The Europe 50 Services Edition
Ranking the most active private investors in the European Services sector
2024
Executive Summary
Authors
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Chapter 01:
Chapter 02:
Chapter 03:
Chapter 04:
Executive Summary
In this report, we rank the most active private market investors in the European Services sector. We take a novel approach to our ranking, which is based on the size of the underlying portfolio rather than the funds raised. In addition, we also share the latest trends and insights in the European Services sector.
Chapter 01: Ranking by size of the underlying portfolio
The top 50 investors in the European Services sector manage a total estimated enterprise value of €110bn across their portfolios. CVC leads the pack with a total managed EV of €14.3bn, closely followed by EQT managing €13.1bn, and then Triton at €6.5bn. Notably, CVC was also the #1 ranked leader in our previous ranking reports, The Europe 250” and The Europe 50: Industrials Edition.” Other investors in the top 5 include US-based KKR (€5.8bn) and Netherlands headquartered Waterland (€4.0bn).
Overall, British investors are in the lead with a combined managed EV of €48.4bn, followed by French (€20.2bn) and Swedish (€14.0bn) investors. In addition to CVC (€14.3bn) and Triton (€6.5bn), other notable British sponsors in the top 10 are Permira (€3.6bn) and Apax Partners (€3.4bn). The top-3 position of Sweden is driven by only 2 investors - EQT (€14.3bn) and Altor (€0.9bn).
Chapter 02: Insights
The Services sector sees the largest number of deals of any sector (28% of all transactions in 2023). These businesses are resilient in nature and/or have recovered quickly in the aftermath of COVID-19 disruptions, with 2021/22 seeing record number of deals. Unlike Manufacturing businesses which often rely on complex global supply chains, Service businesses are mostly asset-light and leverage their skilled human workforce. This means that they were able to (at least partly) continue their operations during the pandemic. When not, they were at least able to recover quickly. Moreover, critical processes such as fire safety checks continued to be carried out even during the pandemic, underscoring the often essential nature of these businesses.
Year-to-date (YTD) in 2023, we have tracked 1,712 deals across the Service sector. Overall deal volume has been soft and is down 26% from the highs of 2021/22.
There have been some large deals in 2023. It is worth highlighting Luxembourg-based CX specialists, Majorel, being acquired by a BPO multinational, Teleperformance, for ~€3bn. Majority investor, Saham, is selling the business for 8x EBITDA. In the logistics subsector, CVC has acquired Danish end-to-end freight forwarder, Scan Global Logistics, for a rumoured ~$1.5bn. Here, CVC is betting on the market tailwinds including increasing supply chain complexity, which has the potential to boost the target’s revenues from ~$3.5bn (2023) to >$5bn in the next few years.
As for notable live transactions in the sector, PAI Partners is exploring a sale of German facility manager, Apleona Group, that could value the business at ~€4bn (vs. ~€1.6bn PAI paid in 2020).
Overall, the current market sentiment has weighed on deal multiples this year. They are the lowest they have been in 5 years. To give an example, Groupe Bruxelles Lambert bought Webhelp in 2019 at 12x EBITDA, but recently, US-based Concertix paid Groupe Bruxelles Lambert an estimated multiple of just 9x (~€4.5bn price tag) for the same asset. Furthermore, Ardian is considering selling French 3PL provider, Staci Group, for ~$1bn at ~12.5x EBITDA down from ~16x the investor paid in 2019, wherein the multiple decrease can be attributed to the lowered parcel volumes.
Methodology
We rank investors based on the total managed enterprise value (EV) in the European Services sector. We calculate the managed EV by multiplying the number of European Services portfolio companies by the median portfolio EBITDA and a predicted EBITDA multiple derived from a proprietary valuation algorithm developed by Gain.pro.
The median portfolio EBITDA calculation only includes companies with a positive EBITDA. While calculating managed EV, we also adjusted investor stakes for majority and minority investments.
We excluded investors who executed less than 3 investments in Europe between Jan ‘18 - Oct ‘23 or have less than 5 investments with positive EBITDA in their European portfolios. Given these filters, we believe that these rankings are focused more on traditional buyout investments vs. growth investments.
Fundraising data, investor entries and exits are from Jan ‘18 - Oct ‘23. Specifically, fundraising data includes investors’ global strategies and is not restricted to Europe only.
