1. business and industrial
2. company
3. merger and acquisition

DOUGHTY HANSON ANNUAL REVIEW 2014
03
DOUGHTY HANSON
CONTENTS
ABOUT DOUGHTY HANSON
04
05
06
08 10 12
14
16
AT A GLANCE
OUR INVESTORS
LETTER FROM THE CHAIRMAN
DOUGHTY HANSON IN 2014
FROM EUROPE TO THE WORLD
INDEPENDENT PERACS ANALYSIS
VALUE CREATION IN FUND V
CASE STUDY: QUIRÓN
OUR PORTFOLIO COMPANIES
20 ASCO
22 BALTA
24EUROFIBER
26 KP1
28 LM WIND POWER
30 TMF GROUP
32 TV3
34 ZOBELE GROUP
RESPONSIBLE INVESTING
36 SOCIAL INVESTMENT
37 ESG POLICY AND INITIATIVES
38 CHARITABLE INITIATIVES Doughty Hanson is a member of the EVCA and the BVCA.
Doughty Hanson has been carbon neutral since 2007 and is currently certified as carbon neutral with the CarbonNeutral® company.
04
DOUGHTY HANSON
AT A GLANCE
Doughty Hanson is one of the longest-established and most
experienced private equity firms in Europe.
For more than 25 years, we have been investing in marketleading companies and creating value by driving operational
improvements across our portfolio.
Through our network of six investment offices across Europe,
our team has developed close relationships with the owners
of, and advisers to, family businesses and industrial
operations throughout Europe.
Working alongside management, we have helped many
companies grow into large, successful international
organisations. Many of the companies we have acquired are
now listed on major stock exchanges, and others have become
divisions of larger global companies.
We work in close partnership with management teams,
develop shared strategic goals and provide ongoing support
through the value-creation initiatives that we undertake.
05
DOUGHTY HANSON
OUR INVESTORS
63
PRIVATE EQUITY
INVESTMENTS
$13bn
AGGREGATE RETURN TO
INVESTORS
6
EUROPEAN INVESTMENT
OFFICES
Investors in Doughty Hanson’s
private equity funds represent a
broad spectrum of institutions
including pension funds, family
offices, endowments, funds of
funds, sovereign wealth funds,
insurance groups and banks.
Our investor base is global and includes
particularly strong representation from the US,
the UK and Europe.
Our pension fund investors include
schoolteachers in New York and Arkansas,
university professors in the UK and Texas and
retired telecommunications workers in
Australia and across the US.
We are proud that the investor base features
strong representation from family offices
around the world, including several families
that sold businesses to us and have
subsequently chosen to reinvest some of the
proceeds in our funds.
Doughty Hanson’s own employees are also
significant investors in our funds, thereby
ensuring a strong alignment of interests with
those of our investors.
Our investors benefit from the experience of
Doughty Hanson’s in-house reporting and
monitoring teams. Our dedicated investor
relations professionals provide investors with
regular updates on developments across the
funds’ portfolios and coordinate access to
senior members of the investment team. We
have also developed proprietary online
reporting systems that provide ongoing
support.
Doughty Hanson & Co Managers Limited is
authorised and regulated by the UK Financial
Conduct Authority (FCA) and Doughty Hanson
Partners LLP is authorised and regulated by
the UK FCA to act as an Alternative Investment
Fund Manager.
29
YEARS OF GENERATING
SUPERIOR RETURNS FOR
OUR INVESTORS
£167m
DOUGHTY HANSON I
1990
DM1bn
DOUGHTY HANSON II
1995
$2.7bn
DOUGHTY HANSON III
1998
€1.5bn
OUR INVESTORS
BY GEOGRAPHY
OUR INVESTORS
BY TYPE
DOUGHTY HANSON IV
2004
€3bn
DOUGHTY HANSON V
2007
NORTH AMERICA
INSURANCE COMPANIES
ASIA
ENDOWMENTS
REST OF WORLD
FUNDS OF FUNDS
UNITED KINGDOM
SOVEREIGN WEALTH FUNDS
EUROPE (EXCLUDING UK)
BANKS
PENSION FUNDS
PRIVATE INDIVIDUALS
06
LETTER FROM THE
CHAIRMAN
We’ve returned €3bn across six
exits in just three years. This
performance is continued proof of
the investment philosophy and
approach that has served us so well
for nearly three decades.
In 2014 we made one realisation and
completed secondary placings for two
businesses we’ve previously IPO-ed to return
nearly €1bn to our investors.
In March we sold our remaining shares in
HellermannTyton, a business we listed on the
London Stock Exchange in 2013. The share
price has risen more than 55% since the
business listed – giving a total return of 2.6x.
In September we sold another tranche of
shares in Tumi, a business we listed on the
New York Stock Exchange in 2012. With this
latest placing the business has returned 5.8x
while we still hold around 8% of the company.
By the time we realise our remaining shares
we’ll be close to a 7x return.
A CONSISTENT APPROACH
HellermannTyton and Tumi are yet two more
examples of the value of Doughty Hanson’s
approach. Both businesses were impacted by
the 2008 financial crisis but weathered the
storm, and then prospered with support from
our team.
Which brings us to Quirón – the Spanish
hospital business we bought in 2012 and sold
at the end of last year for a 33% gross IRR. In
almost 30 years of investing there have been
few investments that better reflect Doughty
Hanson’s philosophy: that is a “bottom-up”
approach, investing in market-leading
businesses, developing a compelling
investment thesis, buying from family owners
and creating significant value through active
ownership.
Our investment certainly raised eyebrows at
the time. Economies across Europe were in the
doldrums and Spain, in particular, was in the
midst of a severe recession. Few private equity
07
LETTER FROM THE
CHAIRMAN
firms were deploying capital in Spain at the
time; in fact, many were closing their offices.
However, we have never been one to follow the
herd. So while everyone else wavered, we
made not one but two fund investments in
Spain: USP Hospitales and Grupo Hospitalario
Quirón (GHQ). Our team had been looking at
the Spanish private healthcare market for
several years and identified the best
businesses to lead the consolidation of this
growing, but very fragmented, industry.
CONTROL AND CONFIDENCE
Prior to the acquisition, the Doughty Hanson
team spent a number of years building a
relationship of trust and confidence with the
family owners of GHQ. Working together, we
agreed and then executed a plan to build a
clear market leader through the merger of the
two businesses to create one supergroup
under the Quirón brand.
It’s important to understand that the Cordon
family were the majority owners of GHQ and
that partnering with Doughty Hanson meant
exchanging their controlling stake for a
minority shareholding in the merged group. It
goes without saying that ceding control to a
private equity firm is a very difficult decision
for any family business owner. However, our
long history of partnering with families and our
strong reputation as a responsible steward of
great European businesses were very
reassuring in this instance, and continue to be
compelling factors when discussing new
investments with family owners across Europe.
CREATING A CLEAR MARKET LEADER
Merging the two businesses offered another
opportunity for our team to shine. They
generated €20m of synergies across all areas
of the business. We worked hand-in-hand with
the management team and created the
undisputed leader in the Spanish private
hospital sector. By the time we acquired
Teknon, a state-of-the-art private hospital in
Barcelona, at the end of 2013, Quirón had three
times the market share of the nearest
competitor. The business had also doubled its
EBITDA in just two years.
€3bn
RETURNED TO
INVESTORS SINCE 2012
33%
IRR GENERATED BY
DOUGHTY HANSON’S
INVESTMENT IN QUIRÓN
Our case study on pages 16–17 explores the
transaction in more detail. We also have a
short film which includes interviews with the
Cordon family.
The sale of Quirón means we’ve returned
almost all of the capital invested in Fund V. The
fund is solidly top quartile according to both
Thomson Reuters and Cambridge Associates
and, in November 2014, Fund V topped the
ranking of “boom-era” buyout funds, according
to research by Private Equity News.
I can’t say it has been an easy investment
period but we’ve stuck to what we do best –
market-leading businesses, family owners,
conservative leverage, active ownership – and
it continues to work. We’ve still got four
businesses left in Fund V and I am confident
of a very strong overall return.
FOLLOW-ON SUCCESS
The remaining portfolio is equally interesting
and we’re preparing for further exits over the
next two years.
Our Fund V portfolio companies have now
completed 38 follow-on acquisitions, including
five in 2014. ASCO made the largest of six
acquisitions under our ownership when it
acquired a specialist transport and logistics
business in Australia. This is a key part of
ASCO’s strategy to grow internationally and
diversify its business.
Another business growing internationally is
TMF Group, which made four acquisitions in
2014 including KCS, a corporate services
provider based in Asia with offices in eight
countries. The transaction adds more than
€25m in revenue, and gives the business a
strong position in the key markets of China and
Singapore.
FLEXIBLE FINANCING
We remain active in the financing markets.
At KP1 we issued Doughty Hanson’s first
“unitranche” facility and at LM Wind Power we
issued our first Nordic bond. Both of these new
facilities remove the need for any maintenance
covenants, de-risking our investment and
giving us greater flexibility to focus on future
growth.
We saw the value of a flexible financing
structure at TMF Group, one of the companies
we refinanced with a bond issue in 2012. In
2014, we “tapped” the 2012 bond to raise a
further €65m, allowing us to complete
acquisitions without the need for further equity.
OLD AND NEW
During 2015, we plan to announce a First Close
on Fund VI. This means 2014 was also a busy
year for talking to existing and potential
investors about our future plans.
It’s a new fund, but with very familiar features:
the same team and the same investment
strategy as Fund V. That’s why we’re delighted
to have secured commitments from many of
the investors in Doughty Hanson’s previous
funds.
We will also be welcoming several new
investors.
I’d like to thank the entire Doughty Hanson
team and everyone at our portfolio companies
for their hard work throughout the year.
Finally, I want to use this opportunity to thank
our investors for their continued support.
Richard Hanson
Executive Chairman and
Head of Private Equity
March 2015
“OUR LONG HISTORY
OF PARTNERING WITH
FAMILIES AND OUR
STRONG REPUTATION
AS A RESPONSIBLE
OWNER CONTINUE TO BE
COMPELLING FACTORS
WHEN DISCUSSING NEW
INVESTMENTS WITH
FAMILY OWNERS ACROSS
EUROPE”
08
DOUGHTY HANSON
IN 2014
09
DOUGHTY HANSON
IN 2014
Doughty Hanson was active
throughout 2014, realising
value through exit and creating
value across the remaining
portfolio companies.
1
EXIT
2
SECONDARY PLACINGS
5
FOLLOW-ON
ACQUISITIONS
JANUARY
MARCH
MAY
JUNE
AUGUST
NOVEMBER
TMF Group acquires
payroll firm Tass Axia
in Indonesia
LM Wind Power
issues €130m bond
ASCO Group acquires
Bonnie Rock
Transport in Australia
TMF Group acquires
remaining 49% of
Custom House Global
Fund Services
TMF Group acquires
KCS Limited in Asia,
adding 14 offices in
the region
TMF Group acquires
GMG Trust Company
in South Africa
JULY
SEPTEMBER
TMF Group raises
additional €65m from
bond investors to
fund expansion
Secondary placing of
Tumi shares returns a
further €107m to
Fund IV investors
KP1 completes
successful €215m
refinancing
Secondary sale of
remaining shares in
HellermannTyton
raises a further
€159m for Fund IV
investors, generating
a total return of 2.6x
Doughty Hanson sells
Quirón, returning
€717m and 2.0x
capital invested to
Fund V investors
3
PORTFOLIO COMPANIES
REFINANCED
€984m
RETURNED TO
INVESTORS
10
FROM EUROPE TO
THE WORLD
For more than a
quarter of a century
Doughty Hanson has
been helping its
portfolio companies
expand overseas
through follow-on
acquisitions, capacity
expansion and
efficiency
programmes.
We look at recent
activity across six
continents.
11
FROM EUROPE TO
THE WORLD
CAPACITY EXPANSION, US
In 2014, LM Wind Power
installed and tested a new
manufacturing process at
one of its US plants. The
proprietary process – called
“Manufacturing 2.0” – is
generating 1.7 times the
normal output per mould, and
significantly increases the
output of the plant. LM Wind
Power will begin to roll out
the process across other
facilities in 2015. This is
expected to have a material
impact on both costs and
future capital expenditure.
FOLLOW-ON ACQUISITION,
NORWAY
In late 2013, TMF Group
acquired Accepta, one of
Norway’s leading high-end
accounting firms, to further
enhance the company’s
presence in Scandinavia.
FOLLOW-ON ACQUISITION,
ASIA
In 2014, TMF Group acquired
KCS, a pan-Asian corporate
services provider. KCS was
originally part of KPMG but
was spun off as an
independent business in
2003. KCS operates from 14
locations in eight countries
and substantially increases
TMF Group’s presence in
Asia.
OPERATIONAL EFFICIENCY,
MEXICO
Throughout 2014, Doughty
Hanson’s in-house value
enhancement team was on
the ground in Mexico to
support a major efficiency
programme at one of Zobele’s
manufacturing plants. This
has boosted plant output,
improved customer service,
reduced working capital
requirements and cut labour
turnover. As a result, there
has been a significant
increase in overall
operational efficiency and
“On-Time, In-Full” delivery –
a measure of customer
service.
PROCUREMENT, CHINA
AND BRAZIL
Doughty Hanson has been
working with LM Wind Power
on procurement programmes
for several years. Throughout
2014, LM Wind Power worked
with its local supply chains in
China and Brazil to help them
provide raw materials and
components for use by its
three Chinese plants and one
Brazilian plant. This de-risks
LM Wind Power’s supply
chain, enables more products
to be sourced locally and at a
lower cost and creates
greater competition
throughout LM Wind Power’s
global supply chain.
FOLLOW-ON ACQUISITION,
SOUTH AFRICA
In 2014, TMF Group acquired
GMG Trust Company, a South
African trust administration
business. The transaction
makes TMF Group one of the
largest fiduciary service
providers in South Africa and
gives the firm a platform
from which to grow across
Africa.
FOLLOW-ON ACQUISITION,
INDONESIA
In 2014, TMF Group acquired
Tass Axia, one of Indonesia’s
largest providers of payroll
and HR administration
services. The acquisition
more than doubles TMF
Group’s revenue and
headcount in Indonesia.
FOLLOW-ON ACQUISITION,
AUSTRALIA
In 2014, ASCO acquired
Bonnie Rock Transport, a
specialist provider of
transport and logistics
services to the oil and gas
industry.
12
INDEPENDENT PERACS
ANALYSIS
13
INDEPENDENT PERACS
ANALYSIS
PERACS provides credible,
independent analysis of private
equity performance. Co-founder
and Head of Research Professor
Oliver Gottschalg discusses his
2014 analysis of Doughty Hanson
Funds IV and V.
How did the Doughty Hanson funds perform?
The Doughty Hanson portfolio shows annual
outperformance of 7.9% over the public market
index (Chart 1).
What does PERACS analyse?
We provide a variety of indicators of
performance from the track record of a private
equity fund manager. Crucially, we don’t just
look at how much value was created but how it
was created.
Does leverage have an impact on returns?
This is an area that is interesting to LPs and
sometimes they can be very sceptical about
the impact of leverage. They worry that a
private equity firm is basically “buying”
returns with the risk that they, the LP, as the
asset owner, has to carry. But if we look in
more detail at the impact of leverage we can
disentangle two conceptually different effects:
replicable leverage and unique leverage.
PERACS is entirely objective; we are an
independent service provider and our
approach is always to give investors an
accurate view, be it good or bad, of the
performance of a General Partner (GP). Every
measure is not only chosen because it is
objective, but it has been proven empirically to
have some predictive ability of likely future
outperformance.
The advantage of this type of analytics is that
you can validate extravagant claims with some
hard facts. It’s not a perfect science but it gives
a much greater level of confidence that a claim
is actually supported by data.
CHART 1 – 7.9% ANNUAL
OUTPERFORMANCE OF DOUGHTY HANSON
FUNDS VS PUBLIC MARKETS
We measure this performance against
the broad public market index because, in
effect, this is the opportunity cost to Limited
Partners (LPs).
We can simulate the effect of replicable
leverage by buying a public market index that
matches each portfolio company and
superimposing the same leverage ratio that we
observed in the Doughty Hanson buyout.
This allows us to identify the de-levered alpha,
the fundamental outperformance of the
companies acquired by Doughty Hanson,
ignoring any replicable leverage. For the
Doughty Hanson portfolio, this de-levered
alpha is responsible for two-thirds of the
overall outperformance (Chart 2).
CHART 2 – OUTPERFORMANCE FROM
DOUGHTY HANSON ALPHA, NOT LEVERAGE
OR SECTOR CHOICE
“EVERY MEASURE IS
CHOSEN BECAUSE IT
HAS BEEN PROVEN
EMPIRICALLY
TO HAVE SOME
PREDICTIVE ABILITY
OF LIKELY FUTURE
OUTPERFORMANCE”
In simple terms, this means that Doughty
Hanson generated returns by working the
assets and not by using leverage.
Of course, the leverage used will amplify the
returns generated by this good performance.
So for Doughty Hanson, around 1.5% of the
overall alpha is attributable to this unique
leverage effect.
What were the main drivers of Doughty
Hanson’s outperformance?
We assess these by analysing the accounting
information on each of the underlying
businesses, considering what happened to the
company over the life of the deal and taking
into account any add-on investments.
For Doughty Hanson, we observe a clear
dominance of the fundamental value drivers
(Chart 3). More than 60% of the value was
created by top line growth and margin
improvement. As you would expect, if you build
a growing and more profitable business, you
usually then get an additional improvement in
the trading multiples, which explains a third
slice of value creation.
picking industry sectors that, at that point in
time, are simply good opportunities for private
equity investments. Our analysis supports this
claim and we see a high consistency in terms
of the size of the investment, combined with a
low consistency in terms of geographies and
industries (Chart 4).
How volatile are the returns in Doughty
Hanson’s funds?
Doughty Hanson has been able to generate
more stable returns than comparable private
equity firms. Our analysis proved that the
performance of any given Doughty Hanson
fund is less driven by single extreme events,
either very positive or very negative; instead,
there’s a relatively stable path to get to the
overall returns, much more stable than what
you would observe in comparable private
equity funds (Chart 5).
What advantages does PERACS analysis offer
over other industry metrics?
PERACS Alpha is the only performance
measure available that offers a good view into
the future. That’s not the case for most other
performance measures, particularly for IRR.
About PERACS
Watch at http://review.
doughtyhanson.com/peracs
For more information on
PERACS see peracs.com
CHART 5 – LOWER VOLATILITY
VS OTHER PRIVATE EQUITY
FUNDS
100%
80%
60%
40%
20%
How consistent is Doughty Hanson in terms of
industry, geography and size?
Doughty Hanson has a mandate of being
opportunistic on a pan-European basis, both in
terms of identifying the best investment
opportunities in different countries, and by
In addition to comparable performance, our
research looks for a level of stability and
persistence. If you observe high PERACS Alpha
in a past fund and a very balanced
performance dispersed across a portfolio, this
GP is more likely to have a more stable level of
returns in the future, and vice versa.
CHART 3 – 60% OF OUTPERFORMANCE DUE
TO REVENUE AND MARGIN IMPROVEMENT
CHART 4 – STRONG SIZE CONSISTENCY
BETWEEN INVESTMENTS
0%
20%
40%
60%
80%
100%
-20%
-40%
DOUGHTY HANSON
ALL PRIVATE EQUITY
75.0%
11.3%
0.6%
100%
26.8%
7.9%
13.0%
0.3%
1.5%
7.9%
1.0%
41.7%
18.6%
5.1%
42.8%
16.7%
5.1%
MARKET
RETURNS
PERACS
ALPHA
PERACS
RATE OF RETURN
DE-LEVERED
ALPHA
SECTOR
CHOICE
EFFECT
REPLICABLE
LEVERAGE
EFFECT
UNIQUE PE
LEVERAGE
EFFECT
PERACS
ALPHA
REVENUE
EFFECT
MARGIN
EFFECT
MULTIPLE DE-LEVERAGE
EFFECT
EFFECT
FX
EFFECT
PERACS
ALPHA
COUNTRY
CONSISTENCY
SIZE
CONSISTENCY
INDUSTRY
CONSISTENCY
Analysis of Fund IV and Fund V
as at 30 June 2014
14
VALUE CREATION
IN FUND V
15
VALUE CREATION
IN FUND V
Raised in 2007, Doughty Hanson’s Fund V
is one of the top performing funds of its
vintage year.
It was invested in eight portfolio
companies between 2007 and 2012 and
has already returned almost 100% of
invested capital with four investments still
remaining.
The fund is top quartile according to both
Thomson Reuters and Cambridge
Associates.
NORIT
The Netherlands
Purification technologies
VUE ENTERTAINMENT
UK
Cinema operator
AVANZA
Spain
Bus transportation
QUIRÓN
Spain
Private hospitals
- Acquired in 2007 from a financial
owner.
- Acquired in December 2010 from
founding management team.
- Acquired in 2007 from family owners.
- Acquired in 2012 from family owners.
- Value created by splitting the business
into two independent divisions,
Activated Carbon and Clean Process
Technology. Both divisions significantly
expanded their capacity, Activated
Carbon with an additional €50m of
equity to fund three new kilns.
- Value created through three follow-on
acquisitions in the UK, Germany and
Poland to form a leading European
chain; the digitisation of the UK circuit
to optimise film booking; and
procurement savings.
- Value created through the acquisition of
six earnings-accretive concession
operators, pricing initiatives including
online sales, and operational
improvements.
- Value created through the acquisition
and subsequent merger of two private
hospital businesses, significant merger
synergies and the follow-on acquisition
of another hospital in Barcelona.
- Realised in 2013.
- Realised in 2014.
- Realised in 2011 and 2012.
2.5x
“With Norit, we knew that the Activated
Carbon and Clean Process Technology
divisions belonged to a different set of
buyers. From day one, we started
splitting the business in two and
developed a separate growth strategy
for each part of the business.”
- Realised in 2013.
2.1x
“Our plan was to look for targets and
build a European leader, and it worked.
During Doughty Hanson’s ownership,
Vue increased its cinemas from 68 to
146 and transformed the business from
the third-largest operator in the UK to
the second-largest in Europe.”
1.0x
“At Avanza, we delivered on our
investment thesis, increased sales and
EBITDA by 84% and 68% respectively,
and built a market-leading business.
Unfortunately the underlying weakness
of the Spanish economy impacted our
ability to turn this effort into a strong
return for Fund V.”
Francisco Churtichaga, Partner, Spain
Julian Huxtable, Partner, UK
Alex Moss, Partner, UK
2.0x
“Quirón is a wonderful example of three
things Doughty Hanson does very well.
First, we needed the vision and
knowledge to find value in an unloved
area of the market. Second, we needed
the creative M&A skills to unlock that
value. Finally, we needed the postacquisition value enhancement skills to
crystallise value and generate a strong
return in less than three years.”
Francisco Churtichaga, Partner, Spain
FUND V SUMMARY
8
PORTFOLIO COMPANIES
63%
ACQUIRED FROM FAMILY OR
FOUNDING MANAGEMENT TEAM
38
FOLLOW-ON INVESTMENTS
96%
INVESTED CAPITAL RETURNED
FROM FOUR EXITS
4
PORTFOLIO COMPANIES
REMAINING
7.2%
PERACS ALPHA – ANNUAL
FUND V OUTPERFORMANCE VS
PUBLIC MARKETS
16
CASE STUDY
QUIRÓN
Despite a challenging macroeconomic environment in Spain,
Doughty Hanson identified the
potential to build a market-leading
private hospital business.
The acquisition of USP was the
starting point for consolidation of
the fragmented private hospital
market. The merger with familyowned Grupo Hospitalario Quirón
(GHQ) followed, as did substantial
merger synergies and a follow-on
investment in Teknon, a large
hospital in Barcelona.
This doubled EBITDA to more than
€100m, triggering an offer from
another financial buyer to generate
a 2.0x return to Fund V investors.
17
CASE STUDY
QUIRÓN
WHY DID WE INVEST?
Although Spain was suffering from a deep
recession, the private healthcare market
proved resistant to the downturn, experiencing
compound annual growth of 4.9% from 2007 to
2012. Favourable demographics, the impact of
severe budget cuts on the national health
service and the proliferation of new medical
technologies all buoyed demand for private
treatment.
Doughty Hanson had developed in-depth
knowledge of the Spanish private healthcare
market, all of the major business in the sector
and identified the potential for significant
consolidation. By the time it acquired USP in
early 2012, Doughty Hanson had already
tracked the asset for a number of years.
But USP – at the time Spain’s largest private
hospital group with a 6.2% market share – was
just the start. Doughty Hanson had also
developed a very close relationship with the
Cordon family that owned and managed GHQ.
Doughty Hanson had identified GHQ as the
business best-placed to lead the consolidation
of the private hospital market.
Doughty Hanson acquired a stake in GHQ from
a minority shareholder and subsequently
merged USP and GHQ to create an undisputed
supergroup of which Doughty Hanson had a
controlling shareholding. As part of the
merger, the Cordon family rolled over 100% of
their investment in GHQ into a minority stake
in the enlarged group, signalling strong
support for the future of the business.
The merged business – branded Quirón – was
the largest and most reputable private hospital
group in Spain and a unique platform from
which to continue the consolidation of the
fragmented sector.
€1.6bn
ENTERPRISE VALUE OF
QUIRÓN AT TIME OF EXIT
2.0x
RETURN TO FUND V
FROM DOUGHTY
HANSON’S INVESTMENT
IN QUIRÓN
99%
INCREASE IN PRO FORMA
EBITDA 2011–13
HOW WAS VALUE CREATED?
Merger synergies
Doughty Hanson worked together with the
management team to develop a synergy
model. This included revenue synergies by
combining hospital volumes located in the
same city or catchment area to strengthen
Quirón’s negotiating power with the health
insurance companies. Merging the two groups
also provided opportunities to drive purchasing
synergies across pharmacy, medical supplies,
contract services and laboratory costs. By
concentrating volumes and consolidating
vendors Quirón could generate significant
savings. Cost savings were also generated by
combining two head offices into one.
Buy-and-build
Another source of growth for the company was
the consolidation of the fragmented Spanish
healthcare market. In November 2013, Quirón
acquired Teknon, the single largest private
hospital in Barcelona and one of the bestregarded hospitals in Spain. The acquisition
strengthened Quirón’s presence in Barcelona
and meant it had an overall market share
three times larger than its next-largest private
competitor.
WHAT WAS THE OUTCOME?
In less than one year, Doughty Hanson and
Quirón’s management team generated €20m
of revenue, purchasing and cost synergies
from the merger.
€900
-11%
6%
100%
€768
€800
€700
€637
€656
€600
€500
€400
€300
€200
€100
€0
EBITDA
GROWTH
MULTIPLE
DEBT
EXPANSION REDUCTION
In total, Quirón operated 21 hospitals, four
fertility clinics and a number of consultation
centres and day hospitals. It had sites across
mainland Spain, the Balearics and the Canary
Islands and was present in more regions than
any other private operator. It enjoyed a
particularly strong position in Barcelona and
Madrid.
Quirón offered a comprehensive range of
medical specialities, with particular strength
in trauma, gynaecology, oncology, cardiology,
neuroscience and internal medicine. With
2,874 beds, Quirón had three times the market
share of the next-largest private competitor.
EXIT
In July 2014, Doughty Hanson agreed to sell
Quirón to another private equity firm at an
enterprise value of €1.6bn. The transaction
was completed in November 2014,
representing a gross IRR of 33% and a 2.0x
return to Fund V investors in less than three
years.
STRONG EBITDA GROWTH UNDER DOUGHTY HANSON’S OWNERSHIP (€m)
QUIRÓN VALUE CREATION
ATTRIBUTION (%)
105%
The acquisition of Teknon gave Quirón control
over the three premium private hospitals in
Barcelona. It also added a further €18m in
EBITDA to the existing business and the scope
for a further c. €10m in synergies to be
achieved over the following three years.
TOTAL
2011
2012
REVENUE
€110
€100
€90
€80
€70
€60
€50
€40
€30
€20
€10
€0
2013
€100.6
€60.6
€50.5
2011
2012
EBITDA
2013
Quirón case study film
Watch at http://review.
doughtyhanson.com/quiron
Our portfolio companies
Doughty Hanson advocates greater
transparency in the private equity
industry and voluntarily complies with
the Walker Guidelines issued in 2007.
We recognise the importance of open
communication with all of our
stakeholders and include a review of
each of our portfolio companies in the
pages that follow.
20
OUR PORTFOLIO
COMPANIES
ASCO
ASCO Group is one of the
largest global providers
of logistics services to the
oil and gas industry.
21
OUR PORTFOLIO
COMPANIES
ASCO
Headquartered in Aberdeen, Scotland, the
company employs more than 2,200 people
worldwide and has operations in 35 locations
in 16 countries including in the strategic
markets of Australia, Canada, Trinidad,
Tanzania and Norway.
ASCO has three primary service lines. Its
oilfield logistics division coordinates the supply
of a variety of goods, both offshore and
onshore, via sea, air and road. ASCO also
provides waste management services,
including industrial cleaning and advisory
services. The company is also involved in
specialist international logistics and freight
management.
ASCO operates through four regional business
lines and eight specialist businesses, all set up
or acquired to support the regional
businesses. ASCO Europe is the group’s most
established operation. In the UK, ASCO is the
clear market leader and has been operating in
the North Sea for more than 45 years. The
company is also the second-largest operator in
the Norwegian market, where it has doubled
its market share since 2008.
ASCO America’s business has operations in
the US, Canada and the Caribbean and is well
placed to support customers’ onshore and
offshore needs, particularly in the Albertan oil
sands. Three recent acquisitions in Canada
have expanded both ASCO’s geographical
presence and its product offering.
£716m
TURNOVER (2014)
2,268
NUMBER OF EMPLOYEES
ASCO Australasia operates from Perth,
Australia, and has offices in Brisbane and
Darwin from which it supports significant
growth across the country. In 2014 ASCO
acquired Perth-based Bonnie Rock Transport
(BRT), a transport and logistics business that
specialises in the oil and gas industry. BRT has
a strong position in Western Australia and is
the largest of six acquisitions made by ASCO
under Doughty Hanson’s ownership. The
business has been integrated with ASCO’s
existing Australian operation and has already
won two significant new contracts with ASCO
customers from other parts of the world.
ASCO’s Middle East and Africa business
supports clients in the Caspian Sea, the Middle
East and Africa. In 2013, ASCO won a threeyear $100m supply base contract for a
consortium of BG, Statoil, Petrobras and Ophir.
The contract is ASCO’s largest in the region,
giving the company an established presence in
East Africa and a platform from which to
further grow the business.
ASCO’s global infrastructure allows the
company to offer an integrated service to its
global customer base, which includes major
oil and gas companies and oilfield service
providers such as BP, ExxonMobil, Shell,
Chevron and ConocoPhillips, many of whom
have worked with ASCO for many decades. The
business generates strong recurrent revenues
and operates on multi-year contracts, giving
ASCO a strong position to lead consolidation in
the industry. Strong global growth means
ASCO’s North Sea operations now account for
less than 50% of EBITDA, down from twothirds at the time of Doughty Hanson’s
acquisition.
At the end of 2014, the company appointed
Alan Brown as CEO. Prior to joining ASCO,
Alan was CEO of Rentokil Initial for five years
and had spent 25 years at Unilever. He joins a
strong and well-established management
team with a track record of expanding
organically and via M&A activity.
Strong health, safety and environmental (HSE)
performance is a key requirement of ASCO’s
customers and a prerequisite for inclusion
within business tenders. The company takes
its HSE obligations extremely seriously and
has adopted the formal structures necessary
to monitor, measure and enhance HSE
performance across the business.
In 2014, ASCO continued to improve its safety
statistics with a 50% drop in both the total
recordable case frequency (TRCF) and the lost
time injury frequency rate (LTIF). This was
despite a 16% increase in the number of hours
worked during the year. The company
continues to measure its carbon footprint and
better data is being collected year on year from
across the group.
Notable safety milestones were achieved
around ASCO’s operations: the freight
management team in Scotland achieved 14
years’ lost time incident (LTI) free, while in
Azerbaijan ASCO reached more than three
million personnel-hours LTI free.
ASCO GROUP LIMITED
Regent Centre
Regent Road
Aberdeen
AB11 5NS
UK
www.ascoworld.com
INVESTOR
Fund V
MANAGEMENT
– Alan Brown, CEO
– Mark Walker, CFO
DOUGHTY HANSON TEAM
– Philos Carnio
– John Gemmell
– Julian Huxtable
22
OUR PORTFOLIO
COMPANIES
BALTA
Balta is a leading
European manufacturer
of wall-to-wall carpets
and rugs.
23
OUR PORTFOLIO
COMPANIES
BALTA
It is a global market leader in mechanically
woven rugs, the European market leader in
wall-to-wall carpets and a leading European
player in carpet tiles.
The company operates manufacturing facilities
in Belgium and Turkey and a warehouse in the
US which serves the North American market.
Balta was founded in 1964 by the Balcaen
family, who significantly reinvested when
Doughty Hanson acquired the business in
2004.
Since 2004, Doughty Hanson has provided
ongoing support to the company to increase
production efficiency, reduce working capital,
improve health and safety and grow
profitability.
Most recently, Doughty Hanson’s value
enhancement group has provided support to
the company as part of a two-year, €25m
investment programme focused on Balta’s
production facility in Turkey. Approximately
one-third of Balta’s total rugs production
capacity is now located in Turkey, supporting
further growth outside Europe and in
particular in the US.
Doughty Hanson has also actively worked with
the company to shape its business portfolio. In
2010, Balta acquired family-owned Domo
Group to further consolidate the European
broadloom market, increase its geographical
exposure to Eastern Europe and gain access to
the commercial tiles market. Since 2010, the
commercial tiles business has grown
significantly and now contributes around 15%
of Balta’s EBITDA.
In addition, a number of non-core activities
have been divested. In 2007, Balta sold its
non-core wall-covering activities. The
industrial yarn activities (Exelto yarns) were
restructured in 2012. In 2013, Balta sold its
50% interest in laminate joint venture Trinterio
and sold its staple fibre activities (Exelto Staple
Fiber).
Balta’s remaining operations consist of
complementary, market-leading soft-flooring
businesses including broadloom carpet (#1 in
Europe), rugs (#1 in Europe) and carpet tiles
(#3 in Europe).
The continued economic recovery and, in
particular, an increase in consumer confidence
in the UK and US during 2014 helped Balta to
capitalise on its market-leading positions and
increase revenues in both of those key
markets. Although the rest of Europe remains
more sluggish, Balta is well placed to benefit
when these markets improve.
Balta has implemented a wide range of
sustainability initiatives, including the adoption
of international standards of good practice
relating to environmental management (ISO
14001) and health and safety management
(OHSAS 18001).
Roof-mounted solar panels installed at Balta’s
factories in Belgium are the largest solar
project in the Benelux region. It generates
income, provides energy-efficiency cost
savings and saves the equivalent of 4,750
metric tons of CO2.
The company also actively focuses on the
development of sustainable products. It
launched a new “green” product range in 2012
and is developing a new floor covering made
from 36% recyclable-reuseable ingredients.
Health and safety is a priority for Balta and
ongoing efforts in this area have resulted in
the reduction of the accident frequency and
severity rate. The frequency rate has dropped
by 25% and the severity rate by 50% between
2010 and 2014, saving Balta an estimated
€2.5m. Health and safety performance data
continues to show that Balta performs better
than the sector average.
€520m
TURNOVER (2014)
BALTA GROUP
Wakkensteenweg 2
8710 Sint Baafs Vijve
Belgium
www.baltagroup.com
INVESTOR
Fund IV
3,127
NUMBER OF EMPLOYEES
MANAGEMENT
– Hendrik Deruyck, CEO
– Carl Verstraelen, CFO
DOUGHTY HANSON TEAM
– John Gemmell
– Julian Huxtable
– Julien Millet
24
OUR PORTFOLIO
COMPANIES
EUROFIBER
Eurofiber owns and
operates the largest
independent fibre-optic
network in the
Netherlands.
25
OUR PORTFOLIO
COMPANIES
EUROFIBER
Eurofiber was founded in 2000 following the
liberalisation of the telecommunications
market in the Netherlands. It is now the owner
of the largest independent fibre-optic network
in the country and also has a smaller,
fast-growing operation in Belgium.
Eurofiber targets the enterprise market and
provides the core infrastructure only: telecom
providers, system integrators and service
providers deliver their services to end users
over Eurofiber’s network. In addition, Eurofiber
delivers directly to larger businesses, public
authorities and utility companies that require
high-speed, reliable and high-bandwidth
connectivity. The long-term nature of its
revenue base (contracts range from three to
30 years in length) means that Eurofiber has a
high level of recurring revenues and strong
earnings visibility.
Eurofiber has completed two acquisitions since
Doughty Hanson acquired the business from
its family owners in 2012. In 2013, Eurofiber
acquired UNET, the owner and operator of a
573km regional fibre network, and Isilinx, the
owner and operator of a 465km network in the
southern Netherlands. Both acquisitions were
from family owners and added a total of 1,500
new connections. With support from Doughty
Hanson’s value enhancement team, both
acquisitions have also generated synergies
and management continues to selectively
explore further add-on opportunities across
the Benelux countries.
Thanks to these acquisitions and Eurofiber’s
continued fibre deployment programme, the
business now operates more than 10,000km of
fibre across over 10,000 customer locations
and more than 500 business parks – up from
7,500km and 4,500 unique locations at the time
of Doughty Hanson’s acquisition. During the
same period, Eurofiber’s market share in the
Netherlands has increased from less than 20%
to more than 25%.
Demand for Eurofiber’s services is expected to
continue to grow over the coming years as the
Dutch market continues to transition from an
infrastructure based on copper or COAX3
cable, which offers lower bandwidth and
reliability, to faster and higher-bandwidth
fibre-based connections.
Mobile data traffic has doubled since Doughty
Hanson acquired Eurofiber and is forecast to
triple again by 2018. This increase in mobile
data is pushing mobile operators to connect
more of their towers with fibre, allowing them
to access the huge bandwidth offered by the
technology. In 2014, Eurofiber started working
with Tele2, the fourth mobile provider in the
Netherlands, and is also connecting towers for
three other mobile operators in the country.
Eurofiber, which already carries 50% of Dutch
mobile traffic over its network, expects to
connect more than 3,300 towers over the next
three years.
Although Eurofiber is one of only two players
actively deploying new fibre on any scale, its
network already has sufficient nationwide
coverage to target the majority of potential
new customers and win significant nationwide
contracts. The Doughty Hanson team has been
actively involved in pricing strategies,
exploration of new sales channels and
implementing a system of key performance
indicators.
Doughty Hanson is supporting Eurofiber with a
number of its environmental, social and
governance (ESG) initiatives. Eurofiber
achieved ISO 14001 environmental certification
for its data centre in Utrecht in 2013 and this
was successfully re-audited in 2014. The
company is working towards gaining the same
certification for its fibre operations throughout
the Netherlands by the end of 2016.
Eurofiber has a strong health and safety
programme in place to ensure that its
employees and sub-contractors work
according to the highest safety standards. All
sub-contractors are required to demonstrate
compliance with Dutch safety regulations and
are audited by Eurofiber. No accidents or
fatalities occurred during 2014.
€129m
TURNOVER (2014)
EUROFIBER
Safariweg 25–31
3605 MA Maarssen
Postbus 7072
3502 KB Utrecht
The Netherlands
www.eurofiber.com
198
NUMBER OF EMPLOYEES
INVESTOR
Fund V
MANAGEMENT
– Alex Goldblum, CEO
– Bart Oskam, COO
– Jaap Truijens, CFO
DOUGHTY HANSON TEAM
– Francisco Churtichaga
– Pascal Keutgens
– Michal Lange
– Alex Moss
26
OUR PORTFOLIO
COMPANIES
KP1
KP1 is a leading supplier
of prefabricated concrete
products to the French
market.
27
OUR PORTFOLIO
COMPANIES
KP1
Founded in 1959, KP1 was created in its current
form in 1993 through the merger of two privately
owned companies that were major players in the
French prefabricated concrete industry.
Headquartered in France, KP1 operates 22
manufacturing facilities (20 in France and two in
Poland) and 14 sales and engineering offices (13
in France and one in Tunisia).
The company is a market leader in France with
an overall market share in excess of 40%, and
has built up leadership positions in most
sub-segments of the building industry. KP1 has
a balanced portfolio of products targeting
different construction markets, including
individual housing, multi-dwelling units and
non-residential construction.
The company’s activities are structured around
four main business units. Three of these focus
on the engineering, production and
commercialisation of products for the housing
and industrial building industries. These include
products for the individual housing market,
products for industrial buildings and bespoke
products for residential and commercial
markets. The fourth business unit involves the
group’s international activities, which are
principally focused in Poland.
Doughty Hanson’s value enhancement team has
been working with KP1’s management to
implement cost-cutting measures to preserve
margins and generate cash in what has been a
difficult environment, while also maintaining the
company’s manufacturing footprint in
anticipation of a market rebound. In 2014,
Doughty Hanson refinanced KP1 with a
“unitranche” facility. This provides the company
with much greater flexibility, in particular the
ability to use its cashflow to either pay down
debt or invest in the business, allowing KP1 to
better respond to changes in demand for its
products.
KP1 has embraced sustainable business
practices and is working hard to enhance health
and safety and address environmental issues
both within its operations and in respect of its
products and services.
KP1 is at the forefront of developing a suite of
innovative lightweight and energy-efficient
products. The lightweight products facilitate
on-site installation and handling, enabling better
working conditions for builders and reduced
concrete consumption. KP1’s award-winning
Milliwatt Ôbox heated floor captures the heat
arising from shower wastewater and re-uses it
to reduce the energy demand for hot-water
production.
The company’s energy-efficient products
improve the insulation of buildings and lead to a
significant reduction in energy waste. Sales of
these insulation materials are expected to grow
strongly, due to additional regulations in the
construction sector following global efforts to
reduce energy consumption.
KP1 successfully installed two large photovoltaic
power plants in 2011, the largest of their type in
France, contributing to reduced energy costs and
a lower carbon footprint. Further projects are
planned.
In 2014, additional investments were made at
production plants across the business to
enhance wastewater storage and treatment
practices, and contribute to a further
improvement in local water quality at the
locations in which the company operates.
During the year, KP1 further reduced its carbon
footprint – cutting 1,436 metric tons of CO2
compared with 2013. All of KP1’s concrete
recipes were subject to a thorough review,
reducing cement consumption where possible.
The business also recycled or re-used almost
50,000 metric tons of waste and 25,000m3 of
water during 2014.
€258m
TURNOVER (2014)
KP1
M.I.N. – Bâtiment D
135, Avenue Pierre Semard
84 000 Avignon
France
www.kp1.fr
1,399
NUMBER OF EMPLOYEES
INVESTOR
Fund IV
MANAGEMENT
– Jean-François Trontin,
President
– Bart Deman, CEO
– Pierre Diesler, CFO
DOUGHTY HANSON TEAM
– Pascal Keutgens
– Julien Millet
28
OUR PORTFOLIO
COMPANIES
LM WIND POWER
LM Wind Power is one
of the world’s leading
suppliers of windturbine blades.
29
OUR PORTFOLIO
COMPANIES
LM WIND POWER
With production, sales and service facilities in
23 locations in 12 countries, LM Wind Power is
one of the world’s leading manufacturers of
wind-turbine blades and the technology leader.
The group is the only independent blade
manufacturer with truly global operations and
local presence in all major markets. This
global reach ensures close contact with
international customers and enables the group
to minimise transport and logistics costs, and
shorten delivery times.
The global wind market experienced doubledigit growth in 2014, following contraction in
2013, and the market is expected to continue
this positive momentum. LM Wind Power
benefits from strong fundamental demand
drivers in the medium and long term. This
includes global long-term commitments to
using renewable energy sources to meet an
increase in energy demand and a reduction in
fossil-fuel emission targets. As the wind
market has matured, the cost of wind energy
production has declined rapidly. This allows
wind to compete with traditional fuel sources
without government subsidy in certain
locations. The process of industrialisation is
also expected to lead to even greater
outsourcing of blade manufacture by OEMs
which will benefit the business. LM Wind
Power’s global footprint and technology
leadership make it well positioned to meet
increased demand from global customers
such as GE, Gamesa, Alstom and Goldwind.
In addition, there is strong growth forecast in
specific areas such as offshore and emerging
markets, which LM Wind Power is well placed
to benefit from. For example, the business’s
most recent plant, opened in Brazil at the end
of 2013, is now up and running and is sold out
until the end of 2015.
€588m
TURNOVER (2014)
4,952
NUMBER OF EMPLOYEES
The company continues to focus on cost
savings, manufacturing efficiencies and cash
generation. It is targeting additional savings of
at least €15m from new procurement and
design cost initiatives. This is on top of more
than €100m of cost savings generated over the
previous four years across procurement,
overheads, factory efficiency and product cost
reduction. LM Wind Power has also installed
and tested a new manufacturing process at
one of its US plants. This is generating up to
almost twice the normal output per mould and,
when rolled out across the business, will have
a positive impact on both costs and capital
expenditure.
The group’s best-in-class research and
development capabilities and production
capacity are at the forefront of LM Wind Power
maintaining its market-leading position. The
company has a long track record of product
innovation and now has an 88-metre blade in
development.
In 2014, LM Wind Power strengthened its
management team with the appointment of
Nick Smith as CFO. Nick has previously worked
at three other Doughty Hanson companies,
including French battery manufacturer and
Fund IV investment Saft. The business also
issued an innovative five-year Nordic bond and
revolving credit facility, providing it with a
flexible and secure source of financing.
LM Wind Power has particularly strong
environmental credentials. Operationally, the
carbon footprint of the group’s manufacturing
activities continues to be measured and
reduced as a result of initiatives to better
manage energy use, water consumption and
waste generation.
The business has committed to obtaining
global certification of its integrated health,
safety and environmental management
system. All offices and manufacturing sites
apart from the new Brazil facility are already
certified to ISO 9001 and all but three locations
are certified to ISO 14001 and OHSAS 18001
standards. LM Wind Power plans to certify
these locations in the first half of 2015.
In 2014, the group exceeded its waste
reduction target with an actual waste saving of
€4.3m. To date, improved waste management
has resulted in efficiencies worth more than
€20m of EBITDA across the group. In addition,
there was a further significant reduction in the
Lost Time Accident rate (measuring LTAs per
million work hours). In 2014 this fell to 2.0 from
2.7 in 2013 and compares very favourably with
similar manufacturing industries. Efforts to
reduce incidents and improve health and
safety across the group over recent years are
estimated to have saved more than €2m.
LM WIND POWER
Jupitervej 6
DK-6000 Kolding
Denmark
www.lmwindpower.com
INVESTOR
Fund III, V
MANAGEMENT
– Leo Schot, CEO
– Nick Smith, CFO
DOUGHTY HANSON TEAM
– Adam Black
– Chris Harwood
– Jon Higginson
– John Leahy
– Daniel Linnergren-Fleck
– Alex Moss
30
OUR PORTFOLIO
COMPANIES
TMF GROUP
TMF Group is a leading
global provider of high
value business services to
clients operating and
investing globally.
31
OUR PORTFOLIO
COMPANIES
TMF GROUP
TMF Group has grown substantially since it
was founded in 1988, driven by a combination
of strong organic growth and more than 60
acquisitions, including 19 since Doughty
Hanson acquired the business in October 2008.
In January 2011, Doughty Hanson acquired
Equity Trust, a global provider of non-advisory
fiduciary and administrative services to
multinational clients, financial institutions,
intermediaries and high-net-worth individuals.
After securing regulatory approvals in
numerous jurisdictions, TMF and Equity Trust
merged in June 2011 to create TMF Group, a
leading provider of outsourced back-office and
administrative services. The merger has
delivered significant cost synergies and
generated cross-selling opportunities to
support organic growth.
Historically, the majority of TMF Group’s
revenues have been generated in Europe,
where the company has a long-established,
strongly competitive position. Through a
combination of new greenfield sites and
acquisitions, TMF Group has also developed a
presence in Asia, Latin America and the Middle
East. These regions continue to grow strongly
and complement the resilient revenue
generated in TMF Group’s more mature
regions, such as Western Europe.
In 2014, TMF Group made four acquisitions,
including one in South Africa and two in Asia.
It purchased the remaining 49% of Custom
House Global Fund Services, a fund
administrator based in Ireland, to become the
sole owner. It also acquired GMG Trust
Company, a South African trust administration
business, to become one of the largest
providers of fiduciary services in South Africa.
TMF Group’s two Asian acquisitions, Tass Axia
and KCS, have significantly increased the
company’s presence in Asia and means the
region now accounts for nearly 20% of global
revenues. Tass Axia is one of the largest
payroll solution providers in Indonesia while
KCS operates from nine countries across
South East Asia. Merging KCS with TMF
Group’s existing Asian business has generated
significant synergies and establishes the
company as a clear leader in the region,
particularly in the key outsourcing markets of
China and Singapore.
As part of its ongoing growth strategy, TMF
Group will continue to pursue strategically
accretive acquisitions and plans to make further
follow-ons in 2015 to increase the proportion of
revenues it generates outside of Europe,
particularly in high-growth countries.
In 2014, Doughty Hanson continued to work with
management on a range of workstreams,
including the implementation of a group-wide
sales strategy, the recruitment of a centralised
sales team to win new clients and enhance
cross-selling, new on-boarding processes and
new time and billing practices. These initiatives
are expected to generate substantial organic
growth from 2015 onwards. Additionally, shared
service centres have been developed to
standardise systems and processes.
TMF Group focuses on providing highly
specialised and business-critical financial,
legal and human resource administrative
services that enable clients to operate their
corporate structures, finance vehicles and
investment funds in different geographical
locations. TMF Group also helps its clients in
new markets with compliance issues and
regulatory regimes where they have
insufficient experience. The company now
operates more than 120 offices in over 80
jurisdictions across the Americas, Asia Pacific,
Europe and the Middle East and provides
services to more than 35,000 client entities.
TMF Group’s sustainability agenda is embedded
within its corporate strategy. The company’s
focus in this area encompasses environmental
impacts, strong workforce relations, providing
fair employment and pay, and working against
corruption in all forms. TMF Group has
established a dedicated team to develop and
implement sustainability policies and to
establish appropriate and quantifiable
environmental, social and governance
performance targets for the business.
All staff are bound by TMF Group’s anticorruption and anti-bribery policy. Everyone
is given formal training on the policy, and
business units are audited for corruption risks
as part of standard internal audits, as well as
statutory external audits.
€373m
TURNOVER (2013)*
TMF GROUP
Herikerbergweg 238
1101 CM Amsterdam Zuidoost
The Netherlands
www.tmf-group.com
INVESTOR
Fund V
5,447
NUMBER OF EMPLOYEES
TMF Group is committed to measuring and
managing its environmental impact through
direct and indirect carbon emissions. At
present, the company is only able to accurately
track emissions for its IT activities, the impact
of which increased by just 5% during 2014
despite a 15% jump in headcount and
associated equipment.
MANAGEMENT
– Frederik van Tuyll, Interim CEO
– Gordon Stuart, CFO
DOUGHTY HANSON TEAM
– Matt Appleton
– Mike Brown
– Francisco Churtichaga
– Chris Harwood
– Jon Higginson
– Michal Lange
– John Leahy
*For regulatory reasons we are
unable to disclose TMF Group’s
2014 revenue
32
OUR PORTFOLIO
COMPANIES
TV3
TV3 is a leading digital
multimedia group
operating in the Republic
of Ireland.
33
OUR PORTFOLIO
COMPANIES
TV3
Launched in September 1998, TV3 is the
second most viewed channel in Ireland after
the government-owned station RTÉ One. The
channel reaches 98% of the Irish televisionowning population.
Targeting the important 15- to 44-year-old
demographic, TV3 differentiates itself from
non-terrestrial channels through an emphasis
on Irish programming and a broad range of
home-produced content. This level of
home-produced content has increased from
20% to 40% under Doughty Hanson’s
ownership and complements a successful
schedule that includes premium sport
(including the UEFA Champions League and
the Rugby World Cup) and other highly rated
content.
TV3 developed a multi-channel offering
following its acquisition of Channel 6 in 2008.
The station was rebranded as 3e at the start of
2009 and has subsequently grown to become
Ireland’s number-one digital channel,
overtaking E4 and Sky 1. TV3’s successful
video-on-demand service, 3player, which
launched in 2011, is now distributed on a
number of platforms including UPC, Sky and
the ROKU platform in the US.
The majority of TV3’s revenues are derived
from advertising during commercial breaks in
programming, sponsorship and promotions, as
well as certain programming and interactive
applications.
The economic climate in Ireland is showing
strong signs of recovery, and in 2014 GDP grew
by 4.7% following a number of challenging
years, particularly between 2008 and 2011
when GDP dropped by 10%. The advertising
market is hyper-cyclical, which led to
peak-to-trough market falls of almost 50%
during the recession. Throughout this difficult
period, TV3 has remained profitable and
cash-generative. It has been able to increase
its EBITDA every year since 2009 and is well
positioned to benefit from the ongoing recovery
in Ireland. The more favourable economic
conditions in 2014 had a positive impact on
TV3, enabling the business to lift EBITDA by
30%. Media agencies are forecasting further
growth in 2015, buoyed by consumer
confidence in Ireland hitting a nine-year high.
TV3 is also well placed to benefit from changes
to the Irish television market. In 2011, a
binding Competition Authority agreement
required RTÉ to abolish certain marketdistorting pricing practices. In 2013, the
Broadcasting Authority of Ireland (BAI)
published its five-year review into RTÉ’s
funding and recommended a new system of
funding for public-service broadcasters. TV3
continues to work closely with the Irish
government and the BAI to push for policy
reform and ensure a commercially functioning
market that allows independent operators to
prosper.
During 2014, TV3 continued to focus on
audience growth, home production and digital
media. At acquisition, TV3 had a similar share
to RTÉ Two – its closest comparable channel
– but is now attracting an adult audience share
43% higher than that of RTÉ Two, despite RTÉ
Two showing the FIFA World Cup during 2014.
TV3 is a leading digital multimedia group in
Ireland and has a dedicated e-commerce team,
driving online engagement among its key
15- to 44-year-old demographic and creating
additional revenue streams. TV3.ie has
developed into the fastest-growing website in
Ireland, and is currently receiving 3.5 million
page views per month. TV3 launched its first
timeshift channel (TV3+1) in December 2014
and is planning the launch of TV3 HD during
2015.
TV3 has also invested in new facilities, with the
construction of Ireland’s first major highdefinition studio and a partnership with Sony to
complete the fit-out. The €5m facility is
enabling TV3 to position itself as a leading
English-language content producer. During
2014, TV3 collaborated with leading Irish and
international producers on a number of
formats, and the company has successfully
sold content to more than 50 countries.
€56m
TURNOVER (2014)
TV3 TELEVISION NETWORK
LIMITED
Westgate Business Park
Ballymount
Dublin 24
Ireland
www.tv3.ie
265
NUMBER OF EMPLOYEES
In 2014, TV3 continued to focus on
environmental and safety performance with
initiatives to cut waste and improve energy
efficiency. No recyclable waste has been sent
to landfill since September 2011 and the
amount of total waste sent to incinerators
dropped to 44%, down from 50% in 2013. TV3
continues to conduct health and safety audits
and monitor accident statistics. Once again,
there were no major health and safety
incidents during the year.
INVESTOR
Fund IV
MANAGEMENT
– David McRedmond, CEO
– Aodha O’Connor, CFO
DOUGHTY HANSON TEAM
– Christopher Fielding
– John Leahy
– Daniel Linnergren-Fleck
34
OUR PORTFOLIO
COMPANIES
ZOBELE GROUP
Zobele Group is a leading
global supplier of air-care
and insecticide devices.
35
OUR PORTFOLIO
COMPANIES
ZOBELE GROUP
Zobele is one of the world’s leading
manufacturers of electric air fresheners and
domestic insecticide products. Based in Italy,
the company was founded by Enrico Zobele Sr
in 1919.
During the early years, Zobele’s main activity
was the manufacture of flypaper, but the group
expanded its product lines over the second half
of the 20th century to include mosquito
products and plug-in and portable vaporisers.
It has a 50% share of the electric air freshener
market globally and a quarter of the domestic
insecticide market. Following recent product
diversification initiatives, the company also
manufactures electrical dispensers for home,
health and personal-care products.
Every day, almost three million units produced
by Zobele are purchased around the world.
Zobele’s sales are geographically well
diversified: nearly half come from the
Americas, 40% from Europe and the remainder
from Asia and emerging markets.
In addition to a plant in Italy, Zobele has
low-cost manufacturing operations in China,
Mexico, Bulgaria, India and Brazil. Zobele has
four product design and development facilities
located alongside major plants, and two
“Innovations Hubs” – in Spain and Singapore.
These help its customers to launch new
products onto the market and leverage
Zobele’s innovation capabilities, customer
relationships and global footprint.
Zobele works with most of the global fastmoving consumer goods companies,
developing and manufacturing new products to
be distributed worldwide under the customers’
brands. Strategic customers include Reckitt
Benckiser, Procter & Gamble and Henkel.
In 2014, Zobele continued to diversify its
revenues across categories, customers and
geographies – albeit with a greater emphasis
on higher-end products. Following strong
sales growth since 2009 – up more than 10%
annually through to 2013 – Zobele is focusing
on growing the business more selectively and
improving profitability.
Thanks to local development and
manufacturing capabilities in Brazil and South
East Asia, Zobele is able to support its global
customers who are looking to grow in these
markets. Leveraging Zobele’s innovation and
R&D capabilities in dispensing devices, the
company’s new products in home, health, and
personal-care categories are forecast to
generate substantial sales growth in 2015.
The company also continues to drive
operational excellence and improve
organisational effectiveness. The Zobele
Production System, which adopts leanmanufacturing techniques to improve
operational efficiency, has now been deployed
across all sites, strengthening Zobele’s cost
leadership position.
During the year, all Zobele manufacturing
plants worked on initiatives to further reduce
environmental impact, enhance social
responsibility and improve health and safety
performance.
All locations now measure their carbon
footprint and focus on opportunities to improve
energy efficiency. Since starting to measure
carbon, in 2011, the company has saved some
1,743 metric tons of CO2 from being emitted
into the atmosphere. All locations also focus
on water consumption and conservation,
reducing the total volume of water used by the
company by more than 60,000m3 during 2014.
All locations now record incidents and near
misses and the total accident frequency rate
– measured as the number of workplace
accidents per million hours worked – has
fallen from 88 in 2012 to just 11 in 2014.
Zobele’s operations in China continue to
subscribe to the Shenzen Carbon Reduction
Project, a municipal initiative aimed at
reducing carbon emissions over the next two
years. Solar panels and ground source heat
pumps have been installed at the worker
dormitories to ensure all hot water and
heating is provided by clean energy sources.
€332m
TURNOVER (2013)*
ZOBELE GROUP
Via Fersina, 4
38123 Trento
Italy
www.zobele.com
INVESTOR
Fund IV
4,482
NUMBER OF EMPLOYEES
MANAGEMENT
– Enrico Zobele, Chairman
– Roberto Schianchi, CEO
– Christopher Wood, CFO
DOUGHTY HANSON TEAM
– Alessandro Baroni
– Francisco Churtichaga
– Chris Harwood
– John Leahy
– Julien Millet
*For regulatory reasons we are
unable to disclose Zobele’s 2014
revenue
36
RESPONSIBLE
INVESTING
SOCIAL INVESTMENT
BRIDGES VENTURES
Doughty Hanson has been a longstanding
supporter of Bridges Ventures, a privately
owned venture-capital company that funds
businesses and invests in assets that generate
strong social or environmental returns.
For more than a decade, Bridges has been
raising money from the private sector to invest
in deprived areas, delivering financial returns
for its investors in the process. It operates
three fund platforms: venture funds that invest
in ambitious businesses in the most deprived
parts of England; property funds that invest in
properties in regeneration areas and
environmentally sustainable buildings; and a
social entrepreneurs fund, which targets
fast-growing social enterprises that are
looking to scale up. In 2014, Bridges made the
decision to expand into the US and will attempt
to raise a US-focused fund in 2015.
Doughty Hanson has invested in all three of
Bridges’ venture funds, the third of which
achieved a final close in late 2013 with equity
commitments totalling £125m – up
substantially on Bridges’ second £75m fund.
The fund provides growth capital to small and
medium-sized businesses in sectors where
the underlying social or environmental needs
create the opportunity for both commercial
returns and positive impacts. In 2014, one of
Fund III’s investments, low-cost health club
chain The Gym, was named on the Sunday
Times Virgin Fast Track 100, a list of the UK’s
fastest-growing companies, for a third
successive year.
A member of the Doughty Hanson team sits on
the Board of Directors of Bridges Ventures.
The Bridges Social Impact Bond Fund,
launched in 2013 in partnership with Big
Society Capital, initially attracted investment
of £14m. During 2014, the fund increased its
commitments to £25m following investments
from the banking and pension fund sectors.
The fund will invest in charities and social
enterprises to deliver programmes designed
to improve social outcomes in areas such as
education, employment, housing and care for
vulnerable young people.
37
RESPONSIBLE
INVESTING
ESG POLICY AND
INITIATIVES
EVPA
Doughty Hanson supports the European
Venture Philanthropy Association (EVPA), a
non-profit association established in 2004 to
promote venture philanthropy across Europe.
EVPA currently has more than 180 members
from 25 countries, including venture
philanthropy funds, grant-making
foundations, private equity firms, professional
services firms, philanthropy advisers and
business schools. Although the majority of
EVPA members are from Europe, the
organisation also has members in Turkey, the
UAE and Asia.
EVPA members apply venture-capital
business models to the non-profit and
charitable sectors. By combining financial
contributions with advisory services such as
strategic planning, marketing, executive
coaching and access to other networks,
venture philanthropists seek to increase the
social impact of the funds they donate.
EVPA has two main aims: to support its
members in carrying out their venture
philanthropy activities; and to promote
venture philanthropy throughout Europe. Its
activities include conferences and events,
country seminars, research projects on
venture philanthropy activity in Europe and
working groups exploring key issues for
venture philanthropists. EVPA also provides
training workshops and peer-learning events
for its members.
EVPA’s 2014 conference, the tenth since the
organisation was founded, brought together
more than 500 attendees – social investors,
venture philanthropists, academics and other
supporting organisations – from across
Europe and around the world.
An EVPA survey on venture philanthropy and
social investment carried out in 2013 and 2014
showed that more than €5bn has been
invested in such initiatives since the
organisation was created in 2004.
Please visit
www.bridgesventures.com
for more information on
Bridges Ventures
Please visit www.evpa.eu.com
for more information on EVPA
Doughty Hanson has long recognised
that environmental, social and
governance (ESG) issues can have a
significant impact on private equity
investment, in terms of raising funds,
making investments and creating
value in each portfolio company.
These issues are integral to our business, both
our own operations and those of our portfolio
companies. We believe firms with an
environmentally sustainable and socially
responsible way of operating significantly
de-risk their business model and, therefore,
achieve greater cost efficiencies and
profitability, leading to higher valuations.
Doughty Hanson’s longstanding commitment to
ESG has been recognised by awards from the
European Private Equity and Venture Capital
Association (EVCA) in 2008, and the British
Private Equity and Venture Capital Association
(BVCA) in both 2011 and 2013.
In June 2007, Doughty Hanson became the first
private equity signatory to the United Nations
Principles for Responsible Investment (PRI) in
Europe. As part of the firm’s commitment to the
PRI, Doughty Hanson has been actively involved
in the creation of the PRI document
“Responsible Investment in Private Equity: A
Guide for Limited Partners”.
A member of the Doughty Hanson team sits on
the PRI’s Private Equity Steering Committee,
which promotes greater awareness of the role
of responsible investment within the private
equity asset class, and as a firm we remain
close to and actively involved with the PRI.
Separately, our Head of Sustainability, Adam
Black, appointed in 2008, sits on the BVCA
Responsible Investment Advisory Committee
and the EVCA Responsible Investment
Roundtable.
In developing our latest ESG policy, we have
given consideration to a range of codes and
standards, including the PRI, the United Nations
Global Compact, the requirements of our
Anti-Bribery and Corruption Policy, and the
expertise gained from implementing our
original ESG policy in 2009.
OUR ESG POLICY STATEMENT
The Doughty Hanson team will, to the best of
our ability:
- Comply with relevant regulations governing
the protection of human rights, occupational
health and safety, the environment, and the
labour and business practices of the
jurisdictions in which we conduct business.
- Adhere to the highest standards of conduct
intended to avoid even the appearance of
negligent, unfair or corrupt business practices.
- Regard implementation of our ESG
engagement activities as an integral part of
how we do business.
- Appoint a Head of Sustainability and provide
for the assignment of and accountability for
ESG responsibilities to senior managers at
companies we control.
- Instruct Doughty Hanson investment
professionals in the identification and
management of ESG risks and opportunities,
and provide them with appropriate support.
- Identify ESG risks and opportunities prior to
the acquisition of portfolio companies, and
manage ESG risks and opportunities
following acquisition.
- Establish appropriate ESG policies and
practices for portfolio companies we own
comparable to standards adopted by
Doughty Hanson, and encourage the
disclosure of ESG matters for public review.
- Recognise that our ESG activities are of an
ongoing nature and encourage continual
improvement in ESG performance at the
portfolio companies we own.
- Distribute this policy to all Doughty Hanson
employees and appropriate employees of
portfolio companies we own.
- Encourage dialogue on how we can
accommodate ESG issues in a way that is
consistent with our Limited Partners and
other stakeholders’ initiatives in these areas.
Our Head of Sustainability will review the
policy’s effectiveness and implementation on
a regular basis, and will report relevant
findings, progress and recommendations to
Doughty Hanson’s Management Group.
Please visit www.unpri.org
for more information on
the PRI
38
RESPONSIBLE
INVESTING
CHARITABLE
INITIATIVES
Now in its 15th year, the Doughty
Hanson Charitable Foundation has
supported more than 275 different
charities and causes, with
donations totalling over £2.8m.
The Foundation is run by a committee of six
members of staff that evaluates causes and
projects to be supported and oversees the
disbursement of funds.
Many of the charities we have supported have
received multiple donations including a core
group that we support every year. The focus of
the Foundation’s work has continued to be the
support of smaller charities where specific
projects have been identified, often requiring
capital expenditure.
We encourage applications to be made by
investors, business partners and portfolio
companies. The Foundation also matches
amounts raised in sponsorship by employees.
In 2014, the Foundation supported 40 causes
and charities. While the UK is the main focus,
we endeavour to offer support in the
aftermath of worldwide disasters.
We aim to distribute our funds across six
categories. In 2014, 23% of our donations went
to children’s charities, 14% to disability, 8% to
elderly, 9% to homeless, 21% to medical and
the remainder to social, cultural and
environmental causes.
39
RESPONSIBLE
INVESTING
CHARITABLE
INITIATIVES
The organisations receiving financial support
during the year included the following six.
BRAINWAVE
Brainwave supports children with brain
injuries, genetic conditions or developmental
delay. The charity receives no government
funding, relying totally on voluntary
contributions.
The Foundation has supported Brainwave for
over a decade; this year, donations helped the
charity to repair and maintain the
hydrotherapy pool installed last year for
children with physical disabilities.
CANINE PARTNERS
Canine Partners aims to transform the lives of
people with disabilities enabling them to lead
more independent lives by providing them with
highly trained assistance dogs. These dogs
help their partner with basic everyday tasks
and mean that the person can continue to live
independently.
Canine Partners also works closely with The
Not Forgotten Association, to whom we also
donate, Royal British Legion and Help for
Heroes, to assist individuals disabled while
serving in the forces. This year, the
Foundation’s contribution is being used to pay
for the next phase of a new puppy’s training.
Trainer Stephen Rigby with
Windsor, one of the dogs
trained by Canine Partners
using funds donated by
Doughty Hanson
40
CHARITIES AND CAUSES
SUPPORTED IN 2014
For more information on
these charities, please see:
brainwave.org.uk
caninepartners.org.uk
cardinalhumecentre.org.uk
elizabethfinncare.org.uk
switchback.org.uk
snowdontrust.org
£2.8m
TOTAL DONATIONS SINCE
2000
CARDINAL HUME
Cardinal Hume specialises in providing
homeless young people with the opportunities
they need to rebuild their lives. The centre
offers a hostel for 16- to 21-year-olds with
drug or alcohol dependencies who cannot live
in their family home due to neglect or abuse.
The hostel runs literacy, numeracy, IT and life
skills programmes. The Foundation donates
annually, and the most recent project we have
supported is flats which have been built as a
halfway house for people taken off the streets
before going back into society.
ELIZABETH FINN CARE
Elizabeth Finn Care helps ordinary people in
the UK and Ireland who have been overcome
by circumstances such as family breakdown,
redundancy, injury or physical or mental
illness. Potential beneficiaries are thoroughly
vetted for suitability and may receive financial
support to cover basic living costs, essential
household items or even support with
claiming benefits to which they are entitled.
The Foundation has supported Elizabeth Finn
Care for nine years. This year’s donation was
to purchase equipment.
SWITCHBACK
Switchback aims to help 18- to 24-year-old
offenders to find sustainable employment
after leaving prison. Switchback works with
prisoners to train them in prison kitchens and,
following release, at the Skylight Café in
London’s financial district. The organisation
also provides mock interviews and training
courses and assists in managing health and
housing issues.
Typically, 58% of this age group are reimprisoned within a year, but for Switchback
trainees, this figure is currently 17%. We have
been a supporter of Switchback since it was
founded in 2008.
THE SNOWDON TRUST
The Snowdon Trust awards grants to students
with a disability to assist with fees or special
equipment they require to enable them to
undertake training or study at further and
higher education centres.
Lord Snowdon set up the scheme in 1981 and
in the first year support was provided to six
students. The Trust now helps more than 100
students each year and our 2014 donation
provided assistance for six students, some
needing vital equipment and others the help of
support workers.
For more information on the
activities of the Foundation or
to suggest a charity, please
contact:
info@doughtyhanson.com
40
ADDITIONAL
INFORMATION
LONDON
45 Pall Mall
London
SW1Y 5JG
United Kingdom
Tel +44 20 7663 9300
FRANKFURT
Platz der Einheit 2
60327 Frankfurt am Main
Germany
Tel +49 69 97 12 02 0
LUXEMBOURG
28 Boulevard Royal
L-2449 Luxembourg
Luxembourg
Tel +352 26 27 56 1
MILAN
Via dei Bossi 4
Milan 20121
Italy
Tel +39 02 806 0681
PARIS
60 Avenue Hoche
75008 Paris
France
Tel +33 1 56 68 55 15
STOCKHOLM
Biblioteksgatan 8
S-111 46 Stockholm
Sweden
Tel +46 8 54 50 60 30
MADRID
C/Serrano, 26
28001 Madrid
Spain
Tel +34 91 436 4420
This document is prepared by Doughty Hanson & Co Managers Limited, which is authorised and regulated by the UK Financial Conduct
Authority. This document is being provided for information purposes only and no part of it may be reproduced, distributed, transmitted or
used for any purpose without the prior written consent of Doughty Hanson. The term ‘Doughty Hanson’ shall include, where appropriate, any
company in the Doughty Hanson group, including Doughty Hanson Partners LLP.
While this information has been prepared in good faith, Doughty Hanson makes no representation or warranty as to its accuracy or
completeness and none of Doughty Hanson or its officers, directors, employees or agents accepts any liability arising from the use of this
document or its contents or reliance on information contained herein.
This document does not constitute an offer to sell, or a solicitation of an offer to purchase, an interest in any private equity fund or any other
securities, investments or financial instruments referred to herein. If such offer or solicitation is to be made, it will only be made on the basis
of final offering documents and not on the basis of this document or any oral statements or representations made in connection herewith.
This document contains information concerning the past performance of various investments but this should not be taken as an indication
of the likely future performance of any investments. Doughty Hanson is not providing, and will not provide, any investment advice or
recommendation in relation to any private equity fund or any other securities, investments or financial instruments referred to herein.