Palatine exits Acora to LDC; GPF Capital confident in demolitions boom with Lezama Demoliciones

Good morning Eurohubsters, Nina Lindholm here to wrap up the week with the Friday Dealflow.

My colleagues and I have been busy attending events this week. On Wednesday, we visited affiliate title Private Equity International’s Investor Relations, Marketing & Communications Forum: Europe and yesterday, we were at the BVCA Summit. Unfortunately, due to the rail strikes here in the UK, the Cardiff-based part of the PE Hub Europe team, which includes myself and my colleague David Wansboro, had to leave yesterday’s event a little early. Luckily for us, the agenda was jam-packed, so we got to hear a lot, even with our early exit. I’m here to tell you all about it.

Proceed with caution. As the BVCA represents the “voice of private capital in the UK”, it came as no surprise the recent economic turmoil was on everyone’s lips. During a discussion on what entrepreneurs really want from private equity, Rebecca Gibson, partner at Oakley Capital, touched on these challenging times. “Every year we’re faced with a new era of uncertainty,” she said. “PE has a role as a guide for these entrepreneurs through the challenges.” When asked about her views on the markets, she called herself “optimistic, but cautious”.

Sentiments like these were echoed in other panels. A few veterans of the industry referred to their “grey-haired” colleagues in the audience, saying that they have been through tough times before.

Mission critical. For me, the most interesting and engaging discussion of the day, was an industry viewpoint talk on the mid-market tech perspective. It was evident that the speaker, Deep Shah, co-president at Francisco Partners, strongly believes in the strength of the sector. “We remain excited, tech still has massive tailwinds,” he said. “It’s about finding the right opportunities and identifying what is mission critical.”

Naturally, Shah also brought up the macro-economic outlook. Even with that in mind, he remains positive. “The greatest tech businesses started during crises,” he explained. “We’re excited to see what’s to come – this is an industry that sees innovation like no other.”

His belief in the sector didn’t deter him from criticising it. ESG, another big theme during the summit, is an area the tech sector is lagging with, according to Shah. “Our industry has been lazy about ESG in the last 10 years,” he said. “I see approaching ESG as three phases: denial, acceptance and embracing it.”

PE Hub Europe’s Craig McGlashan recently spoke with Hg’s David Toms, who discussed the state of the tech sector. Toms echoes Shah’s sentiments: “The tech sector continues to trade very strongly, with double-digit revenue and earnings growth,” he said. “It also benefits from a high degree of insulation from some of the broader challenges of inflation, with very low input costs and little dependency on energy.”

Read Craig’s full interview with David Toms here.

London calling (once more). We also learned about some more about the influx of private equity knowledge and expertise into London.

Thomas Friedberger, CEO and co-CIO of Tikehau Capital, revealed on a dealmaking-focused panel that Emmanuel Laillier, Tikehau’s head of private equity, had relocated to London from Paris.

We’ve covered similar moves recently, such as Thoma Bravo opening a London office, with Irina Hemmers at the helm. Earlier this week, we also reported on law firm McDermott Will & Emery hiring Garrett Hayes as transactions partner, based in London. He will work on M&A and private equity, as well as corporate advisory.

Double digits. Stepping away from the conference, there is an exit worth mentioning. Manchester-headquartered Palatine announced that it has exited IT managed service provider Acora to LDC for an over 3x return on its investment.

Burgess Hill, England-headquartered Acora made five acquisitions with the backing of Palatine’s Buyout Fund III, adding scale and service capability. The most significant acquisition, according to Palatine, was cybersecurity company Secrutiny in May.

Acora achieved double-digit organic growth at over 20 percent in 2022 with revenues doubling to £60 million ($67 million; €68 million).

“This new investment from LDC gives us significant firepower to help accelerate our ambitious growth plans,” said David Rabson, CEO of Acora. “This investment is all about continuing our existing trajectory over the longer term.”

Read David Wansboro’s coverage on Palatine’s exit here.

Ka-boom. The demolition sector is experiencing a boom, according to GPF Capital. The firm announced the close of its 27th deal since launching in 2015, with the purchase of an 80 percent stake in Spanish demolition firm Lezama Demoliciones. The company, headquartered in Trapagaran, Spain, operates at the national level across demolitions, recycling and rehabilitation of industrial soils.

In the last few years, Lezama has demolished more than 60 chemical plants. Operations are currently focused on the demolition of thermal power plants.

Madrid-based GPF’s purchase of the company allows for the consolidation of a plan for Lezama’s international expansion and expansion in the nuclear sector.

Learn why the demolition sector is experiencing a strong phase of expansion here.

That’s it from me. I’m glad to be home, recovering from the busy event days. You’ll hear from me again on Monday, as Craig McGlashan takes a well-earned day off. I hope you all have a great weekend.