Benelux Private Equity Conference
09 February 2017
Hotel Okura, Amsterdam
Written by Rebecca Ford
Dana Haimoff, managing director and portfolio manager at JP Morgan, opened her moderation of the Opening Panel at the Benelux Private Equity Conference by posing a question about the future of private equity in the Benelux region. She guided the discussion through topics as varied as the importance of locality, GP track records, Brexit, sector specification, regulation changes, and impact investment. Here are the five key takeaways from the panel.
1. Benelux is an attractive market, but not without its challenges
All the speakers agreed that Benelux is an attractive market at the moment, with excellent GPs and a solid track record of transactions. However, Ivo Lurvink, partner and head of the Amsterdam office at CVC Capital Partners, pointed out that this attraction has resulted in too much money chasing too few targets, which affects pricing. Arjan van Wieren, head of multi-management at MN, highlighted the volume of funds present in the region and the fierce competition among LPs to do deals with the best GPs. Meanwhile, Neal Costello, managing director at AlpInvest Partners, added that “when you are investing in your own backyard, there’s a tendency to set the bar a little higher in terms of reputation“.
“We all know that private equity infrastructure is, both from an LP and a GP perspective, a really labour-intensive asset class.” – Arjan van Wieren
2. It always helps to have boots on the ground
Neal Costello described the Dutch economy as very open and a central point of the European and global macroeconomies, and Eric-Jan Vink, head of private equity at PGGM, maintained that firms like his, which was one of the first to open in the region, will always have a special relationship with their home turf. Ivo Lurvink made it clear that being on the ground from early on in a fund or deal’s development can give you an edge over outsider competitors, while Arjan van Wieren focused on the importance of GPs who are “disciplined in executing their strategy“, which may well relate to their familiarity with the region and market in which they are operating.
3. All publicity is not good publicity when reputation is on the line
All the speakers addressed an increasing demand within the industry for transparency in their actions, which Arjan van Wieren described as a “burden“, whereas Eric-Jan Vink said simply that whatever a firm and their partners do should be able to stand the test of scrutiny. Ivo Lurvink was especially vocal about his support for increased transparency, saying that “more proactive communication is the way to go“. Later, Arjan van Wieren emphasised the importance of reputation in this region, as a key deciding factor for clients and beneficiaries, and said that ethical transactions which are beneficial for each link in the chain are where priorities should lie.
“The willingness of people to transact is such that this market will remain attractive.” – Ivo Lurvink
4. Impact investment: a nice idea, but a practical way forward is unclear
‘Impact’ has become quite the buzzword within the investment industry, but the sector has struggled to find a home within private equity. Eric-Jan Vink put it succinctly: “we are not willing to trade return for impact“. Neal Costello described the difficulty of translating quality and social impact into returns, and noted that although AlpInvest doesn’t have a sector team for impact investment, they try to work to responsible investment criteria and general good practices, which can both help to ultimately bring costs down. Ivo Lurvink said that CVC does not stream by sector either, but also advocated socially responsible behaviour for all investments. Arjan van Wieren said that while it is difficult to find good-size allocations, “impact investing will bring us to the next level, whereby we try to positively influence the negative side of the economy“.
5. The year ahead brings challenges at both a local and global scale
Neal Costello and Eric-Jan Vink were happy to reflect on their successes from 2016, but both questioned the ease with which they will be able to continue to meet high returns targets. Arjan van Wieren said that although the year to come will present many challenges, such as the Dutch elections, they were looking forward to it and “so far, so good“. Political changes can bring alterations to protectionism, taxation, trade agreements, and much more, and not to mention Brexit, the full effects of which are yet to be unleashed. Ivo Lurvink ended by noting that “2017 is all about being robust before you commit capital“.
Stay tuned to find out more about our upcoming official report!