EQT spots uptick in tech sales and recaps; Abris confident on 2023; SWEN invests in eFuels

Good morning Eurohubsters, Craig McGlashan here with the Dealflow.

It’s great to see that the start of the year has opened with some nice deals, even if there is still pessimism around just how large dealmaking volumes will be in 2023. We reflect that today, with a tech-focused outlook from EQT, insight on the year ahead in central Europe from Abris Capital Partners, plus deals in aerospace, textiles and infrastructure.

Backlog. In the latest of our Q&A series on the outlook for 2023 and reflections on 2022, I spoke to Arvindh Kumar, partner and co-head of EQT’s global technology sector team.

Kumar struck a positive note on tech dealmaking in 2023, although with a few caveats.

“In technology PE, where I focus, I am already seeing an increase in outreach from companies expecting to explore a sale or recap in early 2023,” he told me. “However, given the persisting spread between buyer and seller valuations, I expect the backlog to continue piling up without a corresponding level of consummated deals in the first half of next year. I think valuations will continue to decline versus H2 2022 on average, but we will see the crown jewel assets continue to attract premium valuations, given their scarcity.”

Check out the full interview to read about what Kumar believes will be the major themes for tech in 2023, what’s keeping him awake at night and his reflections on dealmaking in 2022.

Strong pipeline. I spent my Christmas and New Year in central Europe, so it was also great to get the outlook on 2023 from a private equity firm focused on that region: Abris Capital Partners, which has offices in Poland, Romania and Cyprus. Abris’ recent deals include its portfolio healthcare company Scanmed acquiring Ars Medical.

Wojciech Lukawski, partner at Abris, was also optimistic about 2023, while dampening expectations of a bumper crop of deals.

“We should not expect a spectacular volume of deals in 2023, but I believe that the pipeline will be strong, as European investor confidence begins to improve,” he told PE Hub Europe. “We expect that valuations may go down further, given the change in the cost of funding and perceived cost of risk. However, it is a great time to be buying businesses because company owners are looking for partners to share risk, and this is what private equity offers. History shows us that returns are always highest during times of volatility, and this may be a very busy and exciting year.”

Flying high. We’ve got a couple of aerospace deals to report.

Swen Infrastructure Fund for Transition 2 (Swift 2), a fund managed by SWEN Capital Partners, invested in Arcadia eFuels.

Copenhagen-based Arcadia will utilise Swift 2’s investment to develop multiple eFuels production sites that it intends to own and operate, as well as market and sell eKerosene, eDiesel, and eNaphtha.

Read more on that deal here.

Elsewhere in aerospace, Tikehau Capital acquired 100 percent of Formecal, a manufacturer of high-precision machining for the aerospace industry, from Grupo Amper. The deal was via Tikehau’s private equity fund Aerofondo.

Madrid-based Formecal specialises in hot-stamping, high-precision machining and the assembling of complex parts for aerostructures.

Read full coverage of that deal here.

The deals come as some private equity players suggest that aerospace is becoming more popular with investors.

Tikehau Capital is pessimistic about the macroeconomic outlook for next year but one of the main factors behind the gloomy economic outlook is creating renewed interest in an area of its focus, Emmanuel Laillier, head of private equity, told PE Hub Europe in late November.

The aerospace sector suffered during covid thanks to the drop in global travel, but over a longer period, some investors have shunned the industry due to it falling foul of their ESG requirements, including because of its links to the defence industry. But since Russia’s full-scale invasion of Ukraine earlier this year – a major contributor to the slowdown in global growth – investors’ attitudes have changed, according to Laillier.

Check out the whole interview here, including Laillier’s outlook for the aerospace sector.

Textiles. Deutsche Beteiligungs’s DBAG Fund V exited its investment in Heytex, a manufacturer of technical textiles serving various end markets. DBAG will sell its shares in the company to Bencis, an investor with offices in Germany, the Netherlands and Belgium.

Based in Bramsche in Germany, Heytex is a manufacturer of functional technical textiles with four production sites on three continents: Bramsche and Eberbach-Neugersdorf in Germany, Zhangjiagang in China and Pulaski in the US. Heytex’s products are used as tarpaulins, tents, sports mats, shade-sails, stadium roofs, oil booms and water tanks, among other things.

Read more about how DBAG grew the company here.

Deal traffic. Equistone has taken a majority stake in BUKO Infrasupport and BUKO Waakt, providers of outsourced traffic and safety management systems in the Netherlands. BUKO Transport is not included in the transaction.

BUKO Infrasupport, headquartered in Barendrecht, specialises in offering end-to-end outsourced temporary traffic management systems. Its portfolio of services includes design, planning, approval, deployment and collection, as well as onsite management of road signage and safety equipment required for roadworks.

Check out more on the deal here.

Binding agreement. Thermo Fisher Scientific completed its purchase of speciality diagnostics firm The Binding Site from Nordic Capital yesterday.

That gives me a great excuse to recommend that you read the interview that Nina Lindholm conducted with Nordic Capital’s Jonas Agnblad, partner and co-head of healthcare, shortly after the deal was announced in late October.

Agnblad talks about how the return on the investment and lengthy holding period were not part of Nordic Capital’s original plans, as well as how the private equity company grew The Binding Site.

Read the article here.

Networking. London-headquartered private equity firm Permira added to its headcount yesterday with the hiring of Carolyn Everson as a senior adviser, a move the firm believes will aid it in the internet and digital media sectors.

Everson joined Meta – then known as Facebook – before the firm’s IPO as vice president of global marketing solutions. She’s also worked at Instacart, Microsoft and Viacom’s MTV Networks.

Everson will support Permira’s investment activities and portfolio value creation.

That’s it from me today. Nina and I are swapping duties this week, so she’ll be with you tomorrow and I’ll be back on duty on Friday.