Good morning Eurohubsters, Nina Lindholm here with Thursday’s Dealflow.
Firstly, I want to wish you all a very happy new year, as this is my first Dealflow of the year. The last week before the holidays was busy with announcements, and that momentum shows no sign of stopping. This morning Stafford Capital Partners gives us its outlook for the year ahead, CVC reaches preliminary agreement for the sale of a cross-country electricity distributor to the Polish railway network, Parabellum’s Parseq picks up the TALL Group and Cairngorm-backed National Timber Group makes an add-on.
All aboard. Our reporting this week kicked off with an infrastructure focus, and we’ve got bit more on that theme today. CVC signed a preliminary agreement for the sale of PKP Energetyka, an energy distributor for the Polish railway sector, to PGE, a state-controlled public power company. The sale has an expected value of Z5.9 billion (€1.3 billion; $1.3 billion)
PKP Energetyka is one of the largest energy companies in Poland, responsible for the distribution of over 4 TWh of electricity annually, which is 2.9 percent of all energy in Poland, according to CVC. The Warsaw-headquartered company manages and develops critical infrastructure for Polish rail transport and maintains 21.5 thousand km of power lines.
Under CVC’s ownership over the last seven years, PKP Energetyka has focused on implementing new technology to improve the quality, safety and efficiency of its operations.
“We have carried out a complex transformation of the company over the past seven years,” said Krzysztof Krawczyk, partner at CVC Capital Partners in a statement. “Through c.Z4 billion capex investments and value-creation programmes, we have transitioned it from an analogue world to a digital one. This has allowed us to improve operational parameters, such as reducing the network outages from 331 in 2015 to 14 in 2021 and improving SAIDI power outage index by more than three times.”
Challenges ahead. In our Q&A series with leading dealmakers on the outlook for 2023, Craig McGlashan caught up with Jesse de Klerk, partner at Stafford Capital Partners. Apart from client conservatism, which impacted deal execution, de Klerk was overall pleased with last year’s performance. For next year however, he predicts further slowdown.
“We believe deal activity will vary dependent on the sector and the segment,” de Klerk told Craig. “It is likely that the segment for larger deals will be more challenging as these deals are more dependent on the availability and pricing of credit. With increasing interest rates it is likely that fewer deals will be completed in this segment unless pricing levels or return expectations are lowered.”
Read Craig’s full interview with de Klerk to find out his reflection on the year just gone, and what Stafford’s deal pipeline looks like for 2023.
A TALL order. As the first of the add-on deals I mentioned, Parabellum Investment’s portfolio company, Parseq, acquired the TALL Group, a provider of secure print and payment systems.
Based in Runcorn in England, the TALL Group counts major UK banks and blue-chip companies among its clients, according to Parseq. These clients will be incorporated into Parseq’s global client base, which includes telecoms operators, utility providers and FTSE 100 financial services companies.
Parseq is a Rotherdam, England-based business services and IT provider. The company automates 94 million images, digitises 70 million documents and processes £36 billion ($43.4 billion; €40.9 billion) of payments annually.
Read our full reporting on the deal to learn more about how the two companies will complement each other.
Timber. Lastly, we have the second add-on acquisition to look into. Cairngorm Capital’s portfolio company, National Timber Group, acquired NORclad, a bespoke fire-rated timber cladding provider.
Based in Bristol in England, NORclad manufactures timber cladding, facades and other timber products used by commercial and residential customers nationally.
Cairngorm launched the umbrella brand, National Timber Group, following four timber-related acquisitions. The purchase of NORclad aligns with NTG’s strategy to increase its knowledge, range, and manufacturing capacity in bespoke fire-rated timber cladding, according to Cairngorm.
To find out more about the previous acquisitions by NTG and how NORclad fits in with the umbrella brand, read our full coverage here.
That’s all from me. Craig will write to you tomorrow, as I take a day off to travel back home from my visit to Finland.