How active have financial sponsors been in acquiring publicly listed companies and/or buying infrastructure assets?

Private Equity

Austria Small Flag Austria

With regard to publicly listed companies, financial sponsors have not been very active, in part due to the fact that there are few Austrian publicly listed companies with a considerable free float. The only takeover completed in 2018 we are aware of was the acquisition of a majority interest in Wolford AG by Chinese financial investor Fosun.

As for infrastructure assets, while financial sponsors were looking at potential targets, we are not aware of any transaction having been completed recently.

Japan Small Flag Japan

From August 1, 2016 to August 31, 2018, there were 771 public M&A transactions in which the targets were Japanese listed companies, and approximately 15% of these transactions involved financial sponsors as buyers (Source: RECOF).

Traditionally, financial sponsors have not been active in buying infrastructure assets in the Japanese market partly because regulatory authorities prefer strategic investors over financial investors for the purchase of infrastructure assets. We have not seen active involvement of financial sponsors in buying infrastructure assets such as sanitation and water treatment facilities, roads, airports, railways, hospitals and schools. However, the trend seems to be slowly changing in the energy sector in which an increasing number of financial sponsors are buying interests in renewable energy projects.

Mauritius Small Flag Mauritius

There are a certain number of acquisitions of publicly listed companies and/or infrastructure assets by financial sponsors which are structured through Mauritius although we cannot give an indication of their prevalence or not in the absence of statistics.

Norway Small Flag Norway

Financial sponsors frequently look at acquisition opportunities on the Oslo Stock Exchange in Norway. There has, however, been few public takeover offers on the Oslo Stock Exchange in recent years (less than 10 each year, for the last three years). Only a handful of these offers have been made by financial sponsors.

Financial sponsors are also active within the Norwegian infrastructure sector, and takes up a substantial part of the acquisitions.

Switzerland Small Flag Switzerland

In line with the general trend (see question no. 1 above), financial sponsors are also increasingly active in acquiring listed companies and infrastructure assets. A recent example is the take private of Swiss listed company Kuoni by EQT.

The Netherlands Small Flag The Netherlands

Financial sponsors have been involved in several deals that concerned publicly listed companies. Recently, a consortium of PAI Partners SAS and British Columbia Investment Management Corporation acquired 99.4% of the issued and outstanding shares of Refresco Group N.V.

Financial sponsors reported a shift in their portfolios, expanding to investment areas such as infrastructure. In 2017 for example, KKP Infrastructure acquired Q-Park and EQT infrastructure purchased DELTA, a provider of services such as internet. It is estimated that infrastructure funds invested 2.2 billion in Dutch companies. Specific numbers and details on acquired infrastructure assets are not available.

United Kingdom Small Flag United Kingdom

In the last 12 to 24 months there has been a considerable increase in interest in take private transactions both in the UK and across Europe which we expect to continue. Examples of recent take private transactions in the UK market include the acquisitions of, eSure Group Plc, John Laing Infrastructure Fund Limited, ZPG Plc, CityFibre Infrastructure Holdings plc, Laird Plc and Paysafe Group plc. Most of these acquisitions have tended to involve a consortium of sponsors teaming up to acquire the asset.

Of the 28 successful take private transactions in the last 2 years, 22 have been sold to financial sponsors, with a total deal value of approximately £11.28 billion.

The infrastructure market is attracting a wider pool of sponsors who have been raising funds to meet demand for assets that are considered Core + and which can be held over a longer period than the typical 3-5 year hold period.

Belgium Small Flag Belgium

While there have been a number of acquisitions of publicly listed companies by financial sponsors in Belgium in the past, such operations remain very unusual on the Belgian private equity market. In 2017, only one public takeover by a financial sponsor was notified to the Belgian Financial Services and Market Authority (FSMA) by a financial sponsor. So far none were notified in 2018.

Financial sponsors have been active in acquiring infrastructure assets in Belgium, although such activity has been relatively modest compared to many other sectors. However, in the second half of 2017 and the first half of 2018 we have noted an increase in M&A activity involving financial sponsors in this sector.

Poland Small Flag Poland

Acquiring publicly listed companies constitute a smaller part of the financial sponsors’ activity in Poland.

With respect to buying infrastructure assets, according to the 2017 European Private Equity Activity Report prepared by Invest Europe/EDC, only 3.3% of private equity investments in Europe were investments in the Construction sector and only 1.3% in the Real Estate sector.

The above statistics are mirrored also in Poland. However, real estate investment funds, in particular from the Republic of South Africa, have become more and more active on the Polish market.

Portugal Small Flag Portugal

There has been only one public to private transaction in Portugal involving private equity actors: the acquisition, in 2012, of Brisa, a high-way toll-operator, by a consortium made up of an European infrastructure fund and Portuguese industrial conglomerate José de Mello.

In what concerns the purchase of infrastructure assets, deal activity has been buoyant in the last few years, due to valuations perceived as attractive and the search for high and steady returns by institutional investors outside of the capital markets space.

Assets in the energy, highway tolling, telecommunications and water and waste sectors have all been the object of these transactions, typically involving Portuguese groups and utility incumbents selling stakes in the aforementioned assets to yield seeking foreign investors, often due to deleveraging pressures mounted on the former.

Sweden Small Flag Sweden

Recently, public to private deals by financial sponsors have been rather uncommon, with only one or two transactions per year. The same applies to transactions involving infrastructure assets, where we have seen only a few transactions over the last few years.

China Small Flag China

Between 2011 to 2015, there was a surge of going-private transactions involving China-based U.S. listed companies and a number of them have completed their re-listings in China’s A-share market (e.g. Focus Media, Qihoo 360). As to foreign investments in Chinese publicly listed companies, strategic investors remain the dominant players as such investments are subject to MOFCOM approvals for foreign strategic investments, which are more often granted to strategic investors or financial sponsors teamed up with strategic investors. In the past few years more financial sponsors teamed up with strategic investors (including their portfolios companies) to acquire minority or majority stakes in Chinese publicly listed companies (e.g. Focus Media/Carlyle, Qihoo 360/RMB funds, Shandong Luyang/Unifrax & American Securities) and financial sponsors are reviewing public deal opportunities much more actively.

The infrastructure market has been active in China due to the central government’s investment-driven policies but state-owned companies and strategic investors remain dominant players in the infrastructure market (e.g. BOT projects, PPP).

Finland Small Flag Finland

There has been a limited but increasing number of sponsor backed public-to-private transactions in the Finnish market. Financial sponsors have also been very active in transactions involving infrastructure assets – energy (including transmission grids), telecommunication infrastructure assets, and highways/roads – and the trend appears to continue growing in the near future. In addition, the public sector has exhibited increasing willingness to enter into public-private partnerships with financial investors in order to finance and construct significant infrastructure projects such as highways and schools.

France Small Flag France

Since 2017, on a total of 65 offers targeting publicly listed companies, around 10 offers were launched by financial sponsors. During the last 12 months, we have not seen a surge in the number of transactions initiated by financial sponsors.

These figures can be explained by the fact that, at the moment, any bidder needs to acquire 95% of the share capital and voting rights of the listed target to implement a squeeze out procedure. In addition, French market authority will reject any offer that is conditional on reaching the squeeze-out threshold. However, Parliament is currently discussing a reduction of the squeeze-out threshold at 90%. This would bring France more in line with other European countries. This reform should be passed by the beginning of 2019.

Financial sponsors have been increasingly active in the infrastructure sector and have even been successful in the context of auction processes involving trade buyers.

Germany Small Flag Germany

Historically, we have not seen many sponsor driven public deals in Germany which was probably also a result of the common misperception that public deals in Germany are complex and burdensome. However, in the last twelve months we have seen several major public takeovers in Germany which were initiated by financial sponsors (e.g. Stada/Bain, Cinven, GFK/KKR) and we clearly see a strong tendency that sponsors are reviewing much more actively public deal opportunities. We would therefore expect more sponsor public takeovers in the future. The infrastructure market is booming in Germany with many sponsors looking actively at targets. We have seen several recent landmark infrastructure deals (e.g. Techem, Scandlines, Inexio, Tank & Rast) and we expect this to continue as more financial sponsors invest in assets with longer hold periods.

Greece Small Flag Greece

Overall, financial sponsors have been quite reluctant to invest in public traded companies or infrastructure during the last year.

Ireland Small Flag Ireland

There have been no recent public to private transactions in Ireland.

Luxembourg Small Flag Luxembourg

The acquisition of public listed entities in Luxembourg is rare.

Infrastructure assets in other European countries such as Spain, Portugal, Greece are commonly acquired by Luxembourg SPVs due to large investors not wishing to invest funds directly in those jurisdictions and Luxembourg’s collateral law being very creditor friendly. Infrastructure projects in Luxembourg itself are less common.

United States Small Flag United States

In each of calendar years 2016 - 2017 there were 81 announced sponsor-backed take-private acquisitions in the U.S. The number of sponsor-backed take private transactions in 2018 is on pace to modestly exceed prior years’ numbers with 79 announced deals year-to-date (as of December 11). 2018 average transaction size is approximately $2 billion whereas the average in 2017 was approximately $1 billion.

The infrastructure market is attracting a wider pool of sponsors who have been raising funds to meet demand for assets that are considered Core + and which can be held over a longer period than the typical 3-5 year hold period.

As of Q4 2018, there were 187 private infrastructure funds in the market seeking to raise a total of $147 billion, with North America-focused funds dominating the market, having raised nearly three-quarters of the aggregate global total in Q3. Funds in the market include a number of the best-known infra sponsors, including the latest funds from GIP, EQT, ECP, EIG and others.

Malta Small Flag Malta

The acquisition of publicly listed companies or infrastructure assets by financial sponsors is not an active space in Malta.

Such deals tend to be driven by strategic considerations, with the most notable examples being the acquisition of the Malta Freeport by CMA-CGM and Yildirim Group, two large shipping operators, the acquisition of a 33% in Enemalta, Malta’s Government -controlled power corporation by Chinese firm Shangai Electric Power, the acquisition of 65.4% of Go plc (one of the two large Maltese telecommunications operator) by Tunisie Telecom, and the acquisition of 6PM plc (a technology company formerly listed on the Malta Stock Exchange) by IDOX Health, and its subsequent delisting.

India Small Flag India

The share of private investments in the infrastructure sector have fallen to a decadal low of around 25 per cent in FY18 steeply down from a high of 37 per cent in FY08 (Source : https://economictimes.indiatimes.com/news/economy/indicators/private-investments-in-infra-plunge-to-25-in-this-fiscal-report/articleshow/66088568.cms).

Investment in public listed companies is made under a popular ‘foreign portfolio investor’ route. Investment by private equity funds in public listed companies is not very common, but investments in companies just before they get listed (as pre-IPO investment) is gaining more popularity.

Updated: March 8, 2019