm’s lower-mid-market strategy. Other deals in 2023 included GP stakes in larger European-headquartered GPs, including Blue Owl Capital’s Dyal Capital investing in PAI Partners and Hunter Point Capital investing in Inflexion and in Coller Capital.
Check out the full interview to know more about Armen’s growth plans.
Big bite of tech
The buzz around artificial intelligence and the push for digitalisation gave the technology sector a lot of talking points in 2023. The pattern has continued into 2024, as we have seen steady private equity activity in the sector since the beginning of January.
The latest entry to the list is Main Capital Partners, which will acquire a majority stake in Omnidocs, a Danish enterprise information management software provider.
Main will support the company in growing internationally both organically as well as through strategic add-on acquisitions, according to a release. Omnidocs aims to expand in Northwestern Europe as well as in North America, via existing and new customers, the release said.
“Omnidocs’ selective buy-and-build strategy positions it as a potential leader in the European and American enterprise information management software space, offering cutting-edge solutions across diverse verticals,” said Wessel Ploegmakers, partner and head of Nordics at Main.
Energy in focus
A sharp 14 percent spike in Q4 of 2023 sell-side deal kickoffs compared to the same period a year earlier indicated an “extra busy start” to 2024 for dealmakers globally, according to M&A figures from Datasite, a virtual data room provider.
Datasite defines ‘kickoffs’ as the day a new sell-side data room is created on its Diligence or Acquire systems.
EMEA deal kickoffs jumped 13 percent in Q4 of 2023 compared to the same time in 2022, driven by an end of year boost from the industrials and consumer sectors. Industrials M&A increased by 7 percent in Q4 deal kickoffs compared to the same time in 2022, and healthcare deal kickoffs stayed a steady 2-3 percent over 2022 numbers, the report said.
Energy topped its year-long run with a 46 percent rise in Q4 deal kickoffs compared to Q4 of 2022, it said.
I have listed down few deals announced in the energy sector this week:
- Arcus Infrastructure Partners to acquire majority stake in Einhundert, a digital green energy supplier
- BGF, Scottish National Investment Bank to invest in on-street electric vehicle charging company Trojan Energy
- Eurazeo to make an additional investment in Electra, an EV fast charging service provider
- Riverside-owned Montel’s add-on acquisition of Energy Brainpool and Qwatt
- OTPP, PSP-backed Cubico Sustainable Investments’ acquisition of 50% stake in Peel Cubico Renewables