Good morning Eurohubsters, it’s Craig McGlashan here.
We’ve been hearing a lot here at PE Hub Europe about the amount of dry powder funds have ready to deploy. That’s made me think about how dealmakers can have an edge over their similarly well-funded rivals. This morning, we have an insight into how EQT tries to stay ahead.
Faster decisions. I spoke to EQT’s Alexandra Lutz, who in January took over the firm’s proprietary investment platform Motherbrain. She explained what she’s been working on over the last six months and her plans for the platform’s future.
Gaining an advantage over competitors is just one of the areas the Motherbrain team has focused on, she told me.
“We now have three main use cases,” said Lutz. “The analytical lens is about how to help deal teams identify opportunities faster than their competitors and help them monitor a long pipeline. Private equity already know the companies they want to focus on. But there are only so many that they can very actively follow. We help them monitor the longer pipeline via data signals, proxies for growth, proxies for momentum.”
The second main area is about tracking companies through the entire investment lifecycle. That means the work done on a firm by the venture team is available when that firm becomes of interest to the growth department, and so on.
The final use case is allowing EQT’s portfolio companies access to Motherbrain’s data and tools, so they can use it for their own analysis.
You can read the whole in-depth interview with Lutz here.
Talent spotting. One use of Motherbrain was to identify potential hires for portfolio companies, with the platform able to number crunch a load of data points related to individuals and flag up potential appointees, Lutz said.
Such an ability might make some of EQT’s competitors a bit jealous. Iris Dorbian over at PE Hub in the US wrote a piece yesterday about how many private equity firms say that talent acquisition and retention are the biggest factors limiting growth of portfolio companies this year.
That makes it unsurprising that many PE firms have invested in companies that focus on recruiting and staffing, Iris wrote. Her piece gave a recap of some of the flurry of such deals so far this year, including Littlejohn’s acquisition of Alto in January up to the Halifax Group investing in Houston-based The Liberty Group in June.
You can check out the full summary here.
Defensive trade. Elsewhere, one deal that caught my attention was Tikehau Ace Capital on Wednesday announced the completion of its acquisition of Visco, a company focused on high-precision mechanical machining for industries including defence, aerospace, armaments and energy.
Visco, located in Châlette-sur-Loing in France, specialises in the development and manufacture of complex, high value-added parts and sub-assemblies.
“Visco is a company with solid potential, differentiating expertise in its markets and the trust of its customers,” said Cyril Moulin, executive director at Paris-based Tikehau Ace Capital. “We are pleased to join Fabrice Doizon and his teams in this new phase. With our sector knowledge, our ambition is to give new means to the company to consolidate its positions and accelerate its development.”
We’re spotting a definite trend here. Many investment firms that once refused to invest in defence assets have shifted their position since Russia’s full-scale invasion of Ukraine in February. The CEO of one PE services firm I spoke to a month ago told me that “defence is no longer a bad word”.
The CEO noticed that move particularly in the aerospace area, with limited partners interested in funds investing in the sector. “The LP mindset towards defence has changed,” he added.
We’d already seen a flavour of that at PE Hub Europe. In late June, Ardian agreed to take a stake in SERMA, a provider of consulting and services specialising in electronic technologies, embedded systems and information systems. The firm lists aeronautics as one of the sectors it supports – although it has interests in several other industries too.
We’re super interested to hear if your firm is changing its approach to defence assets. Drop me a note at email@example.com
That’s all from us today – speak to you tomorrow.