OpenGate welds Extol and AFE into aluminium group; Pollen collects PAIR; M&A bump spotted

Good morning Eurohubsters, Craig McGlashan here with Thursday’s Dealflow.

There have been plenty of deals to keep us busy this week and it looks like there’s a burgeoning pipeline building for early next year, according to one data provider. But first, we take a deep dive into the world of aluminium extrusion.

Metal fans. OpenGate Capital announced today that it is forming Aluminium Solutions Group (ASG) through the merger of Extol – which it acquired in late September – and Aluminium France Extrusion (AFE), a portfolio company since June 2013.

PE Hub Europe’s Nina Lindholm caught up with OpenGate managing director Fabien Marcantetti and senior vice-presidents Xavier Lambert and Bruno Amaral to learn more about the plans.

“We won’t make M&A a particular focus of this acquisition,” Marcantetti said, “because we started with the merger of two companies – it’s already an M&A play. We’re not necessarily convinced we could drive more synergies if we added another piece on top of that.”

Extol is a speciality extruder and manufacturer of custom aluminium parts with facilities in Toledo, Spain – where the company is headquartered – and in Nantes, France. In late August, OpenGate entered exclusive negotiations with private equity firm MCH and Fernando Busto, founder and CEO of Extol, to purchase the company. The sale went through on 30 September.

AFE is an aluminium extruder serving the construction, transportation and industrial sectors. It is headquartered and has facilities in Saint-Florentin in France and has further facilities in Ham, France.

You can read more about OpenGate’s strategy for ASG – including its ESG plans – by checking out Nina’s full interview here.

Paying the debts. Much has been written across Europe about the difficulties consumers and businesses are facing with inflation high and energy costs rising. A few dealmakers have said to me that one sub-sector that they are looking at as a likely growth asset in that environment is debt collection, and we saw a little bit of that speculation crystallise this week.

Pollen Street announced that it has acquired a majority stake in PAIR Finance. PAIR is an artificial intelligence-based digital collections platform based in Berlin.

The former largest shareholder, Finleap, will retain a minority stake in the business.

London-based Pollen Street Capital is an independent alternative investment management company, focused on the financial and business services sectors.

You can read more about the deal and PAIR’s business here.

Boom time. Despite all that gloomy economic news, we could be in line for a jump in deal volume early next year.

New figures from M&A tech provider Datasite show that new global deals – especially asset sales, purchases and mergers – on its platform are up 4 percent for the first nine months in 2022, compared with the same period in 2021. But in even better news for our readers, the figure for EMEA specifically is 13 percent.

As these deals are at their inception rather than announced, it suggests a steady deal volume in the pipeline but one that won’t bear fruit until the next six to nine months.

Given that there was a spike in M&A process launches in August, that could mean a bump in deals early next year.

Dear oh dear. For the UK specifically, there seems to be a bit of a mixed picture.

The recent turmoil in the UK government bond market might hit one source of cash for private equity, venture capital and other private assets, according to an article in the Financial Times this morning.

The UK introduced ‘long-term asset funds’ last year that allow investors such as pension funds to invest in long-term illiquid assets, such as private equity.

But a large sell-off in UK government bonds – sparked when the government announced a ‘mini-budget’ a few weeks ago that included unfunded tax cuts – forced pension funds to sell assets. That increased their proportional exposure to illiquid assets, “which affects their willingness and ability to make new commitments”, Kerrin Rosenberg, chief executive of advisory firm and investment manager Cardano, told the FT.

The FT also reports comments this morning from Blair Jacobson, co-head of European credit at Ares, that “everything in the UK is on sale” because of the drop in value of sterling against the dollar. The pound hit its lowest level in decades after the mini-budget. He “absolutely” expects more US investors to do deals in the UK thanks to the relative strength of the dollar.

A potential boom in US private equity interest in UK assets is something we’ve written about extensively. You can check out some of our coverage here and here.

Staffing up. We’ve also seen a lot of private equity firms boosting their presence in the UK either via higher headcounts or new offices.

There was a bit more of that this week, as LDC made two appointments to support its North East and Scotland team. Aaron Lawson-Clark joins as an investment director and Emma Borrie joins as an investment manager. The pair will work with LDC’s seven-strong team in the North East and Scotland.

You can read more about the careers of Lawson-Clark and Borrie in our coverage here.

Privately public. Finally, the Financial Times reports that CVC’s plan to go public – put on hold after Russia’s invasion of Ukraine upset markets – “will be revived, insiders say: the only question is when”.

That’s it from me this week – Nina Lindholm will be with you tomorrow for Friday’s edition.