The London-headquartered firm’s 45 investment professionals will now be organized into four enlarged sector groups: Technology media telecoms, healthcare, services and industrials, with the latter run out of the company’s Munich office.
Four staff members will leave the firm as a result. Derk Bleeker, Nadia Dziwinski, Vincent Luning and Ian Moore are all named as team members of the Benelux office, although it is not known if those are the staff members to leave.
Benelux will be served from both London and Munich, HgCapital’s two remaining offices. The firm previously had a Frankfurt office, but this was transferred with no loss of staff in 2007 to Munich.
HgCapital said that the moves will “deliver additional resources to its most successful teams led by our most successful investors, who are preparing to exploit one of the most promising markets for new investment in decades…Running four larger teams will deliver the benefits of better deal origination and improved conversion and execution”.
Current consumer and leisure investments include UK fashion label Americana, Cornish Bakehouse, self-catering holiday group Hoseasons, toy manufacturer Schleich and spread betting business Sporting Index.
Divested businesses include Manchester-based Americana, the owner of brands Bench and Hooch, was bought from lower mid-market peer ISIS Equity Partners for £190m, an eight times money multiple for ISIS, which injected £6.4m in a £20m MBO in 2003 before carrying out two recapitalisations.
Several investments, including public house portfolio Enterprise Inns, casino operator Crockfords and bookmaker Paddy Power, exited through an IPO, mostly in the 1990s.
HgCapital was not immediately available for comment but it is understood that a decision was taken after the firm’s annual business planning review, with the redistribution of resources away from consumer and leisure a result of the historically low level of focus on the sector – only 5% of HgCapital’s capital has been invested in consumer and leisure since 2000. Despite this, two new recruits to the consumer and leaisure team were made in Jason Khaksar and Sophie Ablizua were made in early 2008.
The remaining consumer and leisure portfolio will be managed from within the other sector teams, although it is not yet known which.
The Amsterdam office was opened in the Spring of 2005, headed up by Alex Shivananda, an HgCapital staffer since 2001 who departed in 2008 and is now the founder and managing director of Caprera Capital, a newly-launched Amsterdam-based growth capital investor in global clean technologies.
HgCapital Trust, the firm’s listed trust arm, announced that Shivananda had finally ceased to be a partner in the trust, at the end of January of this year.
The most recent Benelux investments were Fabory, an industrial fasteners business acquired in a €345m secondary buyout from ABN Amro spin-out AAC Capital Partners, in September 2007 and Dutch accounting software provider AccountView, purchased in March of that year by Norwegian rival and 2005 portfolio company Visma.
Earlier Benelux bets were SiTel Semiconductor, a 2005 investment; Pharma Bio-Research, a Netherlands-based 2002 investment sold to US-listed clinical research group PRA for €85m in June 2006; and Doc Morris, a December 2004 acquisition alongside 3i, sold in 2007 to Germany’s Celesio.
Ian Moore, current head of the Amsterdam office, told sister title Acquisitions Monthly last November that only time would tell how badly the current crisis would affect the Benelux region.
“When the UK started to get hit from the US-led downturn, there was a feeling that things would soften in the Netherlands and Belgium, albeit there would potentially be a shallower recession than in the Anglo-Saxon world,” said Moore. “The last month, however has changed that and people are bracing themselves for a more significant recession. This region is entering the downturn later and there is a query about how bad it will be.”
The news follows a wave of staff cutbacks in the last few months. In December, 3i said it would be reducing 15% of its global workforce, or 100 jobs, largely in back office and personnel, as well as the shutting down of its Hong Kong and Shanghai offices, with its Asia investments to be managed solely from Beijing.
By the end of January, chief executive Philip Yea, had fallen on his sword, or been ousted, depending on point of view.
Market sources said that Yea was well-respected and “had done everything right, except for the dividend return”. Over the past few years 3i returned approximately £2.2bn to shareholders, including £800m in July 2007, now regarded as a severe mistake given the current credit situation. However, others have noted that 3i’s board, including chairman Baroness Hogg, backed Yea on these actions at the time.
Hogg has since been appointed managing partner of 3i’s listed infrastructure fund, whose former head Michael Queen replaces Yea.
On the same day as the HgCapital announcement, Fortress Investment Group, a publicly-traded alternatives manager, was reported to have cut approximately 100 jobs, or 11% of its workforce, in the last quarter of 2008.
The Carlyle Group also said in December that it will also cut approximately 100 staff, equivalent to 10% of its capacity, as well as shutting down its operations in Central and Eastern Europe and Asia. Blackstone is cutting around 70 staff, or 8% of capacity, and Bahrain-headquartered investor Investcorp is losing approximately 20%, or 90 people worldwide, including London.
Since raising a £950m fund in June 2005, HgCapital said it has realised 30 investments at an average multiple of 2.7 times cost.
This post originally appeared at Thomson Merger News