Intouch Autumn/Winter 2007-08

Benelux stands out for belief in private equity

When private equity deal activity topped all records in the Benelux countries in 2006, it was just the peak of a recent surge. Local businesses have long accepted this form of finance as a force for good, and private equity-backed companies are employers of significant numbers of people throughout the region.

The €27.4bn of deals completed during 2006 compared with just €8.7bn in 2001, according to the Private Equity Insight database. Yet the number of deals actually reduced to 91 from 140, indicating the increasing value of the very largest management buyouts.

Culturally, the Benelux economies have historically been among the most open in Europe – far more so than neighbouring Germany and France – which helps bring ready acceptance of the benefits of private equity. A number of Europe’s largest multinationals are based locally, and the region has long prospered through international trade. Recently, both large companies disposing of non-core businesses and families selling businesses have turned to private equity.



There is a high degree of trust in financial institutions across the Benelux, and small to medium-sized private equity transactions have been commonplace since the 1980s. In the past few years, however private equity has taken on an even more prominent role, with leading international firms taking advantage of the private equityfriendly culture to acquire some of the largest local companies, including Dutch publisher VNU (€8.7bn), and Dutch semiconductors company NXP Semiconductors (€8.3bn) in 2006.

A positive influence across the region
“There has been a pretty long tradition of minority investments in local businesses,” says Menno Antal, the 3i Managing Director in charge of the Benelux region. “A positive experience of minority investments in family companies by banks, other family companies and government institutions laid the ground for a sharp increase in private equity growth capital investments in the 1990s, and buyouts in the 2000s.”

Private equity-backed companies are big local employers and represent a large proportion of the economies. In the Netherlands, for example, private equity-backed companies provide more than 6% of all private sector jobs and generate around 17% of gross domestic product, according to the Dutch Private Equity and Venture Capital Association. Broadly speaking, private equity has a budding reputation for introducing professional management techniques, as well as investing to promote growth in profits and employment. 3i, which is one of the Benelux’s leading private equity companies, has invested in several companies that provide good examples of this. Best known is the 2003 acquisition of Dutch national telecommunications company KPN’s directory business, De Telefoongids. This was merged with similar businesses from Austria and Finland to form YBR Group, Europe’sleading yellow pages business, before its 2005 sale as a significantly more profitable enterprise.

Accelerating growth at ABX and Hyva
One of the companies that 3i is currently partnering and developing is ABX Logistics, the Belgian freight forwarding and logistics company with 35 subsidiaries operating in close to 100 countries. Following a buyout from the Belgian Railways in 2006, ABX swiftly restructured its loss-making German businesses, and is now concentrating on forging a more cohesive international group. It is making a series of bolt-on acquisitions and is anticipating a period of strong growth.

“This deal clearly demonstrates 3i’s unique competence at carrying out complex multi-country transactions in the mid-market,” says Robert Van Goethem, a 3i Partner and leading Belgian private equity specialist. “It is testimony to our strength and tenacity that we have overcome all the hurdles in our path and are now on course to realise ABX’s full potential.”

Another current example of a growing 3i investment is Hyva, a Dutch provider of hydraulic systems for the automotive market. After acquiring Hyva at the beginning of 2004, 3i introduced a new management structure and controls to prepare it for rapid growth. 3i tripled capital expenditure, focusing on developing markets such as China, India and Brazil and 3i’s Italian team helped to negotiate the acquisition of a complementary Italian business.

Benelux stands out for belief in private equity In just three years, the company’s revenues have more than doubled, mainly through organic growth.

“What is great about Hyva is that the original owner manager had a very good concept of producing and selling through subsidiaries and distributors in local markets, especially developing markets,” explains Mark Redman, a Benelux based 3i Partner. “We have kept this concept, whilst accelerating expansion and encouraging management to focus on additional developing markets where there is substantial opportunity.”

Hyva is far from being the highest profile of recent Benelux buyouts, but it is one of several that local corporates and others are watching with interest. “I think private equity has had a hugely positive impact overall,” says Antal. “It is showing how businesses should be run, with a focus and good agenda. Corporates see when they divest their businesses that they show more growth, more profitability and more employment.”

Previous section Next section