MidEuropa on €1bn+ Profi sale and the exit market

Thoma Bravo in take-private bid for EQS.

Exits remain an interesting topic due to the challenging nature of the current market. This morning, MidEuropa principal Aleksandar Dragicevic spoke with PE Hub Europe’s Irien Joseph about the firm’s sale of Romanian supermarket chain Profi Rom Food to retail holding company Ahold Delhaize. We’ve got some financial details on that for you.

We have more on take-privates again, one of our big themes this year. This time it’s the turn of Thoma Bravo, which has entered an investment agreement with Germany-based cloud services provider EQS.

We’ll finish with financial services, a sector that has been very busy of late. In the latest deal in the sector, Manulife Investment Management has agreed to acquire a London-based multi-sector alternative credit manager.

Supermarket sweep

Let’s start with a deep dive into an exit. PE Hub Europe’s Irien Joseph caught up with MidEuropa principal Aleksandar Dragicevic about the firm’s sale of Profi Rom Food, a Romanian convenience and proximity supermarket chain.

MidEuropa agreed to sell Profi in October to Ahold Delhaize, a food retail group based in Zaandam, the Netherlands, for an enterprise value of approximately €1.3 billion pre-IFRS 16 (€1.8 billion post-IFRS 16).

London-based MidEuropa invested in the company via its Fund IV. The deal is expected to generate a money multiple of around 2.5x for the fund, according to a source familiar with the matter. The sale represents a full realisation for MidEuropa, which acquired a majority stake in Profi in February 2017 for an enterprise value of around €500 million, the source said.

Profi generated revenues of more than €2.5 billion in the 12 months ending June 2023, and increased sales by more than 3.3x since MidEuropa’s investment.

“When we bought Profi, it was a business with around 500 stores, and now it’s close to 1,700,” Dragicevic told Irien. “There was a strong focus on opening new stores, and we contributed by helping Profi’s management develop and enhance their ability to source locations and open stores quickly.”

MidEuropa developed several concepts and adjusted the value proposition of the company. This included “focusing on the assortment that’s being offered and offering something which is different to what exists in the Romanian market”, he said.

The product mix helped Profi to stand out “with its own unique shoppers” in the country, he added.

I highly recommend checking out Irien’s full story, which touches on how Profi fared during the pandemic, and MidEuropa’s views on the state of the exit market. You can find the story here.

For more on the CEE region, take a look at Craig McGlashan’s interview with Sandberg Capital’s Michal Rybovič, or my energy-focused piece with Actis’s Jaroslava Korpanec.

In the cloud

Moving on from exits to take-privates – Thoma Bravo has entered into an investment agreement with EQS, a German cloud provider in the fields of corporate compliance, investor relations and ESG.

Thoma Bravo offered €40 per EQS share, representing a premium of 53 percent to the closing price on 15 November 2023, as well as a premium of 61 percent to the three-month volume-weighted average share price. The management and supervisory board of EQS are fully supporting the offer, according to a release.

With Thoma Bravo, EQS gains additional operational and software sector expertise, enhanced financial flexibility, and strategic support to fully seize the long-term growth opportunity in the growing European compliance market, the release added.

Irina Hemmers, partner at Thoma Bravo, said: “EQS is a unique German software enterprise at the forefront of three mega-trends: digitalisation, regulation and ESG, which have been driving its profitable growth.”

Thoma Bravo opened an office in London in September 2022, and the Europe-based team made its first investment in March 2023 when the software investor announced an investment in LOGEX.

On credit

Lastly, let’s take a look at a financial services deal. Manulife Investment Management has agreed to acquire CQS, a London-based multi-sector alternative credit manager.

Manulife will acquire the CQS credit platform and the CQS brand upon completion of the transaction. The CQS credit platform had around $13.5 billion in assets under management as of 31 October.

Manulife intends to align CQS with the Manulife brand as a co-branded logo – Manulife | CQS Investment Management – the release said.

CQS founder Lord Hintze’s hedge fund, the Directional Opportunities Fund, and certain related mandates are not included in the transaction.

“CQS brings to our portfolio a proven investment process, robust performance, and expertise across market cycles, and a culture that has attracted both talent and flows into the firm,” said Paul Lorentz, president and CEO, Manulife. “We are very excited for the opportunity, as CQS’s capabilities are a complement to our existing fixed income and multi-asset solutions business and a powerful addition to our global credit offering.”