UK take-privates tipped for growth by Peel Hunt

Bain Capital still in talks with SoftwareOne.

We’re delving into take-privates this morning as we open with a new report from investment bank Peel Hunt about the opportunities in the UK public markets for private equity firms.

Next, we have an update on Bain Capital’s pursuit of listed Swiss tech company SoftwareOne.

In other take-private news, Stirling Square, TA Associates and Macquarie Capital have announced an offer to acquire Byggfakta Group Nordic.

We then finish off with an exit. We’ve seen a steady stream of sales this year after a difficult environment for sales in 2023. This time it’s Mutares making the sale.

Going private

The UK market could see more take-privates this year than in 2023, including in larger size, according to a new report from investment bank Peel Hunt on UK takeover trends

“For financial sponsors, greater certainty over future interest rates lends itself to more robust returns modelling and more confident investment decisions,” the report said. Private equity firms’ “record levels” of dry powder would also create more public bid activity, the report noted.

UK plc also looks attractive thanks to “uncharacteristically low levels” of price-to-earnings multiples, with the FTSE 250 trading on a 12 month forward P/E ratio of approximately 11x versus around 15.5x in January 2022, the report said.

Peel Hunt’s thinking is in line with what several of the interviewees in our outlooks for 2024 dealmaking have said.

Searchlight Capital Partners founding partner Oliver Haarmann told us last week: “So long as very large-cap, tech companies continue to drive stock market indices, while more medium-sized, healthy, yet moderate growth companies continue to trade at significant discounts and receive less attention from analysts, take-private activity will be of interest.”

The private equity firm was busy in the UK public market last year, in a £441 million ($557 million; €510 million) acquisition of alternative asset manager Gresham House and £524 million takeover alongside Providence Equity Partners of conference company Hyve Group.

In the running

Switching geography but saying with public-to-private deals, Bain Capital is still in discussions with Swiss tech company SoftwareOne about a take-private deal, the latter’s board confirmed this morning.

The talks follow an “extensive due diligence process”, the board said in its note. It added that it made the announcement in response to media reports. Bloomberg reported on Friday that Bain’s latest offer of almost SFr3 billion ($3.5 billion; €3.2 billion) had received a “lukewarm response” from the board, citing people familiar with the matter. That would equate to a share price below the SFr19.50-SFr20.50 second offer that Bain made for SoftwareOne in July.

Bain declined to comment when approached by PE Hub Europe.

Constructive talks

Sticking with take-privates, Stirling Square, TA Associates and Macquarie Capital have announced an offer to acquire Byggfakta Group Nordic for SKr46 in cash per share. The offer values Byggfakta’s total equity at approximately SKr10.1 billion ($981 million; €898 million).

Byggfakta Group is a software and information company in the construction industry, listed on Nasdaq Stockholm. The company is based in Ljusdal in Sweden.

Stirling Square and TA already own approximately 67.4 percent of the company. TA acquired a “significant” minority stake in Byggfakta in September 2020, alongside existing investor Stirling Square.

The value of the shares not owned by the bidders is around SKr3.2 billion.

“As long-standing shareholders of Byggfakta, Stirling Square and TA have strong belief in the company’s future prospects and are dedicated to establishing Byggfakta as a leading information services and software provider to the global construction industry,” said Henrik Lif, partner at Stirling Square. “Achieving such a position requires access to additional growth capital and operational resources to accelerate the long-term delivery of its stated strategy, including additional international M&A.”

An independent bid committee of Byggfakta’s board of directors has unanimously recommended the shareholders to accept the offer, according to a statement.

Finishing off

While take-privates were in good supply in 2023, the same could not be said for exits, thanks to the usual suspects of increasing interest rates and valuation mismatches.

But we’ve seen a steady stream of sales so far in the new year, and we can add another one to the list.

Mutares has sold its portfolio company Valti to the company’s management.

Valti is a European manufacturer of seamless high-precision steel tubes for the bearing manufacturer industry. The company is based in Montbard in France. Valti employs around 160 people and generated revenues of approximately €60 million in 2022.

Mutares acquired Valti in June 2022 from Vallourec. The repositioning was primarily based on carving out the business from Vallourec, including the hiring of necessary resources, securing the long-term supply of raw materials, terminating loss-making contracts, focusing on specialty products and opening new markets to further diversify from historical activities, according to a press statement.