PE Hub Europe is launching a new Q&A series where private equity leaders share their reflections on 2022 and their outlooks for 2023, with a focus on European dealmaking.
In this first instalment, we caught up with Bilge Ogut, partner and head of the private equity technology industry vertical at Partners Group.
Partners Group, headquartered in Zug, Switzerland, is an independent investment firm dedicated to private markets. With $131 billion in assets under management, the firm has invested $185 billion since 1996.
What were the highlights of your dealmaking in 2022?
Partners Group’s private equity technology industry vertical made several significant transformational investments this year, on behalf of our clients. This included the acquisition of Forterro, a pan-European software services provider for small- and mid-sized businesses, in a transaction that valued the company at an EV of €1 billion. Later in the year, we acquired Cloudflight, a digital transformation services provider that offers tailor-made software to help companies digitise their business models, processes and products. The transaction valued Cloudflight at an EV of €400 million. Both Forterro and Cloudflight operate at the forefront of digitisation trends and benefit from strong thematic tailwinds.
What was the biggest challenge to completing deals in 2022?
Uncertainty around inflation, greater geopolitical turmoil and availability of financing impacted acquisition activity across all markets during most of 2022. These headwinds are likely to continue into the first half of next year. This is why managers need to adopt a hands-on, entrepreneurial approach to working with portfolio companies in order to steer them through these challenging times, as well as a proven thematic investing approach to identify new investment opportunities that are set to benefit from long-term transformative trends. These more challenging times make us focus our attention on strategic priorities and opportunities, which can result in our investment teams and portfolio companies becoming stronger.
How do you expect the first six months of PE dealmaking in 2023 to compare with the last six months of dealmaking in 2022?
Through our thematic investing approach, we maintain a strong pipeline of opportunities across attractive subsectors and niches within technology. So, although global macro headwinds are likely to persist, we remain confident in our ability to source transformational investment opportunities. Broad digitisation trends show no sign of slowing and for many industries, partnering with technology providers that have differentiated products and business models still remains core to operational excellence strategies. We will continue to see an accelerated shift to digital, further investment in customer-facing interactions, and the upgrade of old technology infrastructure to create seamless operational backbones. It is an exciting time to be investing in the space.
What’s keeping you up at night?
I think we haven’t seen the level of geopolitical uncertainty the world is facing now for many years, if not decades. Many of the economic parameters that move across cycles and markets normally adjust through a shift of capital. However, when the geopolitical picture suddenly changes, the impact is much more abrupt, and the response cycle a lot shorter. I am therefore always thinking about agility and flexibility for both our business and portfolio companies. It is important to work out how companies can quickly adjust and then build sustainable, resilient businesses that maintain a competitive edge and continue to drive growth in the future.
What are you looking forward to most in 2023?
In 2023, I look forward to being able to double down on the right things that will make all the difference, both at a corporate and portfolio level. This includes supporting internal initiatives to foster talent and partnering with entrepreneurs and business owners to achieve their vision. It will be an intense year but one where we can grow through the challenges we address.
Editor’s note: Throughout December and January, PE Hub Europe will be publishing Q&As with private equity industry leaders. Click here for our affiliate title PE Hub’s interview with Béla Szigethy and Stewart Kohl, co-CEOs of The Riverside Company.