We kick off today with a deep dive into a take-private deal, as Craig McGlashan speaks to Cap10’s founding partner Fabrice Nottin about Sureserve, a compliance and energy services group.
Then we step into the world of sports, with a report by SportBusiness, examining private equity’s role in the industry.
We’ll finish with a more sombre sector, with a look into Epiris’ acquisition of Pure Cremation, a provider of prepaid funeral plans in the UK.
Take privates have been a big theme this year. One take-private deal we’ve followed here on PE Hub Europe is Cap10’s bid for Sureserve, a compliance and energy services group. That deal completed in July, and Craig McGlashan took the opportunity learn more about it by speaking to Cap10 founding partner Fabrice Nottin.
The 125p per share offer valued the company at £214 million ($275 million; €250 million) on a fully diluted basis, with the enterprise value between £200 million and the equity value, according to Nottin.
Nottin cited a government target for all social housing – the sector Sureserve focuses on – to have an energy performance certificate rating of ‘C’ by 2030.
“At the rate we’re doing, we’ll get it by 2100,” he told Craig.
Government funding – or a lack of it – has little impact on Sureserve’s business currently, with only around 10 percent of revenues dependent on government grants, said Nottin.
While government spending on net zero could go lower, he said, “the probability they do more is much greater than they do less. And if they do less, the impact on the business is not that material. If they do more, it is pretty material.
“Once the government get its act together and starts funding properly the whole energy transition, they’re going to need a lot more people to do the work. That’s where Sureserve is uniquely positioned.”
I highly recommend reading Craig’s full story – found here – as it touches on the value-creation plans for Sureserve, and the acquisition process itself.
On the ball
Is the sports industry storing up long-term pain for short term gain? That’s the underlying question posed in a report titled Selling the Future? Private equity’s role in sport by SportBusiness, which examines and breaks down current revenue profiles of major rightsholders and recently came across PE Hub Europe’s desk. At a time when the biggest shift in ownership in the history of professional sports is underway, is the sports industry giving away too much control? Are there cheaper ways for the sports industry to raise capital?
In some ways, the report’s answer to this overarching question is: it’s too early to tell. What is clear is that sports can offer a compelling investment to PE funds and provide long-dated, sticky assets, as some have described. In football, for example, CVC Capital Partners signed a strategic agreement with LaLiga, organiser of the top two men’s football divisions in Spain, in 2021. The deal involved an injection of almost €2 billion that would go to “technology, innovation, internationalisation and sporting growth initiatives”, according to a CVC statement at the time. The deal valued LaLiga at €24.25 billion.
The figures in SportBusiness’s report give some context to that valuation. The data for LaLiga’s media rights value goes back to the 2013-14 season, when the domestic value was €727 million and international value was €235 million. By the time the CVC agreement was signed in the 2020-21 season, domestic value had grown 58 percent to €1.152 billion. But the highly sought-after international market had rocketed by 220 percent to €751 million. The following season, the international media rights value grew further, to €778 million.
While sponsorship revenues have also grown over that time, according to the SportsBusiness report, the overwhelming amount of revenue still comes from broadcasting matches. Sponsorship revenues for LaLiga accounted for just €98 million in 2021, for instance. While that was well up on €47 million in 2016 – the earliest figure the report has on sponsorship – it was a minnow compared with the €1.903 billion made from broadcast that year. In Premiership Rugby, broadcast revenue has accounted for at least 75 percent of total revenues since at least 2016 – and often more.
“At the root of many of these deals is an assumption many experts see as risky: that the value of sports media rights to premium content will continue to rise,” SportBusiness notes. Given the increase in GPs focusing on sports teams and franchises, we have a feeling this is a risk many are increasingly comfortable with.
Some of PE Hub Europe’s recent sports coverage includes Wise Equity’s exit from racing car company Tatuus Racing, CVC entering into a strategic partnership with Women’s Tennis Association (WTA) and Craig McGlashan’s look into private equity’s interest in football.
Next up, we cover a sector that isn’t the cheeriest to start the week with. Epiris Fund III, advised by Epiris, has agreed to acquire Pure Cremation, a provider of prepaid funeral plans in the UK.
Headquartered in Andover in England, Pure offers people an option to plan and pay for their own end-of-life arrangements. The company also operates within the market of direct cremations, which are simple, unattended cremations without a contemporaneous funeral service, offering a low-cost alternative to a traditional funeral, according to a press release.
“We are delighted to announce this third investment for Fund III,” said Alex Fortescue, managing partner at Epiris. “Like those that have come before it, this ticks all the boxes for Epiris: it is an investment in a fundamentally strong business with a good position in an attractive market, to which we can bring the transformative power of fresh perspective and new skills.”