NEC Corp to acquire Avaloq for $2.2bn

BY Richard Summerfield

NEC Corp has agreed to acquire software company Avaloq Group AG in a deal worth $2.2bn. The parties expect the deal to close in April 2021.

The sale of Avaloq ends a three-year investment by private equity firm Warburg Pincus, which owns 45 percent of the company. The rest of Avaloq is held by its founder Francisco Fernández and its employees. 

Avaloq has about 2300 employees and serves more than 150 banks and wealth managers in key financial centres including London, Frankfurt and Paris. In a statement announcing the deal, Juerg Hunziker, Avaloq’s chief executive, said the deal would help the company expand its geographical footprint beyond Europe.

“The Avaloq team is delighted to be joining NEC Group, a highly trusted and well-respected company with a long heritage, which will help further enlarge our geographical footprint across the globe,” said Mr Hunziker. “Due to very similar values of professionalism, reliability, quality and excellent service for clients with a focus on precision, we firmly believe that this partnership will be a successful one for employees, clients as well as other stakeholders.”

He added: “The whole Group Executive Board at Avaloq is committed to driving forward our growth strategy and we are very glad to have a strong partner on our side who supports our long-term vision. With NEC, Avaloq found a perfect new home to continue our success story of serving our clients with solutions that make their lives simpler in an ever more complex world. The Avaloq team would like to thank Warburg Pincus for its valuable strategic advice and continued support during our successful partnership.”

“NEC strongly believes in the importance of safety and security around financial institutions, which is absolutely crucial for sustainable prosperity and digital inclusion,” said Takashi Niino, president and chief executive of NEC. “Avaloq is a recognised global leader in their field, and their compelling offering is expected to complement our current solutions. NEC aims to further expand its business in the digital government and digital finance areas, by globally developing SaaS and BPaaS business models that utilise software and technologies from throughout the NEC Group, including Avaloq’s.”

“We have enjoyed a rewarding and successful partnership with Avaloq’s chairman and founder, Francisco Fernandez and Juerg Hunziker, Group CEO,” said Adarsh Sarma, partner and co-head of Warburg Pincus Europe. “Avaloq has grown quickly to establish itself as a global leader in banking software and is one of the most strategic FinTech companies in its space. Together with management, we have transitioned Avaloq from an on-premise business model into software-as-a-service provider, launched new innovative cloud native digital products and expanded into multiple new geographies. With strong leadership and governance in place, we are confident that Avaloq will have great future success under new ownership and wish them the very best.”

The deal follows NEC’s 2018 acquisition of British IT services company Northgate Public Services and its 2019 purchase of Danish e-government services firm KMD for more than $1bn.

News: NEC to buy Swiss software firm Avaloq for $2.2 billion

CD&R agrees $4.7bn Epicor deal

BY Richard Summerfield

Four years after it acquired the company, private equity giant KKR & Co has agreed to sell Epicor Software Corp to Clayton, Dubilier & Rice, in a deal valued at $4.7bn.

KKR, which bought Epicor from Apax Partners in 2016 for $3.3bn, including debt, had been exploring a sale of the business since 2019. The deal is expected to close later this year.

“This is an exciting day for the entire Epicor family – employees, customers, and partners alike – and validates the company’s leadership position across markets we serve,” said Steve Murphy, chief executive of Epicor. “We welcome this new partnership with CD&R, which shares our vision for growing the company, and I thank KKR for a highly successful partnership these past few years. We are excited to work with CD&R to increase investment in our market-leading product portfolio and to enhance our ability to support an ever-increasing range of customer needs.”

“Epicor’s reputation for quality and performance, and its impressive portfolio of next-generation cloud products, position the company well to accelerate growth in the coming years,” said Jeff Hawn, operating partner at CD&R. “We look forward to partnering with the Epicor management team to further expand Epicor’s product portfolio as well as make strategic acquisitions to meet customers’ evolving digital transformation needs.”

“Four years ago, we embarked on an ambitious product modernization journey together with Epicor and are incredibly proud of the successes that the company has achieved to date, particularly with its recent cloud releases,” said John Park, chairman of the Epicor board and head of Americas technology private equity at KKR. “We are confident that CD&R will provide valuable support as the company continues these product- and customer-centric investments to accelerate growth in the cloud.”

News: CD&R to buy KKR’s Epicor Software for $4.7 billion

PE and VC investment in UK business hit £22bn in 2019, reveals new report

BY Fraser Tennant

Private equity (PE) and venture capital (VC) investment into UK businesses reached more than £22bn in 2019 – an increase of £1.6bn on the previous year  – according to a new report by the British Private Equity & Venture Capital Association (BVCA).

In its annual ‘Report on Investment Activity’ the BVCA reveals the full breadth of the impact of PE and VC on the UK economy, with a total of 1530 companies across the country having received backing in 2019, an increase of 15 percent on 2018 figures.

“As long-term, responsible investors, PE and VC have a key role in supporting the recovery post-COVID-19, said Michael Moore, director general of the BVCA. “What these 2019 figures demonstrate is the size of our industry’s economic impact, building businesses and jobs across the UK.”

The report’s key highlights include: (i) VC investment increased by 67 percent year-on-year to £1.65bn, with 821 companies backed, an 18 percent increase; (ii) the South West of England received the largest amount of PE and VC capital investment (11.6 percent) outside of London and the South East, followed by the North West (9.6 percent) and the West Midlands (7.8 percent); (iii) the technology sector saw the largest number of deals and investment in 2019, accounting for 37.1 percent of all companies, and 26.8 percent of total investment; (iv) UK PE and VC funds raised £47.59bn in 2019; and (v) pension funds provided 38 percent of all capital raised followed by sovereign wealth funds (14 percent) and fund of funds (11 percent).

That said, while the level of investment is welcome, the BVCA is under no illusions that there are tough times ahead for the UK. “This year’s report clearly illustrates how important PE and VC are to UK businesses big and small, providing them with the long-term capital and the investment expertise they need to thrive,” said Neil MacDougall, chair of the BVCA. “As the country emerges from coronavirus, these attributes are needed now more than ever.”

Mr Moore concluded: “I am supremely confident that PE and VC , and the companies they back, are well-positioned to support growth, sustainability and innovation throughout the UK.”

Report: BVCA Report on Investment Activity 2019

KKR to acquire Roompot Group for $1.1bn

BY Richard Summerfield

Private equity giant KKR has agreed to acquire Roompot Group, a provider of holiday parks in Western Europe and the number one holiday park operator in the Netherlands, from European private equity firm PAI Partners for $1.1bn.

PAI reportedly began looking for a buyer in October of last year. In March 2020, it planned to launch a formal sale process but that was postponed due to the ongoing COVID-19 pandemic. However, a deal for the company has now been reached.

Since being acquired by PAI for $673m in 2016, Roompot has invested significantly in upgrading and expanding its accommodations and opening new parks, and developed a strong digital marketing and distribution platform. It has also increased real estate ownership and grown revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) at double digit growth rates.

“As we change to new ownership we would like to thank PAI, who have been a hugely supportive partner to our team since 2016, and welcome KKR for the next phase,” said Jurgen van Cutsem, chief executive of Roompot Group. “Our focus, as always, will be providing a great service for our leisure customers and third-party providers. We continue to see growing demand from our guests and from our corporate partners due to the leading platform we have put in place, providing a solid foundation to scale the business, also on an international level.”

“Roompot is already a leading player in the region with a best-in-class management team and a strong recent track record,” said Daan Knottenbelt, partner and head of the Benelux region at KKR. “We see significant further growth potential based on a very strong development pipeline, continued expansion of Roompot’s owned assets and new corporate partnerships. KKR is investing in Roompot through our Core Investments strategy, which is our pool of capital for longer-term investments, and we look forward to working with Jurgen and his team over the coming years.”

Joerg Metzner, a director at KKR, added: “We have been looking for a platform to invest behind in the fragmented European holiday parks market for some time. Our support for Roompot and its management team fits perfectly with our broader investment theme in the leisure space.”

Operating across its 33 parks in the Netherlands, Belgium and Germany, Roompot has over 2100 employees catering for approximately 3 million guests per year. The company generates around €400m in annual sales.

News: KKR buys vacation parks firm Roompot in $1.1 billion deal

58.com to be taken private in $8.7bn deal

BY Richard Summerfield

A consortium of investors backed by private equity firms Warburg Pincus and General Atlantic have agreed to acquire Chinese online classifieds company 58.com in a deal worth $8.7bn.

The deal has been unanimously approved by the company’s board and is expected to close in the second half of 2020.

The take-private consortium includes Warburg Pincus Asia LLC, General Atlantic Singapore Fund Pte Ltd, Ocean Link Partners Ltd, 58.com chief executive officer Jinbo Yao and Internet Opportunity Fund LP, an entity controlled by Yao, which has about 42 percent of the voting power in 58.com, the Chinese equivalent of  Craigslist.

The consortium plans to fund the merger through a combination of cash contributions, rollover equity contributions from certain shareholders and $3.5bn in term loans from Shanghai Pudong Development Bank Co, Ltd.

According to a statement announcing the deal, 58.com shareholders will get $56 in cash for each American depositary share, a premium of nearly 20 percent from when the company got the first take-private proposal in April.

The deal would make 58.com the latest in a recent string of Chinese companies to delist from New York and comes just days after online car information provider Bitauto announced it had entered into a similar deal. Bitauto agreed to be taken by private by an investor group backed by gaming and social media firm Tencent Holdings Ltd for $1.1bn in cash.

Chinese companies have been pulling out of the US markets at the fastest pace since 2015 this year. Prior to the announcement of 58.com’s sale, US-listed Chinese companies have announced four go-private deals with a combined value of $8.1bn including debt, according to Bloomberg.

Interest in Chinese take-private deals has increased as Sino-US tensions have risen in recent years. Many companies have been forced to consider the merits of maintaining a New York listing rather than relocating to Shanghai or Hong Kong.

News: China’s 58.com to go private in $8.7 billion deal