1. business and industrial

rainmaker
2015
The mid-market corporate finance magazine from Clearwater International
A new age for
manufacturing
Juergen Maier, CEO of
Siemens UK, shares his vision
+
OUR GLOBAL DEAL
HIGHLIGHTS OF 2014
CROSS BORDER
PROSPECTS
rainmaker | 2015
2
foreword
Foreword
A very warm welcome to Rainmaker which, as
ever, is packed with exclusive interviews from
company owners and executives talking about
the fast-changing, and increasingly global,
business climate we live in today.
Regular readers of Rainmaker will notice a few changes to its
format this year, given that 2014 was a truly transformational
year for our own business. The merger of Clearwater Corporate
Finance in the UK with IMAPLynx in Spain and Portugal and Advizer
in Denmark, plus a strategic alliance with Chinese investment bank
InterChina, to form Clearwater International was an exceptional
achievement and one that has enabled us to extend our expertise
in our nine sectors across Europe and further afield.
As such, we have profiled some of our top deals across these countries
over the past year in this issue, transactions which we hope will give
you a very strong flavour of our dealmaking credentials.
We completed 51 transactions worth ¤1.5bn in 2014, taking our
overall tally of deals over the last decade to more than 700, and our
deals pipeline means our business will continue to grow steadily in
2015. The year ahead looks set to be a lucrative year for our clients
as favourable M&A conditions prevail, debt liquidity increases and
profit multiples continue to rise from an already high watermark.
Among those deals profiled is the landmark sale of vehicle hire
business Burnt Tree to US giant Enterprise. Indeed, the strength of
US buyers in the market proved a dominant theme in 2014 and our sector teams completed a number of notable disposals to
US companies.
We also feature an interview with Denmark’s Via Venture Partners,
which talks about its buy-and-build strategy in the renewable energy
sector, as well as looking at trends in the global animal feed market in
an interview with the Al Dahra Fagavi group.
Finally, we are delighted to carry an exclusive interview with the
CEO of Siemens UK, who shares his exciting vision for the future
of global manufacturing and how an increasingly automated and
customised world is set to change the face of manufacturing as
we know it.
We hope you enjoy the read.
Michael Reeves, Phil Burns, John Jensen and Francisco Gómez
Joint Managing Partners
If you are interested in receiving regular news from Clearwater
International, do follow us on our Twitter (@CWICF) or LinkedIn feeds.
Rainmaker is published by Clearwater International
Editors: Jim Pendrill and Sarah Fernandez
Design: www.creative-bridge.com
Subscription: sarah.fernandez@cwicf.com
No part of this publication may be reproduced or used in any form without
prior permission of Clearwater International
rainmaker | 2015
Contents
4
3
contents
6
siemens
feature
f
f
8
uk
f
10
12
spain
denmark
f
f
14
portugal
f
16
17
cross-border
china
f
f
19
interview
f
rainmaker | 2015
Imagine a world where every consumer
designs a product to their own exact
specification. The data is then transferred
straight onto a factory floor which has
the intelligence to organise itself in order
to manufacture that product in the most
efficient way. Meanwhile, the consumer can
check on the progress of their product at
any time by using real-time applications.
4
siemens
Well, what might appear the realms of
science fiction could actually be upon us
far sooner than you think if the likes of
industrial giants such as Siemens have
their way. Advances in the automation of
software alongside global trends towards
mass customisation and localisation,
together with the increasing speed
at which products go from design to
manufacture, are creating the perfect
climate for a revolution in manufacturing.
Such computerisation of manufacturing driven by intelligent factories integrating
the needs of customers and businesses
- has been dubbed ‘Industry 4.0’ by its
proponents, who see the changes as nothing
short of a fourth industrial revolution
(following the third ‘digital’ revolution).
Juergen Maier, chief executive of Siemens
UK, is one of its cheerleaders. Although he
says this vision is probably still 20 years
away, there are already factories across
the world with elements of these features
in them. “As a company, we are pushing
to be at the leading edge of this and are
already conducting research projects to
design these new factories.”
Maier says the manufacturing world is
only just beginning to wake up to the
possibilities from advances in automation
and Cloud technology. “The implications
are huge, not only for supply chains but
for workers themselves. Will these trends
Juergen Maier
Revolutionary
road
Siemens is playing a key role in changing the face
of global manufacturing. Its UK chief executive
Juergen Maier explains.
2014: Appointed Chief Executive
of Siemens UK, in charge of 13
manufacturing sites and almost
14,000 employees
2008-14: Managing Director at
Siemens UK and Ireland
2004-08: Sales Director for
Siemens Europe. MD Siemens
Industry, Automation and Drive
Technologies (IA&DT)
1986: Joined Siemens as a
production engineer in the
automation and drives division
rainmaker | 2015
take jobs away? I actually think you will
probably need the same number of people
as today, but they will be doing different
jobs which will drive very different levels
of productivity. Countries that get on this
train first will not only create more output,
but also create more jobs - they will
gain more market share and be the most
competitive and productive.”
repeated across the globe. “It links into a
wider renaissance of global manufacturing
in response to the economic crash and the
collapse of the financial system. If you take
somewhere like the UK, people realised
that services alone were not going to sort
out its Balance of Payments problems and
the economic crisis simply accelerated
these conversations.
Vision
“But the UK is not alone. More and more
countries have realised that they want to
start manufacturing more at home and
are looking at what they can do to make
it more attractive for companies to invest
and manufacture.”
It is clear why this vision is of such relevance
and significance to a global industrial giant like
Siemens - which reported global revenues of
¤71.9bn in 2014 - given that it encapsulates
so much of its manufacturing, technological
and R&D skills.
As Maier adds: “People ask how a company
like Siemens drives synergies. The answer
is threefold: firstly, through electrification
of the whole value chain; secondly, through
automation - not just within factories but
in areas such as infrastructure and energy
supplies; and thirdly, through digitalisation.
It makes perfect sense for us to be in
markets which are linked by electrification,
automation and digitalisation. These three
things are in our DNA.
“We are often asked: ‘Why is Siemens
such a diverse business and should it not
be more focused?’ Our response is that
through our strategy we see these three
areas as absolutely intertwined within our
core markets of energy, infrastructure and
manufacturing.”
Maier says it is not just a massive
opportunity for a company like Siemens,
but also for entire countries looking to
become more competitive. “You cannot
be a world player unless you invest in your
infrastructure and energy systems, while in
order to have a really strong manufacturing
base you need good connectivity and
logistics. Everything is interlinked.”
He adds that there is no better example
than the UK, which has suffered from poor
productivity for many years. “Could the
digital factory be the answer to improving
UK productivity? Absolutely yes. The UK has
some of the best factories in the world, but
some need to move on. It needs to invest
more in automation, energy efficiency and
infrastructure and I think over the next couple
of decades we are going to see significant
investment in these areas. Our own vision at
Siemens is to be very much a key part of this
whole reindustrialisation.”
Consensus
Maier says the political consensus that has
emerged in Britain on the subject is being
The UK has been keen to learn from the
successes of German industrial policy,
and in particular has opened a number
of Catapult technology and innovation
centres. “These have been very important,
not just because of what they do but also
because they are a physical thing - they
are symbolic,” adds Maier. “A lot of what
the UK has done has copied the German
model and I would actually say the UK now
has an advantage because these centres
are brand new and have all the latest
technology. It has a very real opportunity
to grasp global leadership in the high-tech
future of manufacturing.”
Indeed, with Siemens not only able to
deliver technological solutions but help
define the UK’s wider industrial strategy,
it is little surprise that Maier was recently
“The result is that now, for example, you
don’t need to have one big factory in China
but could have 10 smaller factories all much
closer to the consumer. I am not talking
about say the production of shoelaces here,
which will always be mass produced, but the
manufacture of far more personal products
such as custom-built cars.”
That said, China remains a huge market for
Siemens and still an exciting one too. “The
country will not grow at the rates we have
seen over the last two decades or so, but it
remains an extremely vibrant market.”
Maier makes the point that business leaders
need to brace themselves for this “new
norm” of low global economic growth and a
far more volatile market environment.
“A lot of people are hoping the economic
crisis will be totally behind us within just
a few years, just as they think the euro
crisis will all be over soon. But I do not
think we will see an end to volatility for
another decade. That means CEOs need
to be nimble players and have a very
interdisciplinary skill set.”
M&A
Maier believes that these emerging trends
in manufacturing will also have an impact
on M&A. One area where he foresees
more consolidation is in the automation
of software and data management built
around a product’s entire life cycle.
“It makes perfect sense for us to be in markets
which are linked by electrification, automation and
digitalisation. These three things are in our DNA.”
commandeered by the UK government
as a non-executive board member at the
Department for Business, Innovation and
Skills (BIS). As he adds: “For me personally, it is
great timing to be CEO at a time when the UK
has fallen in love with engineering again.”
Onshoring
He adds that, like other major players,
Siemens will be eyeing opportunities
too. “We are always on the lookout and
sometimes our acquisitions may not be
huge. For instance, we might be an early
investor in a start-up and take more of a
corporate venturing angle.”
Maier believes this trend towards
localisation, combined with the drive to mass
customisation, will lead to further onshoring.
As he adds: “Twenty years ago, the view
was that you had to put manufacturing into
massive factories so that you could have a
huge amount of scale and standardisation. But
you can no longer do this for every industry
and factories need to be far more flexible in
order to respond to consumer demands.
Staying with the M&A theme, Maier
dismisses any suggestion that Siemens
might offload its healthcare business
which was recently set up as a separate
legal entity. He says the move was driven
by the fact that the division has less R&D
synergies with the rest of the business, but
insists it remains core: “Healthcare is still
valuable to us and part of the family.”
5
siemens
rainmaker | 2015
6
Launching a vehicle rental company with
just four vans from a depot named after
a nearby traffic island doesn’t sound the
most auspicious start in business.
feature
But today, 30 years on, the Burnt Tree
business finds itself part of Enterprise
Rent-A-Car, the largest rental car
company in the US with revenues of
almost ¤16bn and a fleet of 1.5 million
cars. So, just how did this UK company
grow from such humble beginnings to
catching the eye of an industry giant?
Richard Metcalfe (pictured right), Burnt
Tree’s chief executive until its sale to
Enterprise in summer 2014, says the
roots of the deal lie in the company’s
complete focus on service and the fact that
it benchmarked itself not against direct
competitors in its own market, but against
world-class businesses.
“We wanted to know why these companies
were as good as they were, so we set
ourselves a challenge: not to be the biggest
in size in our market, but instead to be
market leaders in terms of our customer
service and in promoting our products
based around exactly what our customers
wanted. So we went out and talked to our
customers and found out exactly what
they wanted from us.”
Deal driver
The cross-border sale of Burnt Tree to global
giant Enterprise was a standout deal for
Clearwater International in 2014.
“Rather than being worried about the downturn,
we were thinking about how we could exploit it and
positioned ourselves to play on our strengths.”
Richard Metcalfe
When it comes to the vehicle rental
market, Metcalfe says maintenance of
the fleet is absolutely core. “This is what
really matters to people when they rent
out a vehicle.” In particular, he says Burnt
Tree brought a “HGV mentality” to the
white van rental market. “The heavy goods
vehicle market is subject to much more
stringent regulations, but we saw no
reason at all why you couldn’t instil that
same mentality into the light goods vehicle
market too.”
As the company’s fleet grew into several
thousand and it opened more depots
around the UK, so this mentality would
serve it well during the recession. As
Metcalfe adds: “It might seem a strange
thing to say, but when the credit crunch
hit we actually said to ourselves: ‘We are
perfectly positioned for this.’ We set a
three-year challenge built around how
we would get through the recession and
it worked perfectly. Rather than being
worried about the downturn, we were
thinking about how we could exploit
it and positioned ourselves to play on
our strengths. We knew that against
rainmaker | 2015
the backdrop of difficult economic
conditions, a flexible rental offering would
be profitable in our market because
companies would be reluctant to make
significant capital investment. We were
proved right as demand for rental services
did not fall at all.”
But how did the business cope when the
recession ended? In the event, Metcalfe says
the business model would prove extremely
resilient due to the increasingly flexible nature
of the economy and the needs of businesses
to be able to react quickly to a fast-changing
economic landscape.
“Take the example of an electrical engineer
who has a big contract with a supermarket
to fit out some new stores. But what
happens if that supermarket then decides
not to build that store? What does the
engineer do with the fleet of vehicles he has
purchased? Business life is changing all the
time, people are employed differently today.
Flexible contracts and working is all the
rage. Which means that whatever the peaks
and troughs are in the economy, this flexible
model has resilience. It is a really compelling
argument. If vehicles are not your core
business, then why would you bother
buying a fleet? What is the point of adding
more complexity to your business?”
Metcalfe says there is actually no such
thing as a typical Burnt Tree customer.
“A typical customer is every customer,
whether they are an engineer, florist,
baker or courier. Virtually every industry
is represented in our customer base. And
when we realise someone is missing, we do
something about it.”
He points to last year’s ‘Refrigerental’
campaign and the company’s investment in
a range of state-of-the-art temperature
controlled vehicles. “Because of this flexible
and on-demand economy we are now in,
there is tremendous demand for these
kinds of vehicles.”
Meanwhile, as the Burnt Tree business
grew - by last year it had a commercial
fleet of 18,000 vehicles including
commercial vans, HGVs, refrigerated
trucks and accessible minibuses run from
20 branches - so it began to catch the
eye of the market. Hardly surprising, given
that Metcalfe had taken the business from
making £1m (¤1.3m) a year to more than
£10m (¤13m) profit in less than a decade.
Enterprise had itself recently launched a
flexible commercial vehicle division in the UK,
7
Flex-E-Rent. Adds Metcalfe: “Enterprise’s
market in Europe is mainly in cars, whereas
in the US it is mainly trucks. Although the
company had launched its own flexible
commercial vehicle company, it was only
operating from a couple of sites. It was
obvious that we had precisely the kind
of infrastructure and strong network of
locations with workshops that could really
help them scale their business very quickly.”
feature
He says one of the things that Burnt Tree
liked about Enterprise was the fact that it
was still a family-run business like itself,
while a key element of the resulting deal
was that Enterprise was prepared to
reverse its fledgling Flex-E-Rent operation
into Burnt Tree’s existing UK head office
in the Midlands. “This was a crucial part of
the deal and was pivotal. The deal was an
excellent fit for the company and our staff.”
Partner Paul Jones, who led the deal
for Clearwater International, says the
transaction shows how the vehicle
outsourcing market continues to be on an
upward trajectory. “The deal is illustrative
of industry attractiveness and the interest
for delivering growth strategies through
acquisitions. There has also been notable
activity from Private Equity players in this
market, which demonstrates the growth
potential within the wider commercial
vehicle rental, contract hire and fleet
management market.”
Following the deal, Metcalfe has been
retained by Enterprise for a year as
a consultant. Meanwhile, he has also
launched his own management consultancy
(Metstrategy) which will be working with
management teams to bridge what he says
is often the big gap between leadership
and management. “At Burnt Tree, bridging
the gap was absolutely crucial. It was all
very well me talking about the importance
of getting our customer service exactly
right, but we had to ensure we were
delivering that on the ground.”
Looking back, Metcalfe’s own rise has
virtually mirrored the extraordinary Burnt
Tree story. “I left school with no qualifications
and my first job was sweeping the floor of
my local backstreet garage. For me, it was
all about hard work and evolving as a person.
Yes, qualifications are important but with
hard work, endeavour and a spot of luck you
can work your way up to the top. The same
was very much true for Burnt Tree.”
The van market is the
fleet industry’s fastest–
growing sector in the UK
and commercial vehicle
companies are expecting
continued growth,
according to the British
Vehicle Rental and Leasing
Association (BVRLA).
Growth in the commercial vehicle
(CV) sector is not just confined
to the rental market. The BVRLA
say contract hire and leasing
companies are also looking at
expanding their operations, for
instance: Lex Autolease has said
it will increase the size of its fleet
by 100,000 vehicles by the end
of 2017, with more than half of
this increase coming from light
commercial vehicles.
The sector continues to see
strong M&A activity. In 2014, HG
Capital acquired Zenith Vehicle
Contracts Group just months
after buying the Leasedrive
Group. HG subsequently merged
the two businesses to create the
UK’s largest independent vehicle
leasing business.
rainmaker | 2015
8
uk
One on one
Having built up and then guided his recruitment business
through the economic downturn, Graham Goodwin turned to
Clearwater International to help him achieve an exit.
For someone who insists he is “not an
out and out recruiter,” Graham Goodwin
has done a remarkably good job at
shaking up the market. Through a mix of
entrepreneurial savvy and clever use of
emerging technologies, he has built up
a business from scratch and disrupted a
market that was ripe for change.
accountants, to sell off non-core divisions.
He looked at buying out PwC’s recruitment
business but was beaten to a deal
following a trade sale to Capita. “That deal
forced my hand. I knew the potential of the
market, so myself and another shareholder
each put £40,000 (¤52,000) into the
new business and off we went.”
After leaving the army, Goodwin’s
entrepreneurial talents were first groomed
at accountancy firm PwC where he would
end up heading the recruitment division
outside London after first spotting the
opportunity to build up a public sector
recruitment business.
Goodwin says that from the outset his
ambition was to grow a national business,
and after starting the company in Leeds
they soon opened a London office. “I was
convinced there was a better model that
could be employed in the industry. The old
model was survival of the fittest, sharp
elbows and hanging on to your own patch.
But this mindset inevitably leads to internal
organisational problems. From the start, I
“When I first joined, it was very much a
private sector focused division: recruiting
FDs and senior managers. However, I could
“We took an industry that people thought could not be
changed and made small, incremental changes which
began to revolutionise it.”
Graham Goodwin
see that the public sector was changing fast
under the Blair reforms and the potential
of that market. If you want to change an
organisation then you have to change your
people and you could see which way the
wind was blowing. I thought to myself:
‘There’s a niche here, let’s have a crack at it’.”
He says one of the keys was persuading
local authorities to start looking beyond their
own HR departments. “They started to see
the benefits that we could bring. We were
able to go direct to candidates, look at their
backgrounds and act as intermediaries.”
Goodwin was already itching to set up
a business on his own when the Enron
scandal forced PwC, like the other major
wanted a team-based and less individualised
model where staff would be willing to share
clients. It might not sound radical today, but
back then it was a new way of thinking.”
Another key element was a specialist
approach to the market. “In headhunting,
being a generalist is no good. You need to
be clear about what you are in and what
you are not in. There can be a temptation
to go elsewhere and venture into new
markets, but we deliberately stuck to our
public sector credentials. We started in
local government and then moved into
central government, health and education.”
Driven by New Labour’s modernising
agenda, the dynamics were strong. “We
could bring added rigour to these labour
markets. Public sector managers were
being forced to bring in private sector
know-how, skills and knowledge to
help modernise services, and we could
really help with that whole agenda. Due
to accountability issues, there is also
this culture in the public sector that if a
particular service is failing then the whole
team gets thrown out. So that created
opportunities, a lot of opportunities for us.”
Technology
Crucially, Goodwin could also see the
potential of technological change to
transform the market. “Costs in the industry
were continuing to rise all the time so
developing more efficient online systems
was a part of tackling that. We were on a
journey where we could see the impact that
the internet was having on our industry and
how traditional models were changing very
fast. The key was to react to these changes
as quickly and effectively as possible, and
see the potential uses of the technology.”
One of the key innovations that the
company brought in was selling microsite
platforms to clients which allowed them to
communicate with candidates much more
quickly and directly. “We took an industry
that people thought could not be changed
and made small, incremental changes
which began to revolutionise it. Another
change was to give consultants permission
to charge what they wanted and give them
their own pricing structure, which again
was pretty revolutionary.”
Recession
The economic crash of 2008 would only
accelerate these fast-moving trends. The
huge shake-out in the industry claimed
many victims and Goodwin admits that
GatenbySanderson came close to being one
of them too. “We went through the mill,
there’s no other way to describe it. rainmaker | 2015
Our gross profit income fell 75% within
just two years and forecasting became
almost impossible. There were times
when we didn’t know if we had enough
cash coming in to keep us going. It was a
case of sticking close to our best clients
and best candidates, and fighting hard for
every piece of work. Looking back, I think
the big advantage we had was that we
were very strong going into the recession
so I felt we had a decent chance of coming
out of it. But to do so we had to become a
very lean and mean business, and we took
some brutal decisions along the way.”
Unlike the private sector, which began
to emerge from the crash within a few
years, GatenbySanderson has had to
contend with public sector austerity
which has continued to this day.
As Goodwin adds: “When the coalition
Government came to power in 2010 and
announced all the austerity measures,
some people in our industry really
questioned whether it was all over for
public sector headhunting per se. But
when you have a vast organisation that
needs to do things and change the way it
operates in order to save money and cut
costs, then you will always need people to
do that job. The Government still needed
the private sector to help.”
Fast forward to 2015 and little has
changed. “Whether it’s job creation,
tackling the deficit, or tackling regional
economic disparities, the Government still
needs us. Yes, it might have grand visions
to cut the size of the public sector but
you cannot actually achieve that without
the help of the private sector.”
Doing a deal
Having guided the business through
the worst of the storm and bought
out all other shareholders, Goodwin
himself began looking at his options 18
months ago and appointed Clearwater
International to initiate a sale process.
As he explains: “It might have seemed a
strange time to sell but I think you get to
a point where you have done your stint.
I took the business through its build-up
phase, got it through the recession in
strong shape and for me the time felt
right to do something else.”
He says appointing Clearwater
International was no different to
appointing a headhunter. “You find people
who really understand people businesses
and with whom you feel you can work.
Because I owned the whole company,
it was naturally a very big deal for me
but that also meant I was quite isolated
because I was the only vendor. So, it’s
paramount that you can trust someone to
guide you through the process.”
Goodwin says he had an open mind in
terms of the buyer. “It could have been
trade or private equity. However, trade
interest has not fully returned to the
market yet whereas PE is keen to invest
funds in the market. Ultimately, we had all the characteristics that PE was looking for - we were market leaders, had strength in depth and scale, great
repeat business and great contracts. We ticked all the boxes.”
With the business forecasting a £5.4m
(¤7m) pre-tax profit this year, Goodwin
says new owners Primary Capital have
plenty to go at in terms of new market
opportunities. “Higher education, health
and charities are just some of the markets
that could now be targeted. These are all
massive markets which need shaking up. The
company could also go overseas and look
more towards the private sector too. There
is a lot of opportunity for more overlap
between the public and private sectors.”
He adds that the interim market also has
massive potential. “When you need to
recruit quickly and holes need filling then
the interm market becomes essential.
Building up strong relationships with
interims can really help your wider business.
Get to know them well and they will start
telling you where the vacancies are.”
Goodwin says that changing labour
market dynamics are also impacting on
the market. “Far more people now work
for themselves and there is a much
bigger pool of professional people out
there running their own consultancies.
This market is only going to grow, but it
is also part of much wider change across
the whole recruitment market. Individuals
are now taking far more control of their
careers and using technology to help
them achieve their goals. But they will
still need headhunters. Ultimately there
has to always be a personal element to
recruitment.”
As for Goodwin’s own career, he is now
investigating new business ventures.
“I have a number of ideas, particularly
around the leisure industry, and am
weighing up my options.”
Recruitment sector deals
9
uk
The GatenbySanderson deal is
one of a string of transactions
in the recruitment sector for
Clearwater International over the
past year. The firm acted on the
following deals:
Advised private equity house
Sovereign Capital on its
acquisition of Nurse Plus, a
provider of staffing solutions
and homecare services across
the UK. The secondary buyout
enables the business to meet
the increasing demand for highquality homecare services and
bespoke staffing solutions.
Facilitated an introduction
between teaching agency Vision
for Education and new owner
TES Global, the UK’s leading
player in teacher recruitment.
Vision for Education has grown
rapidly in recent years and
provides teaching staff to a wide
range of schools. TES Global is
the UK’s number one agency for
teacher recruitment.
Advised on the acquisition of
medical, education and social
work recruiter the Sugarman
Group by Cordant Group plc.
The deal is the first of several
planned acquisitions by Cordant
Group as it expands into new
vertical markets. The acquisition
gives Cordant a strong presence
in the medical, allied and mental
health professions and education
sectors.
Advised the owners of Q-Star
Energy on its sale to All NRG, one
of Denmark’s largest companies
within the oil, gas and wind
turbine sector. Q-Star Energy
provides highly specialised
welders, electricians, scaffolders
and insulators, as well as wind
turbine experts, to the oil, gas
and wind industry across Europe.
rainmaker | 2015
10
spain
interview
Rising crop
Growing demand from emerging nations for imported animal
feed led to a landmark deal for the Spanish Fagavi group.
Josep Maria Gaset, President of Al Dahra
Fagavi, is a man used to dealing with
great change. From the days he first
started working for his father’s animal
feed business Fagavi as a 14-year-old
boy, through to taking over the Catalan
company aged just 27, he has lived
through enormous political and economic
upheaval in his native country.
One of the most significant changes has
been Spain’s entry into the European Union
in 1986, a move which - until recently –
exporting 40% of alfafa production - today
the figure is more than 80%.
However, Gaset stresses that the
company’s success has been down to
far more than just a favourable subsidy
regime. “We have always sought to be
ahead of the curve in terms of efficiency
of production and R&D capability. Over the
years, the company has invested heavily
to find out exactly the best combination of
animal feed for a specific type of animal.
It’s about really personalising the needs of
“It became clear that a deal was the right outcome for all involved and the opportunity was obvious. In particular, it would expose Fagavi to far more global opportunities.”
Josep Maria Gaset
had proved extremely favourable to the
family business. Fagavi, which was founded
by Gaset’s father as a cereals company
but in time moved into the production
of animal feed and specifically alfafa, has
benefited from the EU’s subsidy regime.
Alfalfa is a flowering plant which has been
grown as livestock fodder for centuries:
today, its primary use remains as a feed for high-producing dairy cows because
of its high protein content and highly
digestible fibre.
Spain remains one of the best places in the
world to grow the plant and following the
country’s accession to the EU the industry
was heavily subsidised, allowing players
such as Fagavi to grow significantly and
increasingly export. Just 10 years ago,
for example, Spanish farmers were only
each breed and finding out exactly the best
way to maximise yields.”
Middle East
As the company began exporting further
afield, one particular location it started
targeting was the Middle East. This region
needs to import much of its animal feed due
to the shortage of water supplies to grow
sufficient animal feed crops. In recent times,
the region has tried to help overcome the
problem by investing in desalination plants
to help ease water supply issues, but Gaset
says it has now concluded that it is more
economic to import most of its animal feed
requirements instead.
One country at the forefront of this trend
is the United Arab Emirates (UAE) which
rainmaker | 2015
first began importing alfalfa from Spain in
the late 1990s. In particular, Fagavi would
go on to build strong links with one of the
UAE’s leading animal feed players Al Dahra.
As Gaset explains: “Around a decade ago, Al Dahra needed to service a particularly
big contract in its domestic market and
was looking for the help of players like
Fagavi to deliver it. That was a real turning point.”
As the links between the companies grew,
so talk of a more concrete business tie-up
developed and Fagavi began working
with Clearwater International to assess
its options. In the meantime, Al Dahra
had acquired two smaller Spanish animal
feed businesses - Desagro and Farpla - so
some kind of deal with Fagavi became
increasingly likely.
Adds Gaset: “It was in 2010 when it was
first suggested that we do something
together and we continued having
conversations for a couple of years after that.”
As the knock on the door grew louder, so
Gaset could see that the approach was an
excellent opportunity for both companies.
However, selling a majority stake in the
family business was no easy emotional
decision.
He adds: “It was tough from a personal
perspective, but it became clear that a
deal was the right outcome for all involved
and that the opportunity was obvious. In
particular, it would expose Fagavi to far
more global opportunities.”
In 2014, the deal was completed with Al
Dahra taking an 80% stake in Fagavi. Gaset
retained a 20% stake as chairman of the
newly merged company Al Dahra Fagavi.
Global changes
Meanwhile, the dynamics of the home
Spanish market had changed with the
ending of the EU subsidy for manufacture
of alfafa in 2011. Although farmers still
receive subsidies, manufacturers of the
plant don’t. To some extent, Fagavi was
cushioned by its control of land via longterm rental contracts but the impact was
still significant.
Gaset stresses that the tie-up with Al
Dahra was not directly linked to the
ending of the subsidy, but admits it
was an important consideration. “Fagavi
had already started exporting more
aggressively and laying the groundwork for
further growth of the business before any
deal was done with Al Dahra. But at the
same time, we were preparing the ground
for new market challenges brought about
by the ending of the subsidy.”
As well as changes in the EU market,
far greater moves were also being felt
across the globe. In particular, the newly
merged business is now well positioned to
capitalise on rapidly growing demand for
animal feed from emerging nations, driven
by consumers’ insatiable appetite for
higher quality food products.
Across Asia, for instance, the primary
sector is growing at around 20% a year
with around 100,000 new cows a year in circulation.
Gaset says although the likes of China are
able to grow alfafa, the country cannot
grow the plant to anything like the degree
it needs to and production also tends to
be in more remote parts of the country.
As such, China will become increasingly
dependent on imports to service its needs.
However, he adds that demand isn’t just
coming from the Far East. “Demand from
the Middle East will continue to grow
significantly too. For instance: Saudi Arabia
has now started importing alfafa while we
are begining to see increasing interest from
Africa too. We are witnessing huge global
trends in animal feed production right now
as countries move towards the production
of foods and drinks with more protein and
fibre content.”
For Al Dahra Fagavi, this all means
significant growth prospects. The business
currently turns over ¤120m and produces
500,000 tonnes of feed a year, but is
forecasting a ¤160m turnover within three years.
Gaset predicts that these trends will drive
more consolidation in the sector too. “We
could start to see activity from producers
in emerging countries such as China which
want to pursue similar growth strategies
to that of Al Dahra: going into producer
markets in developed countries and taking market share to help satisfy demand
back home. There could be opportunities
there for new players, while established
players like Al Dahra Fagavi will also be
keeping a close eye on M&A opportunities
as they arise.”
11
spain
interview
rainmaker | 2015
Because of its natural environment,
Denmark has for decades been at the
forefront of the global wind power sector.
12
denmark
However, as Peter Thorlund Haahr (Partner
at Private Equity group Via Venture
Partners) explains, until now Danish
companies in this emerging sector have
largely been too small to compete on
the global stage and take advantage of
growing opportunities abroad.
It was against this backdrop that Via
Venture Partners, a leading PE fund in
the Nordic region which has traditionally
focused on technology and service
companies, embarked on an aggressive
buy-and-build strategy which saw it
acquire three businesses in the wind
energy sector. The trio of companies - VB
Enterprise, Apro Wind and Q-Star Energy
- were all subsequently subsumed into a
new operating company All NRG.
As Haahr, who is also chairman of All NRG,
explains: “As stand-alone businesses,
these companies would simply not have
been able to take advantage of the global
opportunities in this market. By bringing
them together, it gives them all the
capacity and recognition to enter strong
markets. This is a very advanced industry
in Denmark, which over the years has built
up a lot of competence and experience
because of its natural environmental
features. So, it makes perfect sense
to capitalise on that and give Danish
companies a stronger global foothold.”
Wind in
its sails
Combining the strengths of three players in its
home wind energy sector means the Danish
Via Venture Partners group is well-placed to
capitalise on a growing global market.
Haahr says all three companies have a
particular focus on the offshore wind
market which, because of the planning
difficulties involved in building onshore
wind farms, is becoming increasingly
favoured by Governments. He points to
the experience of the UK, which has the
most offshore wind turbines in the world
and where the industry has been heavily
subsidised by the Government as it seeks
to reach a target of obtaining 15% of
its energy consumption from renewable
sources by 2020.
The UK now has almost 1,200 offshore
wind turbines and several major new
projects are planned. For example: the
Hornsea 1 project off the East Yorkshire
coast will have an installed capacity of
1.2 gigawatts and is the first project to
be developed in the Hornsea Zone, an
area earmarked for several offshore wind
farms. Work is also due to start soon on
the East Anglian ONE project which will
rainmaker | 2015
include about 200 turbines. As Haahr
adds: “Because of all these plans to expand
offshore capacity, the UK is probably the
most interesting offshore wind market in
the whole of Europe.”
However, Haahr says that it isn’t just the
construction of wind farms but also the
maintenance and service market in the
sector which has terrific potential. As he
adds: “All NRG sees great growth and export
opportunities in the rapidly growing market
for wind turbine and oil rig maintenance.
The market for services to the wind energy
and oil and gas industries is incredibly large.”
He says the potential for creating a larger
domestic player in the market offering such
a ‘one-stop’ service first emerged a few
years ago. As he recalls: “The plan really
began to take shape in late 2013 and we
drew up a hit-list of companies we wished
to target. Drawing up a list is easy, but you
never really know who is going to come into
play and exactly when. However, we knew
we had to move quickly. Other investors
were looking at the market and we had to
be very firm and fast on the opportunity.”
Via Venture certainly stayed true to its
word, acquiring all three businesses in
2014 (see panel right), starting with VB
Enterprise. “We knew that VB’s strong
position in the offshore wind market
posed an attractive platform to build upon.
Its strong niche expertise and its track
record of successful global projects were
particularly attractive.”
in running buy-and-build operations and
understand what it takes to make such a
strategy work. But that doesn’t mean it
isn’t without considerable challenges. The
biggest single thing you mustn’t do is upset
the companies when you merge them. By
that, I mean if you are not careful you can
create more harm than good when you
come to integrating the businesses. You
have to do it at the right speed.”
Haahr says the year ahead will now very
much be about absorbing the businesses,
although he doesn’t rule out further M&A
activity. “Now that we have the volume in
the business, we will be more specifically
looking for deals that equip us with the
particular skill sets that we need.”
In terms of market opportunities, a
particular focus will be the UK market. “The
UK is a competitive market and we will be
opening an office there this year, while we
are also looking to expand into Germany,”
he adds. However, Haahr stresses that the
opportunities are increasingly global. “This is a fast-growing global industry and as time goes by we will be looking to enter new markets in emerging
economies such as Asia, as well as in more developed markets.”
Additionally, he says wind energy will
always need to be part of the wider energy
mix despite concerns that it remains an
expensive form of energy capture. “Yes,
right now when compared to the price
of oil, wind is expensive. But who is to
“We knew we had to move quickly. Other investors
were looking at the market and we had to be very firm
and fast on the opportunity.”
Peter Thorlund Haahr
Haahr says the rationale for acquiring all
three companies was clear. “Firstly, we
knew the synergies we could achieve
in terms of being able to cross-sell was
very important. Secondly, there was the
considerable cost savings that we could
make by combining the three companies in
areas such as IT and marketing. And thirdly,
we knew the deals would give the overall
business a much higher equity value.”
He admits though that embarking on such
an aggressive strategy was no easy task.
“As a firm, we have considerable expertise
say what the oil price will be at the end
of the year? Will it be as low as it is now?
The fact that the price of wind energy is
pretty much fixed can be very useful when
the prices of other forms of energy can
fluctuate so much. Once you have built a
wind turbine, you can then fairly accurately
calculate the unit cost of that power.
There is more certainty.”
And then there is the continued legislative
drive to cut carbon emissions to consider
too. “The renewable fuels agenda has not
gone away, it is still very important.”
13
denmark
As part of its buy-andbuild strategy, Via Venture
Partners acquired three Nordic
companies in the energy
industry in 2014 which in turn
all became subsidiaries of of its
All NRG platform. Clearwater
International acted as sales
advisor to all three companies in
three independent processes.
All NRG is now a major player
in the market for services to
energy companies, turning
over more than ¤90m.
January 2014: invested in VB
Enterprise, a services provider
to the off-shore wind turbine
industry. The company is a
global leader in installation
and service projects for the
industry, and has been engaged
in the construction of 14 of
the 15 largest offshore wind
parks ever built.
May 2014: acquired APRO
Wind, an installation and services
provider to the global on- and
off-shore wind turbine industry.
The company has achieved
impressive growth over the last
few years, much of it driven by
its track record of successful
international projects.
November 2014: invested in
Q-Star Energy, a provider of
specialised experts and services
to the oil, gas and wind industries
in Europe. Its clients include
Statoil, Siemens and Maersk. The
company was first established as
a supplier of industrial manpower
solutions to the Danish and
Norwegian oil and gas sectors,
and more recently moved into
the wind industry.
rainmaker | 2015
14
portugal
Family affair
Explorer Investments’ funding for leather producers Ramiro
and Ramitex shows continued investor appeal in Portugal’s
traditional industries.
As Ana Leite - Partner in Private
Equity management company Explorer
Investments (pictured above) - says, the
Portuguese business market very much
remains a family market. And just like
family-run businesses across the whole of
Europe, these are firms which are facing
some tough decisions right now.
As she explains: “A lot of these family firms
are now getting to the stage where they
have to make some big decisions because
of both pressures at home and in terms
of how they exploit opportunities in new
markets abroad.”
In terms of these home pressures, the
big challenge remains debt reduction.
Not only does Portugal itself continue to
have one of the highest debt-to-GDP
ratios in the world (around 130%), but
private companies are also still feeling
the hangover from over-leveraging
themselves during the boom years.
Economic crisis
Portugal as a whole is still recovering
from the economic crisis and the country
is adapting to that. “The shocks that
the Portuguese economy has suffered
over a short period of time - such as
strong deleveraging, contraction of the
internal market and the disappearance
of the comfort which the public sector
used to bring to many sectors - have led
many to review their businesses, better
understand their operations and invest
in other markets. However, we are now
starting to see the light at the end of
the tunnel - especially as the country
becomes more competitive thanks to
innovation, customer service and flexibility
of response.”
Leite says the biggest impact of the
economic crisis for a player like Explorer
was the sudden complete lack of debt that
was available in markets.
“Ultimately, Portuguese companies need to focus on
exactly what they are good at: on sectors such as
textiles, IT or shoe manufacturing.”
Adds Leite: “Debt reduction is still a very
big issue for many companies. Before the
downturn, getting debt into a company
was just too easy and some investments
attracted funding which they shouldn’t
have. Some companies grew their business
on the back of debt and that could not be
right long term. Now they are realising the
mistakes they have made and are having to
correct them. This creates an opportunity
for the likes of funds managed by Explorer
which can help them invest for the future
rather than just borrow.”
She adds: “It was also very difficult to
distinguish between those firms which
were just doing badly because of the
recession, but were actually good solid
businesses underneath, and those
businesses which were doing badly
because they were actually poorly-run
businesses in the first place. That made
investing difficult because it was so hard to
value companies. Today, it is much easier to differentiate between these
types of businesses.”
Leite says the bright spot of the crisis was
that it forced companies to look more to
global markets to do business, particularly
outside the Eurozone. She says this has
been partly driven by firms following their
clients into new markets and partly by
firms taking the initiative themselves to
grow their export presence. “Ultimately,
Portuguese companies need to focus
on exactly what they are good at: on
sectors such as textiles, IT or shoe
manufacturing,” she adds.
It was precisely the latter sector that saw
Clearwater International advise Explorer
last year on its minority investment in
Ramiro and Ramitex, wholesalers of
leathers and synthetic materials for shoe manufacture. Adds Leite: “It was a
typical kind of deal for us. The business
is very stable with sustainable margins,
growth potential and an excellent
management team.”
Over the past 16 months, Explorer has
invested in 16 companies from its ¤80m
Revitalizar Fund which Leite manages.
Explorer also worked with Clearwater
International on an investment in a mould
producer which contributed towards
increasing its production capacity.
Trailblazer
Explorer itself has been something of a
trailblazer in the wider Portuguese PE
market since it was founded in 2003.
Today, the firm is divided into three
business areas: Private Equity, Capital
Expansion and Tourism & Real Estate.
Clearwater International also recently
advised Explorer in raising capital for its
private equity fund Explorer Fund III.
As Leite continues: “We have now built
up a great track record here in Portugal
and have ¤1bn under management/
advisement right now. Our record has
ensured our continued success and we
now have a great knowledge of the
Portuguese business fabric. We can also
benefit from longstanding relationships
rainmaker | 2015
with the financial community which gives
us a real competitive advantage.”
When Explorer started, it was actually one
of the first private and independent PE
management companies in the country.
“We were the first dedicated PE company
and it’s a measure of how far the market
has matured since then that today it is
a very different story. The PE market is
growing all the time with new entrants
coming into the market, which is ultimately
a good thing for everyone. When we
started out, companies didn’t know exactly
what we were about and how the PE
model really worked. Indeed, we used
to often find some distrust towards PE.
Today, people know far more about the
industry and have seen the successes of our firm and others which makes our job easier.”
Timing
Leite says timing is everything when it
comes to doing a deal. “We are capable of
moving fast if we need to and have now
invested in more than 50 deals over the
last decade. Our deep knowledge of the
local market is very important, but there
can still sometimes be barriers to getting in
front of companies, and this is where the
likes of Clearwater International come in in terms of building that bridge we need to do business.”
In terms of deal highlights in recent
years, Leite singles out the divestments
of Alfasom, Oficina do Livro and
Crioestaminal. Alfasom provides services
for sound, video, illumination and audiovisual performances, and Explorer exited
the business in 2007 at a gross IRR of
131%; Oficina do Livro is a publisher and
distributor of non-educational books which
Explorer exited in 2008 at a gross IRR of
98%; while Explorer exited Crioestaminal,
a life sciences business, in 2009 at a gross
IRR of 58%.
Meanwhile, in terms of investments, Leite
says the firm very much sticks to the
Portuguese market. “This is the market
we know best and where we have our
expertise. We might perhaps do add-on
acquisitions of Spanish businesses for
our portfolio companies, but our initial
investments will always be in Portuguese
organisations.”
15
portugal
rainmaker | 2015
16
cross-border
Cross-border prospects
2015 is set to be a busy year on the M&A front.
Automotive
Amtek Auto, the Indian automotive
component manufacturer, is seeking to
make European acquisitions in the casting,
forging and machining arena. The group
recently acquired two European businesses
and a Southeast Asian company.
Delphi Automotive, a US manufacturer
of automotive components, has a long
pipeline of acquisition targets. The group
is keen to expand on its 2014 acquisitions
of Antaya Technologies Corp, a US supplier
of proprietary on-glass connectors; and
Unwired Technology, a US supplier of
infotainment connectivity modules.
Business Services
Cintas, the US provider of specialist
facilities and outsourcing services, is looking
to expand its facility services division with a
particular focus on fire protection, periodic
speciality cleaning and washroom services.
DCC, the Irish provider of sales, marketing,
distribution and business support services,
has financial and managerial capabilities to
continue making acquisitions and will focus
on Northern Europe.
Recruit Holdings, the largest Japanese
provider of staffing services, has set out
ambitious plans to grow its overseas
revenues from 21% to 50% in the coming
five years. The majority of this growth
will be driven through either platform
investments in attractive territories or
acquisitions to broaden current offerings.
Sodexo, the French provider of catering
and facilities management services,
intends to use its cash flow for bolt-on
acquisitions. The group is focusing on small- and medium-sized acquisitions of
up to ¤100m.
Consumer
Beijing Toread Outdoor Products,
the Chinese manufacturer and retailer of
outdoor sports apparel and equipment, is
seeking acquisitions of travel agencies as
part of its aim of becoming a one-stop
provider of outdoor services. The group
is looking at targets based in Europe and
the US, which are popular overseas travel
destinations for its Chinese customers.
First Names Group, the Isle of Man
provider of corporate, fiduciary and fund
services backed by private equity firm
AnaCap Financial Partners, is looking to
make acquisitions in Europe and the US.
The group is interested in companies
operating in the corporate services field,
as well as those in the fund services space.
In 2014, the group acquired Mercator
Trust Co and Seymour Trust Co in order to
expand its private client services business.
Henkel, the German manufacturer of
homecare and personal care products, has
up to ¤5bn to spend on further acquisitions.
The focus for acquisitions will be beauty,
laundry and home care. The company
recently acquired Spotless Group, a French
manufacturer of household cleaners.
Funding Circle, the UK peer-to-peer
lending platform for small and medium-sized
enterprises, is on the lookout for opportunistic
acquisition targets. Niche targets offering
asset-based lending are the focus as the
industry increasingly sees the emergence of
more specialist lenders, particularly within the
mortgage and asset-backed finance sector.
Shangtex Holding Group, the Chinese
state-owned textile and apparel producer,
is looking to acquire men’s and women’s
clothing companies in Europe and the US.
The group, which owns the mid-market
brands Conch, EY, Minguang, Prolivon and
Three Gun, is seeking to acquire majority
stakes in businesses that already have
established brands which target mid-range
to high-end customers.
Tilney Bestinvest, the UK provider of
wealth management services backed by
private equity firm Permira, is seeking
acquisitions. The group, which was formed
by the acquisition of Tilney from Deutsche
Bank AG and the subsequent merger with
BestInvest, is hoping to take advantage of
the fragmented market.
Sports Direct, the UK sporting goods
retailer, is planning a programme of
acquisitions with targets in the UK and
overseas being considered. The group
is particularly interested in sporting
goods retailers in continental Europe
and especially Eastern Europe, while also
looking at the acquisition of well-known
casual-clothing brands.
Bright Food Group Co., the Chinese
foods group, is actively seeking acquisitions
across Europe as part of a drive to double
its international revenues by 2017. The
group is particularly interested in targets
operating in the agricultural products,
dairy, spirits and sugar segments.
Financial Services
Anima, the Italian asset management
company with over ¤55bn of assets under
management, is interested in acquisitions.
The group could take advantage of the move
by the European Central Bank to force some
banks to dispose of non-strategic assets.
Food & Beverage
Hain Celestial, the US manufacturer of
natural and organic foods and personal
care products, is interested in acquisitions
in Europe and sees a number of potential
opportunities. The group recently acquired
UK organic baby food supplier Ella’s Kitchen
and UK rice supplier Tilda with the aim of
using its global presence to expand the
brands’ geographic reach.
rainmaker | 2015
17
cross-border
Nestlé, the Swiss foods group, is seeking
acquisitions and is focusing on bolt-on
targets. The group is particularly interested
in targets operating in the health & wellness
and nutritional products categories.
Raisio, the Finnish foods group, is seeking
acquisitions in the ¤50m to ¤100m range.
The group is seeking targets with a suitable
brand and products which will give access
to new markets.
Healthcare
UDG Healthcare, the Irish provider of
healthcare equipment and services, has
a budget of ¤500m for acquisitions and
could spend ¤100m annually on deals.
Universal Health Services, the US
provider of hospital management services,
sees the fragmented behavioural market
providing more bolt-on acquisitions. The
group is seeking further acquisitions in this
area following its acquisition of Cygnet
Health Care in 2014.
Industrials and Chemicals
Actuant, the US diversified industrial group,
is seeking acquisition opportunities in Europe.
The group has a focus on highly engineered
position and motion control systems,
hydraulic tools & solutions and specialist
products & services for energy markets.
It is particularly interested in niche market
leaders with strong management teams.
Platform Specialty Products, the US
developer and manufacturer of speciality
chemicals, is looking for acquisitions to help
it grow into a world-scale business. The
group recently acquired Arysta LifeScience,
an Irish developer and manufacturer of
agrochemicals.
Sulzer, the Swiss industrial manufacturer
of pumps, systems and mechanical
equipment, is looking for acquisitions in
its key markets of oil & gas, power and
water. The group is particularly interested
in targets with a differentiated offering or
ground-breaking technologies.
TransDigm Group, the US manufacturer
of aerospace components, has more than
¤1.5bn to spend on acquisitions and is
seeking targets in Europe. The group has
made five acquisitions for nearly ¤500m
since the start of 2013.
Technology
Aveva Group, the UK provider of
engineering, design and information
management software to the process, plant
and marine industries, is examining a range
of M&A opportunities as well as looking at
the merits of a share buyback programme.
The group’s strategy centres on scaling
the operations of the business around the
world, particularly in North America.
Getronics, the Dutch provider of
complete IT managed services backed
by industrial investment group Aurelius,
is seeking to grow internationally. The
group is seeking targets providing desktop
management, managed services, data
centre services, unified communication
and application development services. It
has a particular focus on targets in Europe
and Southeast Asia which can generate
revenues of between ¤15m and ¤500m.
UNIT4 Software, the Dutch provider of
ERP business software solutions, is looking
at acquisition opportunities following its
acquisition and delisting by private equity
firm Advent International. The group is
interested in targets in fast-growing
geographies in Asia, as well as in bigger
markets such as the US, and is seeking
to capitalise on its strong position in the
Software-as-a-Service (SaaS) market.
Real Estate
Mitsui Fudosan Co, the second largest
real estate developer in Japan, is seeking
investment opportunities in Europe. The
firm is particularly interested in real estate
assets in the commercial property, housing
and office property sectors.
Perella Weinberg Real Estate Fund, the
US real estate-focused debt and equity
investor, is seeking targets across Europe.
The firm is deploying capital from its ¤1.3bn
fund raised in 2013 and is targeting real
estate assets with strong cashflows as a
platform to its investment strategy.
rainmaker | 2015
18
china
Chinese challenges
2014 was another volatile year for doing business in
China. We should expect more of the same in 2015,
says James Sinclair from Clearwater International.
The Chinese economy has undoubtedly
reached a major crossroads, as President
Xi Jinping initiates his major reform
agenda. However, as these reforms are
implemented with increasing vigour so
new business opportunities will arise and
many companies are continuing to do well
within this more uncertain and challenging
economic environment.
That said, disparities between the
performance of different sectors of
the Chinese economy have become
increasingly stark. In such a climate,
companies need to avoid being distracted
by the current volatility, adjust their
approaches to coping and seek out
opportunities as they arise.
One of the core reform issues is the state’s
role in the economy. During this period
of transition, the economy will continue
to depend on state-led investment for
growth and employment - even if it
prolongs debt burdens and investment
inefficiency.
When it comes to state-controlled sectors,
we are already seeing the impact of the
reform agenda. The oil & gas industry is a
case in point: during 2014, the sector was
opened to private Chinese investors - a
development which has in turn provided
a multitude of cooperation and sales
opportunities for international investors.
State-owned companies, in particular
those that are controlled at the provincial
and municipal levels, are spinning off noncore business in order to focus more on
performance.
The economy is now very heterogeneous
and different sectors will present very
different opportunities. This is not just a
matter of growth trajectories but also of
competition structure, including political
support and administrative interference.
The across-the-board boom of the past
has ended with China’s slowing economic
growth.
Sectors such as healthcare and automotive
components stand out as high growth
sectors for international companies,
both due to demand growth and relative
strength against local competitors. The
consumer space is mixed, with imported
food booming, luxury goods slowing, and
many mainstream categories stagnating.
Industrial companies active in wind power, oil & gas, automation and railways are doing well, while others in
construction and infrastructure suffer.
Other boom sectors, such as the Internet,
will remain difficult for international companies given the strength of
local competitors.
In our recent survey of more than 50 China country managers, nearly
all recognised a more uncertain and
challenging environment. International
companies will need to adjust, both
strategically and operationally.
China has always been a complex and
dynamic market, yet despite the challenges
ahead there is still cause for optimism. The turbulence will be manageable and
while what worked in the past will no
longer be enough, the better prepared
companies will flourish as long as they
focus on their sector opportunities and
don’t get too distracted by volatility and uncertainty.
How to adapt to the changing economy:
Accelerate strategic reviews
Five-year planning cycles are now
defunct. In particular, sales and profit
goals will have to be continually
assessed against market realities;
customer sectors will have to be
monitored so that only the most
attractive are focused on; product
and service portfolios will have to be
evolved to meet changing market
needs, including investment in new
product development specifically for
the Chinese market; and new sources
of growth will need to be identified and
pursued as they emerge.
Overhaul operating models
With slower growth, growing
competition and rising costs, profitability
is no longer the given that it was in the
past. For companies that have fixated on
the top line for the last 20 years, this will
require a drastic shift in mentality that
will by no means be easy.
This is not just about running internal
operational excellence programmes,
such as lean manufacturing. Companies
also need to look at whether their
operating model is still fit for purpose.
Be aware of consolidating sectors
A major consequence of the shift in the
economic growth model will be faster
consolidation in many sectors. Where
sectors are consolidating, acquisitions will
become obligatory for either establishing
a significant presence or staying
competitive. International companies will
need a clear picture of the consolidation
dynamics in their specific industry.
Traditional success factors
A headquarter commitment, a capable
local team, a China-tailored approach,
and the right focus in terms of
Government relations, all still remain
critical.
rainmaker | 2015
INSPIRING OTHERS
While serving with the Royal Marines in Afghanistan, Andy Grant was critically injured in
an explosion. Clearwater International has since helped him on his journey to becoming
a leading para-athlete.
What happened to you in
Afghanistan?
I was critically injured when a trip wire
attached to two IEDs (improvised
explosive devices) was triggered. After
receiving life-saving treatment on the
ground, I was airlifted to Camp Bastion. I
woke up from a coma two weeks later in
a hospital in Birmingham, UK, and stayed
there for a further three months. Over
time the wounds to my right leg did not
heal, and I decided to have it amputated
below the knee.
Given your injuries, what made
you decide to pursue a sporting
career?
I have always loved sport and despite
only having one leg my desire to be
competitive has never left. With the
support of so many people, I now have
more aspirations and determination than
before I was injured. I am now really fit
and active, and as well as pursuing my
sporting career I spend my time as a
public speaker delivering motivational
talks to schools, sports teams and the
corporate world. How did you first get to meet
Clearwater International?
I first met some of the team when I
completed a charity bike ride from
Birmingham to London to raise money
for the Help for Heroes charity. About
that time, I began to focus on the paratriathlon but found the cost of getting
kitted out with all the equipment I needed
to be very prohibitive. Clearwater stepped
in and helped fund me, in particular buying
me a custom-made carbon bike to use
for training. Now that I have aspirations
to reach the 2016 Paralympics in Rio,
Clearwater has continued to offer their
support for me in whichever way they
can, which is fantastic.
Last year you took part in the
Invictus Games in London
for wounded servicemen
and women. How was that
experience?
The Games were amazing to be part
of and came about at a great time for
me. Although triathlon wasn’t an event,
athletics was and I competed in the
1500m and 400m where I was able to win two golds. I also competed in the relay team where we managed to
take bronze. What are your plans for Rio?
It was after competing in the 400m that
some of the coaches told me I would
stand a better chance of making the 2016
Paralympics by competing in athletics
rather than triathlon. My time of 63
seconds for 400m wasn’t far off what is
required to reach the Paralympics, so now
my coaches have encouraged me to aim
for the shorter distance instead. If I can
get my time down to 55 seconds then it
would put me in the top 10 in the world
and hopefully a spot on the GB team. What is the most important
message that you think you can
give to people?
Being blown up and then choosing to have
my leg amputated in order to live a more
fulfilled life has given me a foundation
to launch my story from and hopefully
inspire people to live a more fulfilled life.
My motto now is that life is 10% the
situation you are currently in and 90%
what you do about it. This attitude, plus
the help I have received along the way,
has helped me to realise that I am the
master of my fate and truly anything is
possible.
“My motto now is that life
is 10% the situation you
are currently in and 90%
what you do about it.”
Andy Grant
Phil Burns, managing partner at
Clearwater International, is full of
praise for Andy’s endeavours:
“Andy has done a fantastic job and we are
extremely pleased to have been able to
provide our support. He is an inspiration to
everyone, coming from such adversity to
achieve his goals. We will continue to support
him however we can in his bid to reach the
Paralympics and we congratulate him on his
success at the Invictus Games.”
19
interview
Deal summary
Some recent deal highlights...
Waterfall Services
Securator
Prism Medical
Contract catering company
focusing on the education, care
and welfare sectors
Provider of extended warranties
for consumer electronics
Provider of safe patient handling
solutions
Clearwater International advised
the shareholders of Waterfall on the
secondary buyout by LDC
Clearwater International advised the
owners on the sale to the Nordic
insurance group Tryg Forsikring A/S
Clearwater International advised
the MBO team on debt financing
for the transaction, after running a
competitive process with funders
ESG
Royal Westmoreland
Byggeweb A/S
Provider of engineering services
to the aerospace, automotive
and defence sectors
Barbados-based luxury golf
and spa resort and premium
residential development
Developer and marketer of
SaaS-based solutions for the
architecture, engineering and
construction industry
Clearwater International advised
ESG on the sale of AC&S srl & the
ILS business of AC&S GmbH to
Studec SAS of France
Clearwater International secured
a ¤24m funding line to refinance
existing borrowings
Clearwater International advised
Byggeweb shareholders on the sale
to RIB Software
Pentagon Chemicals
Nutramino
Menlo Capital
Independent manufacturer
of fine chemicals &
intermediates
Leading sports nutrition
products business
Independent private equity
company
Clearwater International advised on
the sale of the company to Vertellus
Specialties, a US manufacturer of
speciality chemicals
Clearwater International advised the
company on its cross-border sale to
Glanbia
Clearwater International assisted
Menlo Capital with raising a fund
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