Duke Street has signed an agreement with Paris-based investment firm Tikehau Group whereby Tikehau will become a 35 percent shareholder in Duke Street and provide committed capital to accelerate the firm’s deal-by-deal model. In partnership with Tikehau, Duke Street will have the capacity to underwrite any new deals in its target range.
Duke Street has announced that it has signed an agreement with the independent, Paris-based investment firm Tikehau Group (“Tikehau”), whereby Tikehau will become a 35% shareholder in Duke Street and provide committed capital to accelerate the firm’s deal-by-deal model. In partnership with Tikehau, Duke Street will have the capacity to underwrite any new deals in its target range.
Both firms are looking to build on each other’s strengths to form a new operating model in the private equity industry. As part of the agreement, and with the support of Tikehau, Duke Street will use the cash injection to launch a new fund focused on controlling stake investments in the European mid-market. The transaction is subject to regulatory consent.
Duke Street has operated in European mid-market private equity for more than 20 years, with €3.3bn (£2. 8bn) invested with a realised IRR of 28%. Duke Street’s operating model focuses on transactions with significant build-up potential, acquired via a proprietary deal sourcing approach and concentrating on sectors where the firm has a longstanding experience and track record, such as financial and support services, healthcare, retail/consumer and leisure.
Tikehau, founded in 2004, has emerged as a leading player in the new breed of European multi-asset class alternative investment firms over recent years. Its successes include the creation of Tikehau Investment Management in the credit space (circa €1.7bn in assets across public and private strategies) and the acquisition of Salvepar, a longstanding player in the minority equity investing space, for €135m in late 2012. Both these developments have been important for the Group to develop a differentiated model in the alternative investing space.
Through the partnership Duke Street will seek to leverage Tikehau’s relationships with leading international players in the European investor community, as well as the firm’s opportunistic investment philosophy. In turn, the deal will provide Tikehau with the opportunity to further its expansion across asset classes by partnering with a leading player in the private equity industry. Duke Street’s model of strong operational involvement and value creation at its portfolio companies will complement Tikehau’s capabilities. Duke Street’s longstanding relationships with some of the most globally respected names in the private equity investor community will also provide Tikehau with the ability to expand its geographical reach and continue its development.
The capital injection will allow Duke Street to increase its capability to underwrite deals on a proprietary basis, thus supporting the deal-by-deal model initiated in 2012, the first of which was the acquisition of LM Funerals later that year. The partnership with Tikehau will also expand Duke Street’s sourcing capabilities in Continental Europe’s mid-market.
The firm will continue to operate under the Duke Street name. Tikehau and the partners of Duke Street will determine investment and strategic decisions for the firm together via dedicated committees.
Duke Street was advised by Canaccord Genuity.
Commenting on the agreement, Peter Taylor, Managing Partner of Duke Street, said:
“This is an exciting development that supports our new deal by deal model with significant committed capital. We are well funded to pursue a number of interesting opportunities in sectors where we have a proven track record and are excited about working with Tikehau to develop a new investor friendly model for private equity.”
Commenting on the agreement, Mathieu Chabran, Co-Founder of Tikehau, said:
“We are excited to continue our development by partnering with a leading player in Private Equity with a top tier long term track record. Tikehau continues its development and diversification across asset classes. This development also marks a major step as we begin our international expansion.”
For further information:
Pelham Bell Pottinger
Stephen Benzikie +44 (0) 20 7861 3879
Gregoire Lucas / Estelle Guillot-Tantay +33 (0)1 53 70 74 70
Notes to editors
Duke Street is a leading operationally focused European mid-market buyout group. Founded in 1988, it specialises in taking control stakes in English and French companies with a value of up to €300 million, executing the vast majority of its deals outside of auctions. It is currently investing across four sectors: healthcare, business services, consumer and financial services. Duke Street has a proven model of value creation by successfully transforming businesses through implementing operational change and buy and build, making nearly 60 build-up acquisitions.
The Tikehau Group was set up in 2004 to invest and manage long-term capital for institutional and private investors in various asset classes (credit, listed and private equity, real estate). In 2007, the Tikehau Group launched Tikehau IM, an investment company specialising in fixed income products that has become in just a few years one of the leaders on its market. The Tikehau Group is majority held by its managers, alongside top tier institutional partners, such as Crédit Mutuel Arkéa and Unicredit. The Tikehau Group manages over 2.0 billion euros in investments, including more than 1.7 billion euros in assets under management.